McDonald's takes on KFC to Burger King in Vietnam entry

TN News

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McDonald's Corp., the world's largest restaurant chain, will open its first restaurant in Vietnam next year, taking on earlier entrants such as Yum! Brands Inc. as it seeks to profit from the country's growing middle class.

Henry Nguyen, founder of Good Day Hospitality and managing partner of IDG Ventures Vietnam, was awarded the license to operate McDonald's in the country, the company said in a statement. Nguyen oversees $100 million invested in technology, media, telecommunications and consumer companies in Vietnam.

Expansion in Vietnam would allow McDonald's to capitalize on an aspirational young population attracted to Western brands and with money to spend. The company is late to the country's fast-food market, where Burger King, Yum's KFC, Pizza Hut, South Korea's Lotteria Co. and Jollibee Foods Corp. (JFC) of the Philippines have a growing presence, said Pham Ngoc Bich, managing director of Saigon Securities Inc.

"Economists typically view the entrance of the multinational fast-food chain into emerging markets as a cachet that heralds the flow of other Western brands, but McDonald's is no front-runner this time around," Bich wrote today in a note investors.

There is still room for McDonald's, Bich said in an interview. Starbucks, which opened its first outlet in the country earlier this year, has been swamped by eager consumers.

The first McDonald's outlet is set to open in Ho Chi Minh City early next year. The opening date will depend on a number of factors, such as the pace of construction, Becca Hary, McDonald's spokeswoman, said in an e-mail.

"In the longer term, and based on the performance of this initial location, future restaurants will be determined by consumer demand for McDonald's," she said.

The Oak Brook, Illinois-based restaurant chain said it spent years looking for a partner in Vietnam before choosing Nguyen.

More than 80 percent of McDonald's restaurants are owned by local operators, the company said. It has more than 34,500 outlets in 100-plus countries.

Nguyen, who as a teenager spent two summers working at McDonald's in the U.S., expects to eventually open outlets in other major cities in Vietnam, such as Hanoi, Hai Phong, Da Nang, Can Tho, and Vung Tau.

McDonald's is very deliberate about moving into new markets, which is why the company did not come to Vietnam sooner, he said in a phone interview. "They don't ever want to get anything wrong,'' he said.

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