Vietnam Foodservice Industry 2017, WHAT A YEAR INDEED! Content Decision Lab’s foodservice solutions Overview of the Out of home market Highlights of the market over the year MARKET GROWTH WINNERS AND LOSERS OF THE MARKET SALES OUTLOOK KEY TAKEAWAYS How Convenience stores will disrupt the market Value of a happy customer NET PROMOTER SCORE IMPLICATIONS Foodservice Solutions Why is Decision Lab tracking Foodservice consumption? • Extensive and growing out-of-home consumption • Entrance of global chains and mushrooming of new local F&B concepts • Professionalization and inflow of capital for operators • No existing gold standard in data: Need for creating common ground between manufacturers and operators Methodology HOW WE TRACK OUT - OF- H O M E CONSUMPTION We cover three main cities HA NOI. 40% DA NANG 752,057 10% ONLINE VIETNAMESE COMMUNITY MEMBERS HO CHI MINH Annual Sample: 50% 16,000 in HCMC, Hanoi, Danang are asked about what they ate and drank out of home on the previous day Our research methodology 24 hours recall Mobile-first survey Consumer focused Cost effective The data is extrapolated HA NOI. based on the GSO’s 5,082,561 population projection for DA NANG 2015 771,223 11,974,172 Total HO CHI MINH 6,160,388 adult population (Vietnamese aged 15 years old and above in HCMC, Hanoi, Danang) We monitor 7 Main Channels FINE DINING FAST CASUAL Average spend above Average spend under VND110K per person). Fine VND110K per person & pre- Dining is segmented by coded chains). Fast Casual is cuisine type (Vietnamese, segmented by cuisine type Japanese, Korean, Chinese, (Vietnamese, Japanese, FULL SERVICE French, Mexican etc.. Korean, Chinese, French, Mexican etc.), Fast Casual RESTAURANTS example chains: Kichi Kichi, Gogi House, Vietnammm, Pizza Hut, Mon Hue, Thai Express etc.. We monitor 7 Main Channels QS COFFEE QS SUSHI QS ICE CREAM (Highlands Coffee, (Fanny, Baskin Robbins QS VIETNAMESE Starbucks etc.) etc.) QS CHINESE QS BURGER QS JUICE/SMOOTHIE BAR (McDonald’s, Burger King, QS THAI QUICK SERVICE Lotteria etc.) (Jamba Juice, Jungle Juice QS KOREAN etc.) RESTAURANTS QS CHICKEN QS PIZZA QS OTHER (KFC, Jollibee etc.) (Domino’s etc.) QS SANDWICHES/WRAPS/ QS BAKERY KEBAB/BAKERY (Tous Les Jours, Bread Talk (Subway, Tous Les Jours etc.) etc.) We monitor 7 Main Channels STREET FOOD ALCOHOL CONVENIENCE HOTELS CANTEEN PLACES STORES Food & Drink bought Establishments • Workplace providing from: Outlets that mainly Standard convenience • School accommodation, • Wet market serve alcohol: store such as Family meals, and other • University mart that also offers • Street vendor • Bar services for travelers snacks (some heated • Club and tourists. • Mobile cart up) to eat on- or off- • Karaoke premise How we help our clients Attract Deliver Retain ROI MARKETING OPERATIONS ACROSS ORG. • Increase market • Optimize offerings • Enhance customer shares • Drive spending per satisfaction • Understand the head • Word of mouth target consumers • Drive Footfall Average Average Net Promoter KPIs Annual Spend/Eater Score Visits/Capita What a year!!! So much expansion! Highlands Coffee VinMart+ GGG Highlands Coffee expanded to 180 VinMart+ opened 140 stores nation- Golden Gate Group opened over 70 stores nationwide from just 75 in wide in the span of 15 months. new stores in 2017. They now have 2015 210 restaurants nation-wide. Malls for everyone! The growth of malls into 2nd and 3rd tier cities, helping restaurant brands expand outside of the key cities Soiva Plaza, Vinh Yen City, Vinh Phuc AEON Mall Canary, Binh Duong Vincom Plaza, Buon Me Thuot So much TEA! New deals continue to pour into the market Tealive Ten Ren’s TEA Yutang LOOB Holdings and partners invest 5 The Coffee House converted one of Golden Gate Group – The giant Tealive shops in HCMC, expecting to its outlet into Ten Ren’s TEA. Ninh, restaurant operator- officially grow to 100 outlets in 3 years. TCH’s CEO, expects Ten Ren’s Tea to entered Bubble tea market with have 40 outlets by the end of 2018. Yutang, aiming to expand in 2018 Despite this, many chains failed or shrunk Burger King Gloria Jean’s The Kafé Subway SHRUNK TO 13 CLOSED DOWN CLOSED DOWN SHRUNK TO 6 OUTLETS* OUTLETS* *According to company’s official website But really, how has the market developed? Vietnam AVERAGE EATER SPENDING/ VISIT (IN VND) AVERAGE ANNUAL VISITS / CAPITA Foodservice HANOI TOTAL HANOI TOTAL Monitor 60,436 19% 60,661 18% 127 1% 147 2% HCMC HCMC 60,874 19% 161 3% DA NANG DA NANG 60,103 4% 168 2% KEY INDICATORS FOR Q3 14T 280M 2017 11.0T 10.7T 11.0T 10.9T 12T 10.2T 10.0T 10.0T 240M 9.0T 8.8T 8.8T 8.8T 10T 8.3T 8.2T 8.3T 7.7T 200M 8T 6T 186M 160M 4T 167M 149M 152M 151M 149M 120M 141M 148M 142M 140M 2T 140M 135M 134M 125M 130M T 80M Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Sales Visits 2016 2017 Highlights of the year Vietnamese Convenience The increasing Gen Z is eats out more, Store will value of a coming for us though continue to happy selectively disrupt the customer market Read more here Did Vietnamese eat out more during past one year? • Hanoi Average daily visits Men consumed 0.52 0.5 out of home 0.46 0.46 0.45 more 0.4 0.38 0.37 frequently 0.35 0.35 0.34 0.32 than women, 0.3 and even more 0.2 so during past 1 year 0.1 0 Q3 2016 Q3 Q3 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Male Female Q: Please tell us your gender? n=18,099 24 • Hanoi Average daily visits 0.6 Consumers in 0.51 both Hanoi 0.5 0.47 0.48 0.47 0.47 0.43 0.45 and HCMC 0.41 0.41 0.42 0.4 0.37 showed 0.35 0.35 0.33 0.34 increased out 0.3 of home visits. 0.2 The exception happened in 0.1 Danang. 0 Q3 2016 Q3 2016 Q4 Q1 Q1 2017 Q2 2017 Q3 2017 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 HN HCMC Da Nang Q: Where are you currently living? n=18,099 25 Overall, consumers did eat out more, though just slightly, during past 1 year AVG. ANNUAL VISITS PER CAPITA 144 147 Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099 The market, therefore, enjoyed positive traffic growth 9% IN Q3 2017 COMPARED TO Q3 2016 Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099 The extra visits did not pour into all the channels equally, however. Some won, other lost. Consumers cut down on visits to certain channels, while increased consumption in others • Total OOH visits by segments in Q3 2017 (million) Comparing to Q3 2016, Mid and Difference in visits by segments in Q3 2017 (million) High-end channels lost nearly 43M visits. HIGH-END: 81M 80M Alcohol places Full service restaurants 39M Hotels 40M -8M -34M MID-END: 0M Quick service restaurants LOW-END: -40M Convenience stores Total Visits Increase High-end Mid-end Low-end Canteen Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099 Street food • Visits to low end channels in past 1 year (million) Visits to low end channels in past 1 year (million) Lower priced 100M 46% 87M channels have 80M become much 132% 73M 24% 64M more popular 60M 60M during past 1 51M year 40M 31M 20M 0M Street food Convenience store Canteen Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099 Visits to Quick service restaurants in past 1 year (million) Meanwhile, -23% mid-priced 148M 150M channels continued on 120M 114M its downward 90M trend, losing customers 60M quarter by 30M quarter 0M Quick service restaurants Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099 Gallery slide - add a title As business got rough, outlets of various forms and shapes threw themselves, and their customers, into a discount tornado 2017 is indeed the year of Voucher Revolution 30% off in all GGG “Buy 1, get 1 free” or “50% Outlets use Teachers’ Day, Chains and shops actively restaurants every Monday. off” became a default deal Women’s Day or Men’s engage their customers for grand openings. Day for deals such as “Free with delivery, booking and for teachers”, “Discount for payment mobile apps. ladies/gentlemen”, etc. Not just the fast food chains, but the upper end restaurants have also joined the game Restaurants and outlets tried to attract consumers by showering them with vouchers, e- vouchers, discount for pre-booking, happy hours, collaboration with foodie apps, etc. As more restaurants joined in this Revolution, more consumers started making use of voucher VOUCHER USAGE IN FINE DINING RESTAURANTS 8% 25% Q3 2016 Q3 2017 Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099 As a result, average spending per head per visit went down 60,661đ 18% Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099 Sales went down despite growing visits TOTAL OOH MARKET 10% = 3.3 trillionđ Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099 With the lost sales, we can treat everyone in Hanoi, Danang, HCMC 1 combo of (Per day in one straight week) So, what are the key takeaways? It’s a mixed bag of opportunities and challenges Vietnamese consumers has increased demand Consumers have also become very selective in for Out of Home consumption their choice of outlets to visit Voucher usage have become more popular as Not all outlets can benefit from the increasing outlets started to offer them more generously demand without significant effort to become attractive and worthy of trial Of concern is that voucher usage can be detrimental to sales as it brings down average spending per head To design a voucher/ promotional campaign