Out-of-Home Food & Drink Consumption Trends

DATA PERIOD: Q2 2016 Content Out-of-home Food & Drink Consumption Trends

Introduction What do Vietnamese eat & drink in restaurants? How to improve your business with data How is the food & drink offer changing?

Methodology & Access How can chains stay ahead?

Out-of-home market overview Keys to Success in Today’s Competitive Market The Authors

KATRIN ROSCHER THUE QUIST THOMASEN [email protected] [email protected]

Katrin has spent the last 13 years researching With more than 14 years’ experience in food & drink trends in Europe, Africa and Asia marketing, business development and market where she held various roles at Euromonitor research, Thue has a fearless approach to International, the NPD Group, business and leadership. KantarWorldpanel, TNS and now Decision Lab. He helped grow Decision Lab’s predecessor, She has advised major multinationals such as Epinion from a bold idea into a successful and Unilever, Nestlé, Pepsi, Heineken on their in- thriving business. home and out-of-home brand strategies and restaurant operators such as KFC, Hut, A graduate of both Copenhagen and HKUST on increasing customer traffic Business Schools, Thue’s passion for new strategies. business concepts and entrepreneurship is clear in all of his work. Since 2015, she has led the planning, design and set-up of Decision Lab’s Foodservice Monitor in Vietnam. Introduction

WHY IS DECISION LAB TRACKING FOODSERVICE HOW IS DECISION LAB TRACKING FOODSERVICE CONSUMPTION? CONSUMPTION? • Extensive and growing out-of-home consumption Since April 2016, Decision Lab is tracking the out of home • Entrance of global chains and mushrooming of new eating and drinking market in the key cities , Ho Chi local F&B concepts Minh City and Da Nang. • One of the most interesting beer markets The Foodservice Monitor tracks all food & drink consumed out of home on a daily basis with an annual • Professionalization and inflow of capital for operators sample size of 16,000 completed interviews. • No existing gold standard in data: Need for creating The respondents are Vietnamese consumers aged 15+ common ground between manufacturers and who also report on the consumption by children (under operators 15 years) who were present at the eating out occasion. How to improve your business with data Being data-driven as an operator

POSITION NEW CONCEPTS RIGHT Understand the competitive restaurant landscape and choose the right location to secure your investment

OPTIMIZE OFFERING Choose the right occasions and target consumer and build your offer to capture more revenue

DRIVE FOOTFALL AND SPENDING PER HEAD Use customer satisfaction and net promoter scores to actively drive footfall and spending per head Being data-driven as a manufacturer

TARGET WISELY Assess lucrative categories, channels, occasions, target consumer, best food/drinks pairings etc before investing

ITERATE & IMPROVE Customize and manufacture the right foodservice solutions, develop brand strategies, decide on marketing tactics

DATA DRIVEN SALES Sell value: Higher customer satisfaction, higher spending Methodology & Access

HOW WE TRACK OUT- OF- HOME CONSUMPTION We cover three main cities HA NOI. 40%

DA NANG 752,057 10% ONLINE VIETNAMESE COMMUNITY MEMBERS

HO CHI MINH 50% Annual Sample: 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

24h recall, ‘ what did you Advantages of using online Consumer focused with The costs of eat out of home yesterday’, panel: Faster reporting, information on all running/maintaining the fresh in consumers minds – respondents can complete Foodservice purchases survey are shared amongst high accuracy when convenient made regardless of source a number of clients – of purchase thereby making it a syndicated study. 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, Wrap & Roll, , Mon Hue, Thai Express etc. We monitor 7 Main Channels

QS COFFEE QS QS ICE CREAM (Highlands Coffee, (Fanny, Baskin Robbins QS VIETNAMESE etc) etc) QS CHINESE QS BURGER QS JUICE/SMOOTHIE BAR (McDonald’s, Burger King, QS THAI (Jamba Juice, Jungle Juice QUICK SERVICE Lotteria etc) QS KOREAN etc) RESTAURANTS QS CHICKEN QS PIZZA QS OTHER (KFC, Jollibee etc) (Domino’s etc) QS SANDWICHES/WRAPS/ QS BAKERY KEBAB/BAKERY (, Bread Talk (, Tous Les Jours etc) etc) We monitor 7 Main Channels

STREET FOOD BAR/CLUB CONVENIENCE HOTELS CANTEEN STORES Vietnamese Food & Outlets that mainly Establishments • Workplace providing Drink bought from: serve alcohol Standard convenience • School accommodation, • Wet market store such as Family meals, and other • University mart that also offers • Street vendor/cart services for travelers snacks (some heated and tourists. up) to eat on- or off- premise Which questions are we able to answer?

WHO? WHY? • Age, Gender, SEC, Location (District) • Reason for Foodservice outlet choice & Reason for choosing the type of food & drink consumed WHAT? • Types of food and drink consumed HOW MUCH? • Market size in terms of footfall & sales by channel & chains; WHEN? Spend per head, Servings for Food & Drinks • Breakfast, Morning Snack, Lunch, Afternoon Snack, Dinner, Late Night Snack HOW ORDERED? • Weekday/Weekend • Order mode (waiter, at counter, via phone call, via internet etc), Voucher/Promotion Usage WHERE PURCHASED? SATISFIED? • Source of Purchase: Name & Location of Foodservice outlet (District) • Customer satisfaction with Foodservice visit, Net Promoter Score (NPS) • Where consumed? • On-Premise, Off-Premise (at home, on the go, at work etc) What Measures Do we Use?

ABSOLUTE VALUE (VND) SERVINGS Estimate of total consumer expenditures for commercial The number of times a food or drink was ordered at a foodservice meals/snacks/drinks, based on reported average commercial restaurant; Adults report on what food and drink spend per person children had that were present at the occasion

MARKET SHARE IN VALUE % AVERAGE NUMBER OF ITEMS PER PERSON Includes food & drink ABSOLUTE VISITS Consumer-reported meals/snacks/drinks from commercial AVERAGE PARTY SIZE foodservice outlets. Derived from reported Average number of people in a party. This includes guests and meals/snacks/drinks by teens & adults kids

MARKET SHARE IN VISITS % AVERAGE PRICE PER ITEM

AVERAGE EATER SPEND Average Individual Spend divided by items per person Average amount paid for one person’s food and drink FREQUENCY OF VISIT How to access the Foodservice Monitor

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OVERVIEW REPORT OVERVIEW +CHANNEL ADD-ON REPORTS

VND 32.5M** VND 27.3M** VND 20.8M**

VND 66.3M* VND 66.3M VND 32.5M** VND 27.3M** VND 20.8M**

* Available as stand alone report ** Only available in combination with VND 27.3M** Total OOH report Table of Content of Channel Reports

1. Market shares by Sub-Channel if 7. Reasons for choosing Restaurant 14. Top 10 Drink items by reason for applicable - visits & sales* choosing* 8. Order mode 2. Market shares of Delivery, On- 15. Customer Satisfaction Premise, Take away - visits & 9. Consumption location sales* 16. Net Promoter Score 10. Voucher/Deal Usage 3. Consumer Profile 17. Channel Summary 11. Top 15 Food items by Adults vs 4. Party size Kids

5. Adult only vs Families 12. Top 15 Drink items by Adults vs Kids* 6. Consumption Occasions (Breakfast, Lunch etc) 13. Top 10 Food items by reason for choosing

*no access to brands Out of Home market overview Who is the typical OOH consumer?

Eating out is more popular with men than women. The 15-35 year olds make up the majority of visits and MALE three quarters of OOH visits are by consumers belonging to Class C or D. 15 - 35 340 mil. * CD CLASS (SEC) OOH VISITS IN Q2, 2016

* SEC definition, monthly household income in VND: A: Over 45 million B: 30–45 million C: 7.5–30 million D: 3–7.4 million E: Under 3 million/No Income/Don’t know Where to eat out?

216Kđ 40Kđ 50Kđ 0.4% 6% HOTEL CANTEEN

193Kđ 8% 265Kđ 84Kđ 72Kđ 35Kđ CONVENIENCE STORE 1% 2% 35% 36% 11% BAR/CLUB FINE DINING FAST CASUAL QUICK SERVICE STREET FOOD OOH spend differs by Region HA NOI. 80,327đ AVERAGE EATER BILL

DA NANG On average, consumers in Ha Noi pay considerably 65,526đ more per person per visit when eating out than those in Ho Chi Minh City and Da Nang.

HO CHI MINH 69,599đ What do Vietnamese eat & drink in restaurants? Healthy or unhealthy? REASONS FOR RESTAURANT CHOICE Only When it comes 5% to eating out, choose a restaurant health concerns because of health don’t play a 50% significant role 45%

Convenience/Practicality Treat/Indulgence Health What do Vietnamese adults have on their plates? % of Servings total OOH - Adults

6 6 Protein

14 39 Carbohydrates

Vegetable/Salad/Fruit

35 Western (Pizza/Pasta/Burger/Potato)

Desserts Fresh items not so fresh with kids whilst Western & Dessert items are more important

% of Servings total OOH - Kids

9 Protein 12 36 Carbohydrates 13 Desserts

31 Western (Pizza/Pasta/Burger/Potato)

Vegetable/Salad/Fruit Korean influence and Western items such as Pizza & Burgers have led to Cheesemania

Italian Cheese Pizza Spicy Fire Chicken with Instant noodles with Rock Salt Cheese Milk Baked Oysters with Cheese Cheese Tea Cheese

With the introduction of Korean cuisine has This is also a popular dish The new combination of Vietnamese streetfood Western food, cheese significantly influenced among the Vietnamese cheese and bubble milk vendors quickly caught has become a more the Vietnamese. who frequently watch tea, is a result of the on to the trend and popular ingredient in Korean dramas/TV overwhelming popularity invented many dishes Vietnamese cuisine. shows. of cheese in Vietnam. with cheese. What do Vietnamese adults have in their glasses? % of Servings

1 4 6 8 8 Beer Juice 11 13 Coffee Carbonated Soft drink

13 Tea Smoothies 14

22 Milk Water

Wine/ Spirit/ Flavor Sport/ Energy Women make healthier drink choices while men are responsible for most beer consumption

% of Servings

21

13 13 13 14 29 12 12 12 12 10 7 7 6 5 4 3 4 1 0 Tea Milk Beer Beer Juice Water Coffee Coffee Smoothies Smoothies Wine/Spirits Sport/Energy Drink Men Women Carbonated Soft drink drink Soft Carbonated What do Vietnamese kids have in their glasses % of Servings

4 5 6 14 Milk Juice

20 Carbonated Softdrink Smoothies

21 Coffee Tea

30 Water Energy Drink Milk is linked to consumption of sugary foods

1 2 3 4 5

Ice cream Chocolate cake Chicken Yogurt Waffle

6 7 8 9

Milk is consumed predominately with dessert & snack items such as ice cream, Cookie/Cracker Beef Pho Gateau Banh Mi cake, yoghurt and cookies. How is the food & drink offer changing? Western style outlets already account for 7% of OOH visits

7% 53% 40% WESTERN ASIAN RESTAURANTS COFFEE/TEA SHOPS, RESTAURANTS (Vietnamese, Korean, Japanese, BAKERY, CANTEEN, (Italian, French, American etc) Thai etc) CONVENIENCE STORES, OTHER Competition is fierce with many outlets offering good quality food at low prices

Restaurants are not just competing within their channel and cuisine, competition comes from everywhere including street food. How can chains stay ahead? AVAILABILITY & REACH

AFFORDABILITY

OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market AVAILABILITY & REACH

AFFORDABILITY

OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Convenient Location is the top reason for choosing Western/Asian outlets

Top reasons for choosing Western and Asian Outlets

Convenient location 16%

Clean environment 12%

Quality of food/drink 11%

Taste of food/drink 10%

Good value for money 9%

Friendly Service 8%

Atmosphere 6% PINPOINTING WESTERN RESTAURANTS

Where do the Saigonese go for Western food?

The highest number of visits by Saigonese to Western outlets occur in District 1 & 12. How do we reach consumers living far from Western restaurants?

WESTERN RESTAURANT VISITS

Highest visits Lowest visits Deliveries can drive sales

Average spend per eater per order in VND – Asian & Western outlets

162,002

80,171

42,784

Delivery On Premise Take away ONLINE ORDERING

Restaurants can expand their catchment area with online ordering

BINH CHANH Increasing reach through online ordering can increase penetration without the high cost of opening new restaurants. Deliveries – Why Online/App? DELIVERIES

T2B Customer Satisfaction – Total OOH It’s time to go online

69%

Online orders already account for nearly 60% half of deliveries. Customer Satisfaction is higher with online orders, especially with attributes such as ‘A c c u r a c y o f O r d e r ’.

Online Phone AVAILABILITY & REACH

AFFORDABILITY

OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Good value for money is the fifth most important reason when choosing Western/Asian outlets

Top reasons for choosing Western and Asian Outlets

Convenient location 16%

Clean environment 12%

Quality of food/drink 11%

Taste of food/drink 10%

Good value for money 9%

Friendly Service 8%

Atmosphere 6% Are Western outlets affordable enough to become an everyday staple in Vietnam?

WESTERN OUTLETS ASIAN OUTLETS

168,352đ (2.5x) 68,255đ AVERAGE SPENDING PER PERSON PER VISIT AVERAGE SPENDING PER PERSON PER VISIT Promotions & Vouchers are not a sustainable long-term strategy for Western outlets

WESTERN OUTLETS ASIAN OUTLETS

23% 6% VOUCHER/PROMOTION USAGE VOUCHER/PROMOTION USAGE AVAILABILITY & REACH

AFFORDABILITY

OCCASION NEED

DAYPART OCCASION OCCASION LIFE STAGE OCCASION PARTY SIZE OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Western outlets are low visit frequency destinations Western vs Asian Index

WESTERN v.s ASIAN

Wanted to try something new Convenient Location Special occasion (Birthday etc.) No ingredients in the house to cook Free Wi-Fi Good value for money Tre a t Quality of food The kids love it there Didn’t feel like cooking myself Socializing with friends/colleagues/family AVAILABILITY & REACH

AFFORDABILITY

OCCASION NEED

DAYPART OCCASION OCCASION LIFE STAGE OCCASION PARTY SIZE OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Breakfast is the biggest OOH occasion

¾ say that they visit the same 118 breakfast outlet 3-7 times a week MILLION VISITS Breakfast occasion represents 98 the biggest traffic opportunity; targeting it can be valuable because the consumer is likely 40 37 to have a repetitive routine and 28 19 develop a habit.

Breakfast Morning snack Lunch Afternoon snack Dinner Late night snack Western outlets are underperforming at Breakfast

By Occasions - %

Asian Outlets Western Outlets 36% 33%

26% 22% 18% 12%12% 12% 9% 8% 6% 4%

Breakfast Morning snack Lunch Afternoon snack Dinner Late night snack AVAILABILITY & REACH

AFFORDABILITY

OCCASION NEED

DAYPART OCCASION OCCASION LIFE STAGE OCCASION PARTY SIZE OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market VIETNAMESE FAMILIES FLOCK Party composition-% visits TO WESTERN RESTAURANTS

Asian outlets 15% 85%

Western outlets 39% 61% Number items per eater

Family visits Adult only visits 5.1

3.6

Western outlets are three times more likely to be chosen because ‘the kids love it there’ compared to Asian ones.

Family Adult only AVAILABILITY & REACH

AFFORDABILITY

OCCASION NEED

DAYPART OCCASION OCCASION LIFE STAGE OCCASION PARTY SIZE OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market WESTERN OUTLETS ARE THE Number items per eater at Asian & Western outlets “GO- TO” VENUES FOR SOCIALIZING AND SHARING Eat alone 3

2+ people 4.2

Party size - % Average spend per eater at Asian & Western outlets

Asian outlets 33% 67% Eat alone 45,273

Western outlets 13% 87% 2+ people 94,145

Eat alone 2+ people AVAILABILITY & REACH

AFFORDABILITY

OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Taste of food is the fourth most important reason when choosing Western/Asian outlets

Top reasons for choosing Western and Asian Outlets

Convenient location 16%

Clean environment 12%

Quality of food/drink 11%

Taste of food/drink 10%

Good value for money 9%

Friendly Service 8%

Atmosphere 6% Asian outlets are more likely to be chosen because of taste of food than Western ones.

Give your menu a local touch to decrease the barrier of trial – some have adapted but is it enough?

As rice is a staple food in McCafe introduced Banh Mi Lotteria has also localized its Vietnam, KFC has localized in early 2016 to compete menu. its menu in order to reach with the localized menus of out to more customers. other competitors. McDonald’s also introduced rice with the McDonald’s Com menu. AVAILABILITY & REACH

AFFORDABILITY

OCCASION Keys to

TASTE Success in Today’s Competitive CUSTOMER SATISFACTION Market Clean environment is the second most important reason when choosing Western/Asian outlets

Top reasons for choosing Western and Asian Outlets

Convenient location 16%

Clean environment 12%

Quality of food/drink 11%

Taste of food/drink 10%

Good value for money 9%

Friendly Service 8%

Atmosphere 6% Western outlets do not excel on Customer Satisfaction T2B - % value for the 71 Value for money money 71 75 Accuracy 73

72 Cleanliness 61

71 Friendliness of staff 61

74 Quality of food/drink 67

66 Speed 60

67 Atmosphere 58

Western Outlets Asian Outlets THE YOUNG ARE LESS Customer expectations & SATISFIED WITH THEIR standards are rising RESTAURANT VISIT THAN

THEIR PARENTS Asian & Western T2B customer satisfaction by age

73%

64%

36+ year olds 15-35 year olds Western outlets are far more likely to be recommended than Asian ones BUT the young are less likely to recommend

Net Promoter Score – the leading indicator for growth NPS for in USA: NPS 23* 15

38

-8

(*) Source: Temkin Group who specialize 18 in customer experience research Keys to Success

Increase reach through online ordering

Conquer the Breakfast occasion

Offer some localized menu items

Improve Value for money perception

• Target promotions/deals at consumers that will make a difference to sales:

- Offer Family Meal Deals & a Kids menu

- Offer Sharing Meal Deals

• Let your customers know where you excel Reach out to us

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