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Expanding fast food outlets place strain on obesity worry



As international organisations are at pains to warn of an increasing obesity problem in Vietnam, the country’s fast food industry continues to swell despite mounting losses for some chains and difficulties in attempting to alter local eating norms.

Expanding fast food outlets place strain on obesity worry

Despite its fast-paced development, Lotteria Vietnam has been operating at a loss. In 2020, the chain’s net losses surpassed $8.97 million, reducing its book value from $24 million at the beginning of the year to a little less than $14 million.

The COVID-19 pandemic was not the main culprit behind the chain’s losses, as it was only a continuation of the VND20 billion ($870,000) losses it suffered between 2017 and 2019.

Lotteria is not alone in this situation, as others like McDonald’s and Jollibee are also amassing losses.

Chain owner South Korea’s Lotte Group last month sent the market spinning after rumours surfaced that it would shut down its Lotteria restaurant chain in Vietnam. However, a representative refuted the news, saying that the chain will not only remain open but will expand with 10 new outlets as well as a food preliminary processing factory in the southern province of Long An. The company blamed the confusion on a misunderstanding of a South Korean media report, and the fact that it is leaving the Indonesian market.

Since its entry in 1998, Lotteria has opened 260 stores in Vietnam, including 100 through the franchising model.

According to Sean T. Ngo, CEO of VF Franchise Consulting, there are many reasons for the ongoing losses of foreign fast food chains despite their long presence in Vietnam, including increasing competition, high rental costs, and the limited supply of affordable premises.

“Other reasons include a supply chain that needs significant improvements and more qualified suppliers, fast-rising labour costs due to nearly annual increases in minimum wages throughout the country, and generally lower disposable incomes compared to many neighbouring countries,” he said.

However, the difficulties do not seem to stop the onslaught of fast-food chains, with more outlets being opened not only in commercial centres and big cities but also in the provinces, making the market more competitive.

Acquiring a taste 

According to data from Euromonitor International, Vietnam’s fast food market is still growing strongly at 18-20 per cent a year. This comes partially from people incorporating more and more Western meals – including fast food but also pastries and dairy-based smoothies – into their diets.

Changing consumption habits are partially driven by rising incomes as well as modern Vietnamese families shifting to a busier, more cosmopolitan lifestyle that includes fewer home-cooked family meals and more dine-out and takeaway options to save time as well as money.

According to a survey of nearly 600 people across Vietnam published in August 2020 by Q&Me, 87 per cent of respondents had fast food in the past three months, with 55 per cent saying they went because of “good taste” and 39 per cent because of the location. Additionally, 87 per cent of respondents ordered fast food online due to ease of use (71 per cent) as well as good prices/promotions and low delivery costs (43-43 per cent).

The Lotteria at Hang Than Street in Hanoi is a popular lunchtime haunt for secondary and high school students. Trung Thanh, a local student, told VIR, “We like coming here because it is close to our school. The food is delicious and the space is comfortable. It is also a good place to get out of the sun during summers.”

The obesity epidemic 

The increase in demand for fast food is one of the causes of the rising rates of obese and overweight children in Vietnam. Last month the Ministry of Health’s National Institute of Nutrition published the National General Nutrition Survey for 2019-2020, highlighting alarming increases in the number of obese and overweight children across the country.

The survey is the largest of its kind in Vietnam and involved over 22,000 households in 25 cities and provinces representing six ecological areas. It collected anthropometric data as well as data on micro-nutrients, individual food portions, food security, and food hygiene and safety.

The survey showed that the rate of overweight and obese school-age children (5-19 years old) increased from 8.5 per cent in 2010 to 19.0 per cent in 2020. Within this figure, the rate reached 26.8 per cent in urban areas and 18.3 per cent in rural areas.

Speaking at a conference to announce the results of the survey, Rana Flower, the representative of the United Nations Children’s Fund (UNICEF) cum acting chief of the Food and Agriculture Organization of the UN in Vietnam, said that the country is facing the triple burden of stunting, overweightness-obesity, and lack of micronutrients.

UNICEF’s State of the World’s Children 2019 report in addition directly linked the marketing of unhealthy foods and sugar-sweetened beverages to the growing number of overweight and obese children.

“Marketing, packaging, and aspirational status symbols have a seductive pull on all consumers, but adolescents are especially influenced by these factors. Fast food and prepared snacks are widely available in urban areas worldwide and can be especially appealing to young people. Fast food restaurants, with their clean, bright interiors, are places where teens can hang out with friends,” the report noted.

Tran Minh Chau, health coach and the operator of HAB Cyber Club in Hanoi told VIR that while fast food might taste good, they are extremely rich in aromatic spices and trans fats, one of the most unhealthy kinds of fat to consume.

“Fast food is very harmful to health because the oil used to fry food is of a very high temperature and is reused many times. Fast food increases visceral fat and has been proven to contribute to the incidence of cardiovascular diseases and even cancer,” Chau said. “The problem is that these diseases set in slowly, so parents often overlook the signs and are unaware of how harmful their children’s diets are.”




Phuc Long tea chain to open first US store



Phuc Long tea chain to open first US store

An artist’s impression of the first Phuc Long store in California, U.S. Photo courtesy of Phuc Long.

Phuc Long beverage chain will open its first store in the U.S. next month, following in the footsteps of other Vietnamese coffee brands that have branched out to other markets.

The store will be located in Garden Grove, California, the company said in a Facebook post.

Phuc Long has over 80 stores in Vietnam. It had recently signed a deal with conglomerate Masan Group to establish Phuc Long kiosks in over 2,200 VinMart+ conveniences stores.

Last month, TNI King Coffee chain opened its first store inside a mall in California.

Other Vietnamese coffee chains that have branched out to foreign markets include Cong Ca Phe with six stores in South Korea and two in Malaysia, and Trung Nguyen E-Coffee with a store in Laos.


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Private enterprises lack internal strength and driving force to develop



How will Vietnam overcome challenges to realize its development plans? Nguyen Dinh Cung, former head of Central Institute for Economic Management (CIEM), shares his perspective with VietNamNet.

Private enterprises lack internal strength and driving force to develop

One of the great successes of economic reform in Vietnam since doi moi (renovation) is the establishment of a community of businesses from different economic sectors with many ownership modes. Vietnamese enterprises are operating under similar legal forms as in other market economies.

High in quantity, small in scale

In terms of quantity, enterprises in the private sector account for the overwhelming proportion, 97 percent, while SOEs (state owned enterprises) account for 0.38 percent and FIEs the remaining.

The enterprises employ 16 million workers. The workers in SOEs account for 7 percent, private enterprises nearly 60 percent and 33 percent in FIEs (foreign invested enterprises).

In terms of total assets, SOEs account for 28 percent, private enterprises 53 percent and FIEs 29 percent.

In terms of stockholder equity, SOEs account for 20 percent, non-state owned enterprises 56 percent and FIEs 24 percent.

In terms of net revenue, SOEs account for 14.5 percent, non-state owned 57 percent and FIEs 28.5 percent.

In terms of pre-tax profit, SOEs account for 21 percent. The figures are 36 percent for non-state owned enterprises and 43 percent for FIEs.

If considering financial efficiency, the ROE (return on equity) is 9 percent for SOEs, 4.5 percent for non-state owned enterprises and 15 percent for FIEs. Meanwhile, the profit to sale ratio is 5.6 percent for SOEs and FIEs, while it is just 2.4 percent for non-state enterprises.

The figures show that while private enterprises account for the overwhelming proportion, they mostly have small and micro scale, with very few enterprises having medium scale. They have low technology and low competitiveness.

Lacking inner strength and driving force to develop

This is attributed to several reasons:

First, the ratio of profit to revenue and to assets is too low. Stockholder equity is not high enough for re-investment and development. Therefore, most private enterprises have to rely on working capital from relatives and friends. Only a small part of the enterprises can access bank loans.

Most private enterprises lack capability to innovate and receive technology transfer, and lack the driving force to research, develop and renovate technology. In other words, private enterprises lack inner strength and motivation for development.

Second, one part of private enterprises doesn’t want to expand investment to become large enterprises.

This is attributed to unclear and overlapping laws which can be understood and implemented in different ways by different state management agencies. The bigger that enterprises become and the more business fields they cover, the higher legal risks they face, which may cause big losses or loss of all of their assets that had been created over decades.

While private enterprises account for the overwhelming proportion, they mostly have small and micro scale, with very few enterprises having medium scale. They have low technology and low competitiveness.

In this situation, there is no reliable and effective tool and institution, especially independent courts, capable of protecting their rights and benefits.

Third, another part of private enterprises wants to grow but cannot, because they cannot access resources for investment and development. Surveys have found that capital costs are too high. The inability to get enough capital and access land are the big barriers for private enterprises in this group.

Fourth, some of the hundreds of thousands of private enterprises are crony enterprises. The number of these enterprises is not high if compared with the total number of operating enterprises, but they appropriate significant resources and deprive business opportunities from authentic investors and businesses.

The enterprises of this kind contribute to creating an unfair business environment which lacks transparency; distort the allocation of national resources; and distort the value and constrict the business motivation of genuine businesses.

It is the enterprises of this kind that make it difficult for other enterprises to access resources and business opportunities. This is a major obstacle for the development of private enterprises.

Large private groups vulnerable

Vietnam now has some large-scale private enterprises, called economic groups. There are some similarities and differences between the economic groups and groups in some Asian economies prior to 1979 as follows:

The similarities include investment in multi business fields; reliance on bank loans; lack of transparency in administration and business; and relatively friendly relations with the government. They are big if compared with the size of the economies, and so they are not allowed to collapse.

Regarding differences, some foreign economic groups specialized in manufacturing, developed strong R&D (research and development), and expanded their business across the region and the world. They have had specific products and strong brands. Meanwhile, Vietnamese private economic groups mostly target the domestic market, focusing on real estate and consumer services. They still cannot develop and master technologies in their fields and don’t have global competitiveness.

It is obvious that Vietnam’s private economic groups are not as powerful as Asian private economic groups before 1979, and they are vulnerable. If the businesses collapse, it will take a longer time to recover them and the collapse may cause bigger losses to the national economy.

Therefore, developing the private sector, including economic groups, in a balanced, effective and sustainable manner must be a top priority task in the coming time.

It is necessary to amend unreasonable policies to help private enterprises increase their strength and overcome obstacles so they can feel secure to expand investment for development.

The 13th Party Congress Resolution has set specific goals for Vietnam’s socio-economic development.

By 2025, Vietnam would become a developing country with industry going towards modernization and income surpassing the lower average level.

By 2030, Vietnam would become a developing country with a modern industry and higher than average income.

By 2045, it would become a developed country with high income.

Nguyen Dinh Cung


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Excited but anxious: Hanoi business owners reopen



Though they eagerly reopen after being closed for 27 days due to the Covid-19 outbreak, many Hanoi businesses are also worried about changing consumer behaviors.

Closed restaurants inside a shopping mall in Ha Dong District, Hanoi, June 20. Photo by VnExpress/Duc Minh.

Closed restaurants inside a shopping mall in Ha Dong District, Hanoi, June 20. Photo by VnExpress/Duc Minh.

After Hanoi authorities announced that indoor dining and hairdressing can resume on Tuesday, Bui Quang Hung, co-founder of barber shop chain 30Shine, showed his excitement with a post on social media saying, “see you Hanoians on Tuesday morning.”

He said the shops would open from 7.30 a.m. until late night to clear a backlog of almost a month.

“Men have to visit the barber once every three weeks on average because they feel irritated if their hair is one to two centimeters too long.”

There would be two or three times the usual number of customers for two weeks, he said based on his experience from previous waves.

But some other businesses are less hopeful.

Trieu Nguyen Quan, owner of the Goofoo Gelato chain of ice cream shops, does not expect many customers for 10 days after reopening since people are afraid of the pandemic.

Hoang Tung, CEO of fast-food restaurant chain Pizza Home, said the outbreak could cause him to lose a number of customers since people have adopted a new habit of eating at home.

To survive the stop-start nature of their business amid the pandemic, many have sought to improve their business model. Tung said Pizza Home has closed some stores that were not doing well but has expanded into home delivery and apps.

“The restaurants have to operate both online and offline, and must be prepared for the worst, which is closure, amid the pandemic.”

Goofoo Gelato too has managed to pull on thanks to online sales.

Quan said he plans to increase the number of outlets but only after vaccination. He said vaccination is the only way to make him feel secure and the ultimate solution for businesses to open and the economy to revive.

Around 2 percent of the population has received the first shot, and 0.1 percent has received both.

Vietnam has received delivery of around three million vaccine doses so far, and is expected to get over 120 million this year.

It seeks around 150 million in all to cover 70 percent of its population.


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