While the revenue growth of KFC and Lotteria has decreased to lớn less than 5% in recent years, the fast-food chain from the Philippines maintained a double-digit growth. This has made Vietnam’s fast-food market become a field for three players instead of two like it used to be.

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Jollibee is experiencing sharp growth

KFC (Kentucky Fried Chicken) is one of the fast-food brands under Yum Brands Group (USA). Lotteria is a chain of fast-food restaurants belonging to lớn Lotte Group, one of the five largest groups in Korea. While Jollibee is a fast-food chain born in 1974 in the PhilippinesEntering the Vietnamese market at an early stage, these three brands also hold most of fast-food market chia sẻ in Vietnam. In 2019, the total revenue of these three chains reached nearly VND 4,300 billion, an increase of more than 11% compared khổng lồ 2018. However, there was a huge difference in the growth rate of these three giants, which has narrowed the gap between them.KFC & Lotteria are leading the market with 2019 revenue of VND 1,498 billion and VND 1,683 billion, respectively. Their positions are partly established thanks lớn early entry into the market. 

KFC opened its first restaurant in Ho đưa ra Minh city in 1997. Since then, the system has developed more than 140 restaurants present in 32 provinces and cities in Vietnam. Lotteria joined the Vietnamese market one year after KFC, & now it has more than 210 restaurants in more than 30 provinces và cities.However, despite maintaining positive growth, the growth rate of these two fast food companies is very minor. Compared to 2018, KFC"s revenue only increased by nearly 1.3%, which is lower than the 7.5% và 18.3% increase in the two previous years. Lotteria"s growth was somewhat marginally better as this chain"s revenue in 2019 increased by nearly 8%, an improvement from 2018"s but still well below the average growth in 2014-2016.Compared lớn its two older counterparts, Jollibee - a branch of the largest fast-food group in the Philippines – is considered a “newborn” as this chain did not join the Vietnamese market until 2005.In the period 2014-2016, this chain held a very modest market chia sẻ as its revenue was only around VND 200-400 billion, which is less than half of that of KFC và Lotteria. However, in the last three years, Jollibee has soared when it expanded the number of restaurants to lớn over 100 & launched many products that match the appetites of Vietnamese people.In 2019, the Filipino brand’s revenue reached VND 1,100 billion, an increase of more than 40% compared to lớn 2018. The average growth rate in the last three years was more than 37%, much higher than the 4% increase of KFC and 5% of Lotteria.

KFC is the only one lớn enjoy profit

However, of these three market leaders, KFC is the only one to be profitable. In the past three years, the fried chicken brand from the US has maintained a profit of over VND 100 billion. Meanwhile, despite having improved significantly, Lotteria và Jollibee still suffered losses.Compared to the other two chains, KFC is somewhat different in terms of structure on the business results sheet. While Lotteria và Jollibee depend mainly on selling expenses, KFC’s business results depend on improving gross profit margin.KFC"s gross profit margin is significantly lower compared lớn its two major competitors. In the period of 2014 - 2016, this ratio only reached around 10%. However, in 2017, when the gross profit margin of KFC increased to lớn approximately 20%, this chain suddenly enjoyed a profit of VND 103 billion, & its profit has maintained above VND 100 billion in recent years.Despite the fact that they have maintained gross profit margin at around 50% to 60%, which is similar lớn many other large-scale restaurant chains, Lotteria và Jollibee’s costs of goods sold are abnormally high. As a result, although their revenues increased continuously, they were not enough khổng lồ cover operating expenses.In addition, there is also another big difference between KFC & the other two counterparts, which lies in the ownership structure. KFC is a joint venture between an American corporation và a Vietnamese partner (a very well-known và big family business), while the other two chains are subsidiaries of two foreign parent groups. Therefore, their profit pressures are also different.

Source: CafeF, translated by mercurytravel.com.vn

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