Burger King still faces problems despite backing by tycoon

Burger King restaurant, located at No 1B-1B1 on Cong Hoa Street of Tan Binh district in Ho Chi Minh City, has shut down. Prior to that, two others were closed in 2015, including one at No 26-28 Pham Hong Thai Street in Ho Chi Minh City and at 125 Lo Duc Street in Hanoi. In 2014, a Burger King in Danang City stopped operation.

Burger King came after KFC, which arrived in Vietnam in 1997.  Lotteria has been present since 1998, but it came long before McDonald’s and Starbucks. 

BKV, the franchisee, belongs to Imex Pan Pacific (IPP) owned by the well-known businessman Johnathan Hanh Nguyen and his wife Le Hong Thuy Tien. Tien who is now CEO of BKV.

Burger King has 17 shops in Vietnam, including 11 in Ho Chi Minh City, 4 in Hanoi, 1 in Can Tho City and 1 in Bien Hoa. After three years of operation, Burger King is encountering difficulties in seeking retail premises to expand the network. 

Nguyen Gia Thanh, managing director of BKV, confirmed that some Burger Kings have been shut down recently, saying that the company will close the shops with weak business potential and will replace them with shops in more advantageous positions.

Thanh, in an interview with VTC news, said Burger King Vietnam has been looking for reasonable retail premises to continue expanding the Burger King chain in Vietnam.

An analyst said that as Burger King is a ‘newcomer’ compared with other fast food chains like KFC, Lotteria, Jolibee and Pizza Hut, it cannot find advantageous retail premises in large cities such as Hanoi and Ho Chi Minh City because the premises are occupied by rivals.

Burger King has spent big money to get retail premises. A branding expert said that it takes VND6-VND9 billion on average to open one Burger King.

BKV reportedly accepted to pay US$$10,000 a month to lease retail premise on Nguyen Van Linh Street in district 7, Ho Chi Minh City. Sources said that the rent was 21% higher than that paid by KFC for the premises.

However, the analyst noted that it was too costly to join the race for premises.

Meanwhile, a branding expert thinks Burger King’s main problem is that it underestimated  its rivals.

“Burger King talks much about its direct rival – McDonald’s. It did not pay appropriate attention to indirect rivals.

Indirect rivals not only include hamburger sellers, but pizza companies, Lotteria and KFC, and other fast food suppliers’. 

Besides, pho (noodle), bun (vermicelli) and bread could also be strong rivals to Burger King.