Lotteria entered Vietnam in 2004 and became the No. 1 player in the market, posting its first net profit in 2022. Lotteria's growth in Vietnam over the past 20 years can be summarized by the following keywords:
1. Development of localized menus that reflect local eating habits and culture. 2. Respect for Vietnamese common sense and communication efforts. 3. Responsible management centered on the head of the subsidiary and the ownership spirit of resident employees. 4. Expansion of stores through partnerships with supermarket partners. 5. Steady investment in efficient store operation and remodeling.
At the intersection of Tran Hung Dao and Nguyen Thai Hoc streets, two of the city's most prominent shopping districts, a five-story state-of-the-art Lotteria building stands out. Recently featured in the Vietnam setting of the movie The Roundup(2022), Lotteria Tran Hung Dao is the first place that Vietnamese people think of when they think of Lotteria, and a symbolic place where the history of Lotteria's development in Vietnam is embedded. Lotteria Tran Hung Dao opened in December 2006, at the beginning of Lotteria Korea's entry into Vietnam, introducing a new culture of quick service restaurant (QSR) dining, and quickly became a favorite among students and office workers in the neighborhood. With the rise of Bui Vien Walking Street, known as the "Traveler Street," across from the store, the number of foreign customers, including backpackers, has significantly increased.
In 2023, Lotteria Korea posted its first net profit in Vietnam in 20 years. Vietnam Lotteria, which started with five branches in Ho Chi Minh City when it took over the management of Vietnam Lotteria from Japan Lotteria in 2004, now operates 246 branches (as of the end of 2022) across the country, ranging from Ho Chi Minh City and Hanoi to provinces such as the Mekong Delta, and holds the No. 1 QSR market share in Vietnam. Of these, 77 franchisees are run by Vietnamese locals.
There were also significant challenges. In 2020, the novel coronavirus (COVID-19) pandemic began to drive away customers, and then in July 2021, the company had to close its stores for three months when the government shut down Ho Chi Minh City, banning people from leaving their homes. With monthly sales in its largest city at "zero," there were vicious rumors that Lotteria would follow in the footsteps of its Chinese and Indonesian counterparts and pull out of Vietnam.
But Lotteria didn't sit back and wait for the crisis to pass. It started investing in remodeling its old stores with modern interiors, and after the Tran Hung Dao store reopened in April 2022, its monthly sales increased by more than 30% compared to before. "We are seeing more younger customers coming to Lotteria for special events such as birthday parties and dates," said Linh Uyen, manager of Tran Hung Dao.
During this period, Lotte Group also strengthened its choice and focus on Vietnam. Lotteria Vietnam prepared for the pandemic by reorganizing its store strategy, including eliminating unprofitable stores and remodeling older stores, including Tran Hung Dao. In late 2021, Lotteria Vietnam increased its investment in brand marketing, launching a TV commercial featuring local pop idol Amee for the first time since entering the country. As a result, Lotteria Vietnam rebounded in 2022 with sales of more than VND100 billion and a positive net profit.
Looking back, it took Lotteria 20 years to enter Vietnam's QSR market in its infancy, become the number one operator by market share, and achieve financial success. As long as it took, Lotteria's journey in Vietnam highlights how difficult it is for Korean companies to succeed in Vietnam. Lotteria has gone through countless highs and lows, failed, challenged, and succeeded in localization, and is now expanding into the Southeast Asian market using Vietnam as a role model.
DBR (Dong-A Business Review) visited Vietnam Lotteria's headquarters in Ho Chi Minh City, Vietnam, and analyzed the secrets of Lotteria's growth.
This content was translated into English by AI (using DeepL) from an article that was originally written in Korean in the DBR (Donga Business Review). Therefore, please understand that there may be some awkward expressions.
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