Báo cáo nhóm cuối kỳ môn học kinh doanh quốc tế Đề tài subway’s vietnam debacle

Both KFC and SUBWAY recognized the potential of the Vietnamese fast food industry and entered the market.. This trend indicates a growing inclination towards spending more time in restau

DAI HOC KINH TE TP HO CHI MINH TRUONG KINH DOANH KHOA KINH DOANH QUOC TE - MARKETING

UEH

UNIVERSITY

BAO CAO NHOM CUOI KY MON HOC KINH DOANH QUOC TE

DE TAI: SUBWAY’S VIETNAM DEBACLE

Giảng viên hướng dẫn: TS Đỗ Ngọc Bích

Mã học phần: 23CIBUS50319804

Lớp - Khóa: IBC06 - K48

Nhóm sinh viên thực hiện: Nhóm Š

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Nguyễn Hải Nguyên 31221024529

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INTRODUCTION

Entering a new business market is always challenging, regardless of whether the

company is young or established Many factors determine how international business

operates, including geography, level of development, economics, politics, culture, and law

The activities of multinationals and domestic businesses are significantly influenced by these

factors As a result of globalization, international business activities have become increasingly

important Businesses need to enhance their ability to integrate and adapt to new business

environments, both domestically and abroad, to keep up with this trend Thus, businesses

wishing to succeed in foreign markets should research and understand the international

business environment

Every business entering a new market faces the possibility of either success or failure

Regardless of the outcome, there are valuable lessons to be learned by the business and other

businesses Both KFC and SUBWAY recognized the potential of the Vietnamese fast food

industry and entered the market The failure of SUBWAY was a contemplative one, whereas

KFC was a resounding success This report examines SUBWAY as a typical example of how

they approached the Vietnamese market in a misguided manner As a result of this mistake,

the fast food giant that had been successful in over 100 countries had to admit failure in 2020

and exit the market We can provide alternative solutions and proposals for businesses that

could continue to follow SUBWAY's footsteps in the fast food sector in Vietnam's potential

market by analyzing the causes that led to SUBWAY's failure

MARKET SITUATION

1/ Subway’s history

In the year 1965, Fred DeLuca and Peter Buck established Subway with an ambitious objective of owning 32 outlets within a decade To facilitate growth and realize this goal, Subway transitioned to a franchise business model, enabling individuals or businesses to acquire Subway franchises in specific locations This strategic shift marked a significant milestone in Subway’s journey, propelling it towards remarkable success By 1992, Subway

had expanded its presence to over 1,000 locations in the United States and Canada In 1995,

it ventured into the Asian market, inaugurating its first store in Japan In a triumphant moment

in 2002, Subway outpaced McDonald’s to become the world’s leading fast-food restaurant chain, boasting more than 17,000 outlets worldwide Presently, Subway’s extensive network

comprises 44,000 stores spread across over 100 countries

2/ Mission, vision, and core values

Subway's mission statement states: “Delight every customer so they want to tell their friend - with great value through fresh, delicious, made-to-order sandwiches, and an exceptional experience” (2011) This statement is a clear and concise mission statement that effectively communicates the company's goals and values The declaration outlined four key

elements:

« Customer Focus: "Delight every customer" emphasizes the company's commitment

to surpassing customer anticipations and guarantee their satisfaction

« Word-of-mouth promotion: "They want to tell their friends" underlines the significance of fostering positive word-of-mouth marketing, which can be one of the most effective and cost-effective methods to attract new customer s

¢ Value Proposition: The segment "Great value through fresh, delicious, made-to-order sandwiches" indicates that the company offers high-quality products at reasonable prices

« Exceptional Experience: The term "Exceptional experience" stresses the importance

of providing each customer with a memorable and enjoyable encounter

Through this mission statement, Subway has delineated the store's core missions and values, which is “Satisfy customers through quality products and services” By adopting a customer-oriented approach, Subway has strategies in place to safeguard the company from becoming obsolete when demands shift

Subway’s vision: “Be the #] Quick Service Restaurant (OSR) franchise in the world, while

delivering fresh, delicious sandwiches and an exceptional experience.”

Core value:

“Family - We build our relationships by serving each other, our customers and our communities, much as we do within our own families.” Subway pioneered the practice of allowing customers to witness the entire process of bread preparation, and also offers the flexibility for customers to personalize the bread filling ingredients according to their preferences

“Teamwork - We challenge ourselves and each other to succeed through teamwork, against shared goals and to be accountable for our responsibilities.” This is one of Subway's strengths that can be seen through the fact that Subway and its franchisees work effectively together In addition, Subway also offers programs and informational resources that equip franchise businesses with essential knowledge

“Opportunity - We create an entrepreneurial, ever-growing SUBWAY community, increase the opportunity for evervone.” Since its establishment, the number of Subway franchise stores has been escalating at a very remarkable rate Each new store contributes tc Subway’s growth, generates opportunities for franchisees, and broaden the spectrum of customers served by Subway

3/ Introduce the situation

“All connections between supplies and markets result from the activities of international business, defined as all commercial transactions, including sales, investments, and transportation, that take place between two or more countries Private companies undertake such transactions for profit; governments may undertake them either for profit or for other reasons.” When Subway ventured into the Vietnamese market as part of its international business activities, this unsuccessful entry had repercussions on the brand itself and businesses in both nations In 2010, Subway made its foray into the Vietnamese market, inaugurating its first outlet in Ho Chi Minh City, with an ambitious goal of expanding to a chain of 50 stores in Vietnam within five years However, contrary to Subway’s aspirations,

after six years of operations in this market, Subway only managed to establish six outlets across the country Despite making alterations to the menu, the situation did not improve Furthermore, the Covid-19 pandemic led to a significant decline in demand in the F&B market Consequently, unable to sustain the losses, Subway decided to completely exit the Vietnamese market in 2020

4/ Market size

Vietnam, with its dynamic and appealing market, has seen the emergence of numerous local brands and has attracted foreign enterprises During the period 2010-2020, Vietnam's Food & Beverage (F&B) market was highly competitive, with a notably high attrition rate

As of the end of 2016, the country boasted approximately 540,000 F&B outlets, including 430,000 small stores, over 7,000 fast food restaurants, 22,000 coffee shops, bars, and more than 80,000 well-established restaurants The F&B industry in Vietnam is considered to have immense growth potential and promising prospects In 2017, this industry achieved a

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Compound Annual Growth Rate (CAGR) of about 12% and is projected to grow at an average rate of 18% per year shortly This indicates that the Vietnamese F&B market has the potential for rapid growth and is fiercely competitive Despite the global COVID-19 pandemic, the Vietnamese F&B industry demonstrated remarkable resilience, reaching a market size of US

$62.5 billion in 2020 It is projected to record a forecast CAGR of 6.4% over 2019-2022 With disposable incomes rising, this region is experiencing the fastest growth, outpacing its competitors Post the COVID-19 pandemic, the Vietnam Foodservice Market size is estimated to be 2.79 billion USD in 2023 and is expected to reach 36.29 billion USD by 2029, growing ata CAGR of 9.73% during the forecast period (2023-2029) Before the COVID-19 pandemic, consumer demand in the Vietnamese F&B market was very high However, due to the impact of the pandemic and the closure policies issued by the government, the need for in-store dining has become nearly impossible

5/ Market demand

Before the onset of the COVID-19 pandemic, a study conducted by Statista during 2017-2018 showed that 2 out of 5 people being surveyed choose to eat quickly at restaurants 1-3 times a week Among the respondents, 55.85% opted to eat fast food regularly, ranging from at least once to more than ten times per week We will also see a small change in people's fast food preferences over the two years, with the proportion of individuals not dining at fast food restaurants decreasing by 6.42%, and generally, the frequency of dining out increased This trend indicates a growing inclination towards spending more time in restaurants and suggests a potential demand in the fast food market However, the COVID-19 pandemic severely impacted the F&B industry, particularly fast food restaurants, leading to a dive in profits by about 25% According to government regulations, during the period 2020 - 2021,

no stores are allowed to open for business This caused a devastating impact on business owners and also led to the closure of many of restaurants during this period

The culinary preferences of Vietnamese consumers are quite complex, with each region having distinct tastes For instance, individuals who grew up in Ho Chi Minh City tend

to prefer sweeter flavors compared to other regions Most of them often prioritize and are familiar with rich ingredients such as fish sauce, soup powder, soy sauce, chili sauce The sauces usually include fish sauce or soy sauce, and the level of spiciness varies across the country Vegetables are often served raw or lightly fried or boiled, contributing to the reputation of Vietnamese cuisine as one of the healthiest in the world Therefore, businesses entering the Vietnamese market, especially the F&B industry, need to conduct thorough research and make necessary adjustments to cater to each area they penetrate

Hence, when a business decides to enter the Vietnamese market, it requires a comprehensive market survey using as many models as possible t o obtain a more accurate overall picture of the market

6/ Marco environment

P - Political

Political factors play a significant role in the operation of businesses, particularly in the fast-food industry Compliance with regulations related to wages, hygiene, and food quality is mandatory Governments can exert pressure on fast-food chains to incorporate healthier options into their menus The COVID-19 pandemic in Vietnam led to the implementation of government shutdown policies, which necessitated the temporary closure

of fast-food restaurants These policies, aimed at curbing the spread of the coronavirus, included restrictions on large gatherings and the shutdown of non-essential businesses Fast- food restaurants were compelled to cease operations for a period from April to October 2020

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During this time, they had to pivot to online sales and home delivery to sustain their business operations The government’s shutdown policies had a profound impact on the Vietnamese

fast-food industry

E - Economic

With its rapidly developing economy and increasing per capita income, Vietnam has seen a rise in demand for Food and beverage (F&B) products Brands have adapted to this economic growth by including low-priced items and increasing the variety of products on their menus Recognizing that customers are price-sensitive, brands have started offering various deals and discounts to make their offerings more appealing

S - Social

Young adults in Vietnam, who are likely to have a large amount of disposable income, are increasingly interested in sampling new foods The growing trend of Westernization in Vietnam is impacting food habits, with Vietnamese consumers becoming more open to experimenting with different cuisines, including fast food This trend is further fueled by the increasing accessibility of international brands and the popularity of food delivery apps Furthermore, the fast-paced lifestyle in Ho Chi Minh City, the heart of the Vietnamese economy, has led to a growing demand for convenient and quick meal options, making fas t food a more attractive choice for busy individuals

T - Technology

Technological factors, especially the strong development of information and communications technology, have a significant impact on the F&B market in Vietnam This has led to changes in people’s consumption habits, such as the strong growth of e-commerce

in the F&B sector, and the trend of using online food delivery applications among young people The ongoing transformation of Vietnam’s e-commerce landscape, driven by a national e-commerce development program (2014-2020), presents a valuable opportunity for brands like Subway to improve their online sales process and reach a wider audience

E - Environmental

Vietnam’s warm and humid climate provides fertile ground for growing clean, high-

quality, and affordable ingredients such as vegetables, tomatoes, and chicken Environmental concerns such as minimizing packaging waste, utilizing sustainable farming practices, and limiting pesticide and antibiotic use are considered However, the regulatory framework for these issues remains less stringent than in European countries, where stricter standards are enforced

Competitors: The Food & beverage (F&B) industry in Vietnam is witnessing escalating competition between local and international businesses Domestic F&B enterprises are experiencing robust growth and dynamism In recent years, international F&B enterprises, including McDonald’s, Lotteria, KFC, Pizza Hut, and others, have expanded their operations

in Vietnam These international businesses have the advantage of brand recognition, experience, scale, and financial resource s However, domestic F&B enterprises also posses: unique advantages, such as a deep understanding of the market and the preferences ot Vietnamese consumers This indicates that to succeed in this competitive environment,

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international F&B businesses need to thoroughly understand market needs to formulate appropriate business strategies

Consumers: Vietnamese consumers’ needs are becoming increasingly diverse and complex, necessitating F&B businesses to strive to meet them Vietnamese consumers exhibit varied preferences and eating habits, influenced by factors such as geographical location, age, gender, income, etc Additionally, the culinary trends among Vietnamese consumers are rapidly evolving, aligning with global trends and healthy eating habits This requires F&B businesses to continually update trends to cater to customer needs Besides offering quality products and services, businesses must also price their offerings competitively, in line with the living standards of Vietnamese consumers

Through macro-environmental factors of Vietnam, such as socio-economic conditions, population demographics, consumption habits, government policies, technological factors, etc., businesses need to conduct thorough market research before entering Market researct will equip businesses with a comprehensive understanding of the market, consumer needs, and competitors This will enable businesses to devise suitable business strategies, identify potential partners, and effectively prepare human resources, thereby helping businesses seize opportunities and overcome challenges when entering the Vietnamese market

SUBWAY’S MARKET ANALYSIS IN VIETNAM

1/ Theoretical framework

a/ SWOT

SWOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats SWOT analysis helps identify internal (Strengths, Weaknesses) and external (Opportunities, Threats) factors as a premise to build a 4P marketing strategy for Subway business

Strengths

Subway has the world's most effective 4

fastest-growing franchise business moa

and is a global fast-food chain Therefd

when entering the Vietnamese market, v

its reputation, Subway easily attracts

certain number of consumers, who

willing to pay to enjoy food fron

international brands

Providing dishes for public health is

different highlight compared to other fd

food stores, creating a unique mark

Subway's nutritional food in the hearts

customers

Franchise costs are lower than competi

($120,000 - $300,000), creating conditiq

for Subway to easily penetrate ft

Vietnamese market, develop high-qua

products along with creating favorak

conditions with business partners he

Subway become a reputable franchise bị

and attract business partners to invest

Weaknesses Service quality between stores uneven, leading to a significant impé

on customer experience

The light taste of bread combined w

a little salt is in complete contrast to t rich taste of Vietnamese peop Subway has adopted the pure Wesi formula to apply in the Vietname:

market without being flexible il changing the formula to suit consum:

The price of Subway sandwiches is times higher than the general avera Customers will weigh and measure make a decision to buy more or not

Purchasing has to go through mé steps which takes a lot of time, contrast to buying bread at roads shops which only takes a few minut:

This is an extremely big minus point Subway that makes it fail miserably the market Vietnamese

Customers can design their own bre

stimulating creativity and creating th

unique value of each loaf of bread

Subway stores are simply decora while it is considered a luxury meal f Vietnamese people, so it does not rr customers’ need to take check photos when experiencing the foc leading to dissemination amor consumers Use together significantly limited

Opportunities

using environmentally friendly materials a

supporting responsible businesses for

community Subway has established

mission and commitment to society w

community responsibilities that cred

sympathy for consumers

People’s living standards are getting hig

and higher, so spending on Subway's hi

priced products may increase

After COVID-19, consumers’ need to prot

their health is increasing, so providi

healthy dishes is one of consumers’ priori

when choosing products Subway’'s hig

nutritious sandwiches are also a prio

choice in choosing health-protecting food

Foreigners coming to travel or live and wa

in Vietnam are increasing, this could be

Threats Consumers are increasingly moving towa Vietnam has an open-door policy a

always creates conditions for forei businesses to enter the mart increasing competition with ne’

competitors

Fierce competition comes _ fro competitors in the cheap fast fo industry such as KFC, Lotteria N only that, but Subway also has compete with long-standing bre:

brands and street bread carts

The outbreak of the COVID-1 pandemic caused the global econo

to go into recession and chanc customers’ consumer behavior wt shopping for food

Subway's scandals abroad hi lowered Subway's brand value wh number of potential customers for Subwa entering the Vietnamese market

b/ Subway’s 4P marketing strategy in Vietnam For marketing strategy, Subway chose the 4P mixed marketing strategy Once

considered one of the factors that brought success to the Subway empire, when simultaneously applying this strategy in the Vietnamese market, Subway rec eived not very positive results

In this report, we will analyze the factors: Product, Price, Place, and Promotion in the 4P strategy that Subway has applied in the Vietnamese market

First and foremost, let's analyze the product strategy The product is what makes up the Subway brand, but it is not suitable for the taste of most Vietnamese people Subway is one of the first fast food service stores in the world with the brand's signature dish being fast- food sandwiches with high nutritional value and healthy for health Subway's menu is famous for its long sandwiches with fillings such as chicken, bacon, tuna, eggs, ham, and Seattle cafe - Subway's own product Customers can also replace the bread crust with a Wrap Choose and "design" your own dishes to your liking, from premium, safe and nutritious ingredients: Meat, Seafood, Premium Cheese, Vegetables, along with dozens of varieties Special sauces have helped Subway attract a large number of customers Besides, Subway also offers salads cookies, and drinks Starting with the submarine sandwich, Subway has diversified its menu

and introduced some signature dishes in certain countries such as adding "Traditional Vietnamese bread” based on the taste of Vietnamese consumers

Next, Subway implemented a price strategy when entering and operating in the market Because they originate from a Western brand, bread is expensive and is 3 times higher than the average price of regular bread In its statement, Subway is committed to serving the best quality food and service Therefore, Subway's sandwiches are priced higher than other fast food competitors such as KFC, Lotteria, Pizza Hut, Pizza Domino, On average, each Subway sandwich costs 60,000 Vietnamese dong for small size and 130,000 Vietnamese dong for large size Price coupled with quality had shaped the company's pricing strategy and brought in revenue 10,2 billion $ in 2019 - according to Technomic statistics

An indispensable element in Subway's 4P strategy is the place strategy Subway's stores are located in luxurious, high-end, eye-catching places As analyzed in SWOT, Subway's strength lies in the fastest-growing franchise business model in the world Subway headquarters is located in Milford, Connecticut, and has approximately 37,000 stores in more than 100 countries Rapid growth since opening its first store in 1965 has tapered in recent years amid fierce competition and a global economic slowdown in the wake of the COVID-

19 pandemic Stores had been located in luxurious locations such as airports, shopping centers, or prime locations such as near schools, hospitals, etc., places with a large number of foreign and potential customers ready to buy dishes with nutritional value that are good for health such as RMIT South Saigon, Kumho Link District 1, From there, exploiting store location helps Subway be positioned higher than its competitors

Finally, Subway applied promotional campaigns to promote and increase brand awareness Subway did not hesitate to launch extremely attractive incentives and promotions promptly to attract and retain customers Subway's slogan is Eat Fresh, used to affirm the provision of fresh and high-quality food Subway targets the main customers between the ages

of 18 and 35 - young people interested in supplementing healthy foods to protect their health instead of greasy fast foods that cause obesity Subway uses promotional strategies to attract customers as well as promote the brand such as buy one get one, discounts on holidays along with broadcasting advertisements during prime time, increasing accessibility to

everyone

c/ HOFSTEDE

Vietnam is a peaceful country (Vietnam's peace index in 2011 ranked 30th worldwide) with political stability helping to attract foreign businesses to invest in the Vietnamese market, including Subway

According to Hofstede's theory, in Vietnam:

Vietnam’s power distance index stands at 70 This means that employees always adhere to the instructions of their superiors, viewing them as obligatory commands This is a stark contrast to the practices in America and Europe Consequently, as it enters the Vietnamese market, Subway must revise its employee training policies as well as exploit their potential at work

Individualism: with an individualism score of 30, Vietnam is a society that values community living and shared goals Managers here will take full responsibility for their employees Workplace loyalty is esteemed more than in European and American countries Given the communal nature of society, the manager-employee relationship will be ethically driven Therefore, when it comes to employee rewards or promotions, managers may exhibit certain biases, leading to a lack of absolute fairness This poses a challenge for Subway in terms of human resource management

Motivation towards Achievement and Success: Vietnam scores 40 on Motivation for Achievement and Success and is considered a consensual society People here have the concept of working to live, hence time-based incentives such as extended lunch breaks are quite popular Besides, flexibility in work is also emphasized, with employees being almost trained to adapt to various situations Unlike their Western counterparts who focus solely on their area of expertise, Vietnamese employees who regularly assist their colleagues are valued Subway needs to realign its human resource development strategy to cater to Vietnamese workers and partners

Uncertainty Avoidance: Vietnam scores 30 on this dimension signifies a low inclination to evade uncertainty Vietnamese people are generally comfortable in accepting challenges and place more importance on the results rather than the process This is beneficial for Subway’s entry into the Vietnamese market because local consumers are not xenophobic

and unnecessary regulations are continually eliminated and innovated They can accept new things in a relaxed mindset

Long Term Orientation: a score of 47 - the average score in long-term orientation indicates that while the Vietnamese people cherish their ancient cultural features, they also absorb the progressive development of society and foreign cultural influences Therefore, Subway can more easily penetrate the Vietnamese market and cater to the Vietnamese consumers’ desire to savor and experience novel cuisines, thereby enhancing the brand’s

growth

Indulgence: with alow score of 35, Vietnamese people often tend to refrain from self- indulgence and luxury, choosing instead to save for the future of their descendants Social norms restrain people's desire for indulgence This presents a challenge for Subway in pricing its products above the average market rate in the Vietnamese market

d/ PESTLE

PESTLE analysis helps enterprises in discerning six external elements that influence strategic decisions in alignment with their goals, grab external opportunities and mitigate potential business risks Those factors encompass: Political, Economic, Social, Technological, Legal, and Environmental aspects

Firstly, Political Vietnam, a nation with an open-door policy, became a member of the WTO in early 2007 This has facilitated Vietnam in attracting substantial foreign investment and provided opportunities for Subway to easily penetrate the Vietnamese market To venture into the Vietnamese F&B market, Subway must ensure compliance with the Vietnamese State's Political policies on food and market price control Changes in tariff laws necessitate absolute attention

Secondly, Economic Vietnam is a developing country The General Statistics Office reported the average income of Vietnamese people in 2020 to be 4.2 million Vietnamese dong/person/month Consequently, the consumption of high-value items remained quite limited In addition, the epidemic outbreak in 2020 led the government to issue an official dispatch to close restaurants and non-essential stores This weakened the country's economy halved the GDP growth rate compared to the previous year (2019), and altered Vietnamese people's consumption habits and shopping priorities The high unemployment rate in Vietnam made cheap labor readily available

Thirdly, Social Vietnam is a country with a high proportion of young popula tion so progressive innovation is easily accepted and absorbed (Median age was 29.7 in 2015 - according to the Worldometer) The improving quality of life is leading to lifestyle changes People are increasingly interested in green food that is safe for their health, and businesses that demonstrate high responsibility towards the community and the environment are warmly welcomed by consumers Vietnamese consumers prefer quick and convenient food shopping

at average prices Fast food is considered a luxury food for working individuals, hence it is only consumed only on special occasions, ranging from meetings to children’s birthdays Vietnamese people tend to purchase food from familiar and easily accessible places Fourthly, Technological In 2015, the rate of Internet users in Vietnam reached 52% The emergence of food delivery apps such as Now, Grabfood, Baemin has helped Subway reach more consumers Building websites and fanpages on social platforms to post promotions and introduce new menu items had made it easier for consumers to choose dishes and place orders Advances in science and technology in Vietnam, such as software for store management, assist businesses in optimizing their operations

Fifthly, Legal Franchise laws in Vietnam are considered relatively lenient, not as stringent as in other European countries When operating, stores require a business license and other related documents on food hygiene and safety The terms of transfer contracts, human resource management, and brand protection have been clearly stipulated by Vietnamese law and must be adhered to avoid legal risks

Sixthly, Environmental Vietnam has a tropical climate and rich natural resources, primarily focuses on agricultural development Hence, the input prices of ingredients and food supplied to the F&B market are quite affordable The significance of worksite environmental protection is escalating Businesses must transform themselves into green businesses for sustainable development The use of environmentally friendly materials such as biodegradable plastic bags, paper boxes, is gaining popularity This increases production costs but creates sympathy for consumers and helps enhance the value of products

2/ Challenges that Subway faced when entering the Vietnamese market

The cultural diversity of Vietnam, with its 54 ethnic groups and the assimilation of foreign cultural values through past invasions, has resulted in a vibrant and colorful nation, rich in culinary delights and flavors

a Taste

Bread was introduced to Vietnam by French colonialists in 1859 Over centuries, the bread-making recipe has evolved and become an integral part of Vietnamese life In 2011, bread was included in the Oxford Dictionary, marking it as a staple Vietnamese dish Vietnamese bread, with its rich flavors of sauce, meat, patties, and pate is a familiar taste of the locals However, when Subway entered the Vietnamese market, the brand adhered to a purely Western recipe While this recipe has found success in other Asian countries such as

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Korea, Malaysia it did not cater to the Vietnamese palate Subway’s sandwiches, filled with

bacon, chicken breast, ham, cheese, etc have a bland, slightly salty flavor that failed to impress Vietnamese consumers In addition, Subway's soft bread crust made from oats, cereals contrasts with the familiar crispy crust of Vietnamese bread, leading to a loss of appeal among local consumers

b Vietnamese shopping culture

Vietnam's street food culture is very diverse, ranging from fruits and snacks to elaborate savory dishes Consumers often frequent convenient food stalls, such as sticky rice carts or pho stalls It takes about 2-3 minutes to make fully Vietnamese bread However, buying bread at Subway is a more time-consuming process Customers must park their vehicle, enter the store, and follow a complex 5-step process to choose their sandwich This contradicts the quick buying habits of Vietnamese people

C Character

Vietnamese people value communication during meals, viewing family meals as a time for bonding Therefore, the small spaces of Subway stores are not conducive to meetings or family gatherings Given the average income of Vietnamese people, fast food restaurants are considered a luxury, limiting their frequent usage Besides, fast food primarily attracts a certain age group of customers, with middle-aged or elderly people highly appreciating and preferring traditional, nutrient-rich dishes over Subway’s offering

Behavior

In Vietnam, the workforce constitutes the main component of the population structure Therefore, the purpose of Vietnamese consumers seeking food is satiates their hunger rather than focusing on its aesthetic appeal or health benefits The criteria for food choices are deliciousness - nutrition - affordability The slogan ‘Eat Fresh' seems to be inappropriate for the majority of Vietnamese consumers

e Price

Vietnam is a low-middle-income country As per the PESTLE analysis, the average income of Vietnamese people was 4,2 million Vietnamese dong/person/month in 2020 Bread priced from 10,000 Vietnamese dong is affordable for all Vietnamese consumers and is the top choice for low-income workers However, as Subway entered the Vietnamese market, the pricing of sandwiches from 35,000 Vietnamese dong to 150,000 Vietnamese dong was significantly higher than the general average Furthermore, the cost of a sandwich is 2-3 times that of a regular meal, which is inconsistent with the consumption behavior of Vietnamese people Especially, after the pandemic, the weakened economy along with the closure of numerous restaurants have altered the consumption behavior of Vietnamese people, leading

to more limited spending on high-value goods

entering the Vietnamese market, Subway faced competition not only from major fast-food industry players such as KFC, Lotteria but also from renowned local brands like banh mi Phuong, banh mi Huynh Hoa, banh mi Nhu Lan Additionally, roadside bread carts that are easily accessible on every street corner poses additional challenge The dominance of

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