Although Pho 24 has achieved certain successes, its popularity is not high. Some people think that the reason is because Pho 24's taste is not widely accepted and the price is not attractive to consumers.
Creating a common flavor for all three regions and easy to eat for all customers is the strategy to make Pho 24 a standardized and international dish. But this strategy also makes many diners not particularly impressed with the flavor of Pho 24. People who are familiar with the rich flavor of traditional pho from Nam Dinh or Hanoi still prefer the cramped, hot atmosphere of the old restaurant. Pho 24 is currently only suitable for office workers, families who want to gather on weekends or when free, foreign guests who are curious about a traditional dish served in an industrial style in Vietnam.
In addition, the price of Pho 24 is also considered quite high compared to other pho restaurants. This will make it difficult for Pho 24 to expand to many provinces and cities across the country. In areas where the average income of people is still low, trying it a few times is acceptable, but to make it a familiar and regular dish is not feasible.
Pho 24 has focused on in-depth development first, so the speed of replicating the business model is much slower than the market demand. This creates a risk for the brand owner: being copied by competitors. Currently, there are many pho restaurants with decoration and service styles quite similar to Pho 24 and there have been disputes over trademark copyright, so Pho 24 needs a solution to firmly build the brand and quickly expand as planned.
Meanwhile, Pho 24 determined that massive advertising is not the company's strategy, but the main method is to use word-of-mouth advertising, thanks to the propaganda of the customers themselves. In a market situation where there are many competitors and the popularity of the product is still low, this
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will greatly limit consumer awareness of the quality and style of the Pho 24 brand.
4. Development goals in the integration period
4.1 Becoming the leading fast food in Vietnam and the world's number 1 pho brand From the beginning, the founders of Pho 24 had the ambition and plan to internationalize Vietnamese pho, making Pho 24 an international pho brand. Currently, Pho 24 is continuing to expand its business model. According to the plan, by the end of 2008, Pho 24 will complete a system of 100 stores at home and abroad, of which 30% are self-invested, the remaining 70% are franchised and joint ventures. And in the next five years, there will be 300 franchised stores across all continents, becoming a global pho chain of 37 stores . Currently, the company's policy is to prioritize strong development domestically with the goal of leading the market, and slowly but surely abroad. The fast food market in Vietnam is increasingly competitive with the presence and rapid expansion of big names such as KFC and BBQ. Pho 24 considers these international fast food chains as its main competitors in the market.
dominate the domestic market.
Regarding business methods, Pho 24 will continue to apply the international standard franchise model. In the near future, the company will only conduct direct franchises to individuals who meet the conditions set by the company, each partner will only manage a single store, even in foreign markets (while most foreign brands choose to sell Master Franchises or Area Development Franchises). After a certain development process, Pho 24 will evaluate and select which partners truly want to stick with the brand, have effective business, and good financial capacity, then develop this single partner into a Master Franchise, responsible for developing the franchising network in that country.
37 www.pho24.com.vn
4.2 Cooperate with Vina Capital fund to expand production and business
On September 12, 2006, Vina Capital Group's Investment Fund signed a contract with Pho 24 Company, accepting an investment of 30% of its capital shares (about 3 - 4 million USD) to help Pho 24 expand its business model in 2007 and 2008. Thus, Vina Capital Group will help Pho 24 develop 100 domestic franchise stores; establish a chain of Pho 24 stores in Indonesia, the Philippines, Japan, the US, etc.; build a central kitchen system, a factory to produce pho noodles and pho spices. According to Mr. Kelvin Lee, CEO of Vina Capital: "We often have to decide which economic sector can develop well and bring profits. From there, we choose the best operating company in this sector to invest in. And Pho 24 meets these criteria. It is an activity in the food and beverage sector with great potential for development, a widely known brand, Vietnamese characteristics but an international business model" 38
Cooperating with Vina Capital not only brings Pho 24 great financial support; the experience of experts, managers, operators along with Vina Capital's network of investors around the world is what Pho 24 will take advantage of in the process of exporting its brand.
This can be considered a turning point for the company in the integration period. Pho 24 will not be managed in a family style but will follow a professional direction in management, improve competitiveness and continue to expand the model according to the set plans so that "Pho 24 will be a company of the community, listed on the stock exchange and an international name" 39 .
II. LESSONS LEARNED FOR PHO 24
In the coming time, with a high and stable economic growth, industrial style will be more evident in the life of Vietnamese people, especially
38 http://phienbancu.vtv.vn/vi-vn/VTV1/hoinhapktqt/2006/9/105145.vtv
39 Portraits of Entrepreneurs - DDDN_com_vn – Forum of Vietnamese Entrepreneurs
In urban areas, fast food will be an inevitable and very developed trend. According to the provisions when Vietnam joins the WTO, foreign companies will be allowed to participate in business in the service sector without having to open factories in Vietnam. This will create great advantages for the world's fast food giants to penetrate Vietnam - a market that is considered to have great potential. Currently, KFC, BBQ and Lotteria stores are present in many locations in Hanoi and Ho Chi Minh City. Pho 24 needs to have specific business strategies and directions to increase the competitiveness of Vietnamese fast food, building a solid position before the market is increasingly torn apart by other big competitors.
Director Ly Quy Trung himself stated in an interview with the Vietnam Business newspaper that: Pho 24 applies and follows the business model of McDonald 's , the dominant brand in the world's fast food industry, and Pho 24 wants to be like McDonald 's or KFC, becoming an international brand, competing with these names. Doing business in the same culinary industry, applying the same franchising model and having the same direction, the successes in McDonald's marketing are worth Pho 24 continuing to learn and apply on the path to bringing a Vietnamese dish to the world.
1. Brand development and franchising promotion
1.1 Building a franchise brand with national identity according to international standards
Brand is the most important factor in the franchise business system because the brand is an invaluable asset that the business uses to franchise besides its know-how and products. The brand not only helps the business build prestige with customers but also with potential franchisees. Not only that, it is also something that cannot be copied and helps the business avoid the risk of having its business model copied.
McDonald 's has spent a lot of time building an American brand of international stature. The image of the yellow arches and the funny clown Ronald McDonald has become very familiar, leaving an impression on diners of a modern, high-quality fast food restaurant chain that always strives to best meet the needs of customers. McDonald's brand itself has the ability to ensure success in penetrating any international market. This not only reassures McDonald's franchise partners but also customers about the quality of the company's products and services.
For Pho 24, in order to continue to replicate the successful model, first of all domestically, continuing to consolidate and build the brand is the top priority. Product quality, service style, and dining space must always be maintained and ensured to be consistent across all Pho 24 stores. When franchising to partners, the company must regularly check to ensure that all hygiene and service quality standards are met. Currently, Pho 24's supervision is relatively strict, but as the number of stores increases, a separate team of supervisors and experts is needed to closely monitor each step in the processing and serving process.
In addition, to compete with famous foreign brands currently present in Vietnam, national identity and international standards are two decisive factors for absolute victory that cannot be ignored. Elements imbued with national traditions such as decoration, processing methods, types of drinks, service culture, etc. will help Pho 24 win the hearts of Vietnamese people and tourists who love Vietnamese cuisine. Traditional dishes prepared according to international hygiene standards with a modern business model will elevate Pho 24 to new heights, not only attracting more and more diners but also creating advantages for the company in its strategy of expanding to the world market.
1.2 Promote franchising activities
Franchising is considered the key to McDonald's success with a huge number of stores around the world. This business method has helped McDonald's quickly adapt to every culture and encourage the creativity of franchisees.
Pho 24 has applied this model quite systematically and is gradually expanding both domestically and abroad. However, due to limitations in the legal framework for franchising activities in Vietnam and the professional knowledge of those who want to buy a franchise, Pho 24 needs to have a stronger strategy to promote this activity, in order to quickly expand its business before famous brands in the world take up a large market share in the fast food industry, which is very potential in Vietnam.
First of all, it is necessary to further synchronize the business process. Compared to McDonald's, the requirement that the potatoes must be fried for exactly how many seconds, the beef in the hamburger must weigh exactly how many grams, Pho 24's regulation of taking orders from customers in nine steps, blanching pho noodles in six movements, etc. cannot be considered strict and consistent. And even to maintain these standards at all restaurants is not easy to do, because it also depends on the franchisees. To successfully franchise, standardization and synchronization in the entire system must be carried out seriously and carefully down to the smallest detail. In fact, it can be seen that Trung Nguyen, the first enterprise to apply the franchising method in Vietnam, is a typical mistake in this stage: the company did not pay attention to the regulation on uniformity, leading to a situation where there are big differences between stores in the Trung Nguyen system in almost every aspect: beverage quality, menu, store layout, service style, etc.
The second is to increase the ability to adapt to different cultures. This is also the secret to McDonald's success when penetrating
into foreign markets. Although currently, Pho 24 has only franchised in countries with culinary cultures that have many similarities with Vietnam such as Indonesia, Korea, Singapore, but in the future, when expanding business to many other markets, adaptation and innovation are very necessary. In addition to the main dish that must still be purely Vietnamese and retain its own flavor, Pho 24 should supplement and diversify side dishes, so that it is both suitable for the pho model and meets the needs and tastes of each locality. For example, when Pho 24 opened a store in Indonesia, due to the preference for chicken wings in this country, Pho 24 sold Vietnamese-style fried chicken wings with fish sauce, which was very popular with Indonesian diners. This is something that Pho 24 should widely apply in other countries to enrich its brand. But to do this, it is necessary to have very thoughtful and meticulous market research, along with close connection and consultation with local franchisees.
Figure 3.3: Fried chicken wings with fish sauce served at Pho 24 restaurant in Indonesia
Next is to be flexible in changing strategies according to the situation. When cars became popular, customers could be served food by McDonald's without
need to get off the bus. When other fast food companies simultaneously applied discount promotions to increase market share, McDonald's launched the "1 Dollar Meal" program and revenue increased rapidly. Pho 24 can completely learn and apply flexible and creative adjustments. For example, in determining the selling price. Although the company's initial target customers were high-income customers, foreign tourists in Vietnam, and overseas Vietnamese, after five years of operation, Pho 24's customer base has been expanded to middle-income Vietnamese customers. Therefore, Pho 24 needs to offer prices that are acceptable to more consumers. To become a daily fast food for the majority of Vietnamese people, the price must be closer to the people's ability to pay. Or Pho 24 must also prepare mentally for the fact that franchise stores will compete with each other when the number of stores increases rapidly in an area. It is essential to teach franchisees how to compete not only with other brands but also with other stores in the system.
2. Strengthen marketing activities
Mass advertising is not the business strategy of An Nam Group. Pho 24 mainly relies on public relations activities to promote the company's image such as press relations and PR for the leader's image. However, when the competitive pressure and the risk of being copied are increasing, Pho 24 should expand its image marketing in many other aspects such as on television and the internet, so that consumers can recognize the company's efforts in improving quality and service. Especially when expanding abroad, just introducing in culinary magazines is not enough, Pho 24 needs a stronger and richer marketing program. Community activities also need more attention. The company should have a budget for promoting its own image, combined with the franchisee to choose the method.