If you are living in any of Vietnam’s big cities, chances are you have eaten out at one of your city’s hundreds of restaurants with hot pots, a barbecue buffet, and draft beers on the menu.
Increases in household incomes and living standards in urban areas have led to a boom in the barbecue buffet business model, giving rise to a slew of popular chains seeking to cement a hold on the burgeoning market.
Latecomers are eagerly hoping to cash in on the success of the already well-established brands in the sector, many of whom are chalking up annual revenues well into the trillions of dong. (VND1 trillion = US$42.9 million)
A half-a-kilometer strip of Tran Thai Tong Street in Cau Giay District, Hanoi, is home to more than half a dozen hot pot and beer restaurants, according to news website VnExpress. Just four kilometers away, on Tran Thai Tong Street, several more brands have set up popular barbecue and hot point joints.
Though competition is fierce, there are two brands that seem to be rising above the rest: Golden Gate and Redsun.
A two-horse race
Golden Gate Company, known for its flagship brand Ashima, and Redsun were both established in 2008 and have since grown to become massive players in the industry.
Golden Gate’s portfolio has since grown to nearly 20 different brands which raked in combined sales topping VND3,300 billion (US$141.9 million) in 2017, a serious jump from VND500 billion ($21.5 million) in 2013.
Redsun, Golden Gate’s top competitor, owns more than ten brands, including Seoul Garden, ThaiExpress, King BBQ, Sushi Kei, and Hotpot Story which reported over VND360 billion ($15.48 million) in revenue in 2017.
By the end of 2017, Golden Gate had operated 227 restaurants across Vietnam, compared to Redsun’s 140 restaurants.
It is difficult to walk through a busy shopping center in any of the country’s major cities without spotting an eatery owned by one of these two giants – typically Redsun’s flagship brand King BBQ standing side by side with Golden Gate’s Gogi or Sumo BBQ restaurants.
The key to the success of these two companies has not been their staggering revenues, but rather their abnormally high gross profit margins.
By leveraging the buffet concept, each chain has managed to make service its biggest expense, rather than food costs.
In 2017, Golden Gate achieved a nearly 62 percent gross profit margin. In other words, an average of $0.38 out of every $1 spent at these restaurants goes toward operating and food costs.
Comparatively, Golden Gate spends more than 40 percent of its total revenue on operational costs.
According to Golden Gate’s 2018 business, the company is targeting sales of more than VND4,400 billion ($189.2 million), up VND1 trillion ($43 million) from 2017.
The company expects to open 89 more restaurants, including 36 restaurants in the north and 53 in the south, with a primary focus on expanding Kichi-Kichi, Gogi, and Hutong brands.