VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY

UNIVERSITY OF ECONOMICS AND LAW

FACULTY OF BUSINESS ADMINISTRATION

ASSIGNMENT

SERVICE MARKETING IN FAST FOOD INDUSTRY

Case Study: McDonald’s Vietnam

Lecture: PhD. Phung Thanh Binh

No. Full Name Student ID Note

1 Mai Công Hậu K194101457

2 Nguyễn Văn Quyền K194101411

3 Phan Thị Quyên K194101410

4 Phạm Minh Tuấn K194101426

HO CHI MINH CITY - 2022

 Table of Contents

Chapter 1. Overview of the Fast food Service Industry 2

1.1. Introduction to the fast food service industry 2
1.1.1. Definition 2
1.1.2. History of the fast food service industry 2
1.1.3. Fast food service industry in Vietnam 3
1.2. Market overview 3
1.2.1. Market size 3
1.2.2. Market share 4
1.3. Customer behavior 5
1.3.1. Brand awareness 5
1.3.2. Customer behavior 5
1.3.3. Desired Promotions 6
1.4. Market forecast 6
1.4.1. E-Business 6
1.4.2. International cuisine & spicy seasoning 6
1.4.3. Meal kit becomes popular 7
1.4.4. Feeling comfortable 7
1.4.5. Healthy foods 7
1.4.6. Sustainable food and packaging 8
1.4.7. Focus on dinner 8
1.5. Opportunities and challenges 8
1.5.1. Opportunities 8
1.5.2. Challenges 9
Chapter 2. Marketing in Fast Food Service 11
2.1. Listening to Customers through Research 11
2.1.1. What do customers think about “Fast Food” and Fast Food? 11
2.1.2. Research in Fast Food Service 11
2.1.3. Service Quality Gaps Model 12
2.2. Building Customer Relationships 14
2.2.1. Promotional programmes 14
2.2.2. Customer Card 14
2.2.3. Voucher 14
2.3. Marketing mix 7Ps in Fast Food Service Industry 15
2.3.1. Product 15
2.3.2. Price 17
2.3.3. Process 18
2.3.4. People 19
2.3.5. Place 21
2.3.6. Physical Evidence 22
2.3.7. Promotion 24
2.4. Service Recovery 25
Chapter 3. Case Study: McDonald’s Vietnam 29
3.1. About McDonald’s 29
3.1.1. Introduce 29
3.1.2. Establishment and Development History 29
3.1.3. Vision, Mission, Core Values 30
3.1.4. Business Activities 31
3.1.5. Competitors 32
3.2. SWOT of McDonald’s: 34
3.2.1. Strengths 34
3.2.2. Weaknesses 35
3.2.3. Threats 36
3.2.4. Opportunities 37
3.3. McDonald’s Target Segment: 37
3.4. Service Quality Analysis: 38
3.4.1. Service Quality Dimensions 38
3.4.2. Gaps of McDonald's Vietnam Quality Analysis 41
3.4.2.1. The Customer Gap 41
3.4.2.2. The Provider Gap 42
3.5. Marketing Mix 7Ps of McDonald’s 48
3.5.1. Product 48
3.5.2. Price 50
3.5.3. Process 52
3.5.4. People 54
3.5.5. Place 62
3.5.6. Physical Evidence 67
3.5.7. Promotion 70
3.6. Suggestion 73

3.6.1. Product 73

3.6.2. Price 74

3.6.3. Process 75

3.6.4. People 76

3.6.5. Place 77

3.6.6. Physical Evidence 77

3.6.7. Promotion 77
 1

Introduction

In recent years, fast food has gradually become familiar and popular with young
people in particular as well as Vietnamese people in general. A series of famous fast
food brands of the world such as KFC, Lotteria, Jollibee, Pizza Hut,.. have all penetrated
the Vietnamese market and achieved many successes in business. McDonald's, a leading
brand in the fast-food business in the world for many years now, has rapidly expanded
into the Vietnamese market, affirming and consolidating its number one position in the
fast-food chain worldwide.

Penetrating the Vietnamese market in 2014, McDonald's has achieved certain

successes, which are caused by an abundance of investment capital as well as an
appropriate marketing strategy, and a skillful combination of internationalization
standards and localization standards. Studying the marketing strategy of McDonald's in
Vietnam will bring necessary lessons about the combination of marketing tactics to
create a branding strategy for the fiercely competitive fast-food market in Vietnam.

In this study, we aim to offer general information about the fast food service
industry, deeply discuss Marketing Mix 7Ps for this service and then analyze a typical
case study: McDonald's to enlighten the brand's marketing strategies to meet its
customers' needs.
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Chapter 1. Overview of the Fast food Service Industry

1.1. Introduction to the fast food service industry

1.1.1. Definition

The fast food industry includes restaurants that cater to people who are traveling
and want to buy food that is served quickly. Most restaurants in the industry have drive-
through service that allows people to get their food without getting out of their cars, and
there is also usually the option to go inside. Many restaurants in the fast food industry
are part of large chains. Overall, the industry has been successful financially, but it is
often accused of helping perpetuate obesity.

1.1.2. History of the fast food service industry

The first place that had ready-cooked food for sale was Ancient Rome. The urban
population that lived in multi-story apartment blocks called insulae didn’t have kitchens
in them and had to buy their food from food vendors. They bought bread soaked with
wine and ate stews and cooked vegetables in so-called "popinae" which were simple
restaurants.

British favorite “fish and chips” appeared in the 19th century with the
development of trawler fishing and the first “fish and chips” shop opened in 1860 at
Tommyfield Market in Oldham. Max Sielaff in Berlin invented “automats”, vending
machine restaurants, in 1896. In 1902, Joseph Horn and James Hardart opened an
automat in New York City which marked the beginning of fast food in the United States.

The first hamburger chain in the States was White Castle opened in 1921. It was
opened by Billy Ingram and Walter Anderson who started with the first White Castle
restaurant in Wichita in 1916. They had a small menu which had cheap hamburgers and
they sold them in large numbers. The first franchises appeared also in 1921 (A&W Root
Beer franchised their syrup) and the first restaurant franchise appeared in the 1930s by
Howard Johnson.

When automobiles became more popular, drive-in restaurants started appearing

around the United States. Customers in cars were served by carhops that in the 1940s
started wearing roller skates. The first McDonald’s with fast food was opened by the
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McDonald brothers in 1948 (They had a restaurant before but it was not of a “fast-food-
type”). Soon after them, others started opening their fast food chains: Burger King and
Taco Bell opened theirs in the 1950s while Wendy's started in 1969. Carl's Jr., KFC, and
Jack in the Box existed before in other forms, just like McDonald’s, but as the fast food
started becoming popular they reoriented.

1.1.3. Fast food service industry in Vietnam

In Vietnam, the phrase "fast food" appeared after 1975. The first Kentucky Fried
Chicken (KFC) fast food store at the Saigon Super Bowl Trade Center in late 1997,
marked the entry of fast food into the culinary culture of Vietnam. A year later, the
Korean fast-food brand Lotteria first appeared in Vietnam at Rex Hotel in 1998. Up to
now, a series of famous fast food brands such as Subway, Popeyes fried chicken,
McDonald's, Carl's Jr.Hamburger fried chicken, fried chicken. Papa's Chicken, Texas
Chicken, BBQ Chicken ... appeared, creating a competitive playground in the
Vietnamese culinary market.

1.2. Market overview

1.2.1. Market size

The global fast food industry is worth up to 651 billion USD, and has gained
success from the US, Europe to Asia. However, in the Vietnamese market, which seems
to be very potential, this industry has not flourished as expected.

According to Statista, McDonald's was the most valuable fast food brand in the
world in 2018 with more than 126 billion USD, far ahead of Starbucks with 44.5 billion
USD. Followed by Subway ($18.8 billion), KFC ($15.1 billion), Domino's Pizza ($7.4
billion), Pizza Hut ($7.3 billion) and Burger King ($6.6 billion).

Of these brands, only KFC in the fried chicken segment and Pizza Hut in the
pizza segment are successful in Vietnam. In contrast, McDonald's or Burger King have
long struggled in this fierce competition.

Despite being a global leader in the field, so far in Vietnam, McDonald's has
opened only 20 stores and Burger King 13 stores, far behind its initial ambitions.
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Meanwhile, the food service industry in Vietnam has expanded enormously

compared to 10 years ago. Currently, there are about 540,000 stores, about 430,000 of
which are street vendors, 80,000 are eat-in restaurants, but only about 7,000 are fast food
restaurants. This shows how modest the fast food industry is.

Moreover, it is calculated that Vietnamese people spend a large proportion of

their earnings on food every day, 78% of which goes directly to street food vendors and
only 1% flows into fast food restaurants.

1.2.2. Market share

KFC is the most frequented fast-food chain in Vietnam. According to a survey

conducted by Q&ME in Ho Chi Minh City in 2020, 45% of total respondents said that
they regularly visit KFC restaurants. Next is Lotteria with 17% of the 600 respondents,
followed by the US chain Pizza Hut and McDonald's, with 6% respectively. The top
reasons for customers to eat at KFC are good food (66%), convenient location (63%),
family-friendly and young (60%), and large menu (56%).

In terms of stores, Lotteria leads with 151, followed by Jollibee with 115,
according to a study by Statista Research released in late 2020.
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In terms of revenue, KFC and Lotteria are two names with widespread popularity
and top fast-food chains with sales of 1,498 billion and 1,683 billion VND in 2019. This
position is established partly thanks to early market entry. KFC is highly appreciated for
its delicious, mouth-watering dishes while Lotteria is chosen by consumers for its
convenient location and suitable for the whole family to enjoy.

1.3. Customer behavior

1.3.1. Brand awareness

When referring to fast food, consumers often refer to brands that have been
"introduced" into the market for a long time such as KFC, Lotteria, and Pizza Hut.

Among the fast-food brands in Vietnam, the KFC fried chicken brand is the most
preferred by consumers, and the frequency of use & loyalty rate is quite high compared
to the other brands. Next are Lotteria, Pizza Hut, and Jollibee.

1.3.2. Customer behavior

- Where to eat: In addition to eating at fast-food restaurants when eating out,

consumers also choose other types of shops such as pubs; luxury restaurants; roadside
eateries, and food carts with affordable prices.

- When to eat: Consumers often choose and enjoy eating out on weekends, this
is the time when consumers have more time for shopping, resting and family reunions;
According to observations on the actual market, fast food restaurants often have
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locations in commercial, shopping, and supermarket centers. Therefore, the frequency

on weekends is often denser than on weekdays.

- Who to eat with: Usually, who to go with is divided quite clearly by age group:

+ Children in 13-22 always go with a group of friends

+ Adults in 23 - 30 not only go with friends but also go with lovers

+ Groups of parents often go with their families.

+ Very few consumers eat alone at fast-food restaurants

This is also one of the factors that food chains can pay attention to in arranging
space according to different groups.

1.3.3. Desired Promotions

Top promotions that consumers expect to receive:

+ Direct discount on food

+ Bonus 1 other dish (Free)

+ Increase the amount of food

+ Get coupons for the next purchase.

1.4. Market forecast

1.4.1. E-Business

The emergence of the Covid-19 pandemic forced the fast-food market to change
to adapt to the times. Instead of dining on the spot as before, customers have increased
the tendency to buy takeaway or order for delivery. This is the result of social distancing
which has created new buying habits.

1.4.2. International cuisine & spicy seasoning

Having to stay at home for long periods of time and eat familiar foods makes
many people more inclined to look for menus that offer new experiences or make them
feel like they are out and about with the world.
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Therefore, brands can capture this psychology of consumers to experiment with

different food flavorings in fast food recipes. They can be dishes that use spicy spices
or with foreign culinary styles that are popular like Korean, Chinese, Southeast Asian,
Caribbean, Mexican, etc.

1.4.3. Meal kit becomes popular

According to a publication from Mintel, up to 80% of consumers feel that dining

time with family is their happiest time during the pandemic. It is also one of the reasons
leading to the appearance of meal kits containing ingredients or pre-cooked dishes that
are enough for many people.

The new form and family atmosphere experience make meal kits increasingly
popular with users. According to Mintel, up to 62% of respondents expressed their desire
for restaurants to continue selling meal kits even after the pandemic ends. Therefore,
fast food brands can enhance the variety of flavors in meal kits through different
flavorings to help customers have more choices.

1.4.4. Feeling comfortable

Besides the decorations and taste, comfort is also considered an important factor
for customers to choose fast food. Especially in the time of isolation and post-pandemic,
few mind users will be affected.

As a result, fast food restaurants may launch promotions or rewards programs to

give customers a feeling of being cared for as well as create new customer journeys
when making a purchase. This will also help the brand leave a positive impression on
customers and retain them.

1.4.5. Healthy foods

Since the appearance of the Covid-19 epidemic, consumers have increasingly

prioritized choosing foods that are supportive and healthy. Not only the main ingredients
but also the auxiliary ingredients such as spices, food flavors, etc. are also paid special
attention by many people.
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Vegetables should be considered used more in the composition of fast food

dishes. This can help increase consumer sympathy through the appearance, taste, and
health-oriented goals of the dish.

1.4.6. Sustainable food and packaging

Currently, many brands are particularly interested in protecting the environment

by limiting the use of single-use plastic packaging and replacing it with more
biodegradable and "green" packaging. Similarly, the use of natural organic ingredients
in menus is also increasingly popular.

Many fast-food brands have started to create sustainable dishes from the use of
food flavors of natural origin, both helping to create a variety of flavors and ensuring
the health of users and consumers. Environmental friendliness.

1.4.7. Focus on dinner

The pandemic has forced many people to stay at home, so they have more time
to spend with their families, especially at dinner. Therefore, fast food brands can rely on
this habit to invest in menus and human resources in the evening to be able to meet the
needs of customers.

1.5. Opportunities and challenges

1.5.1. Opportunities

- The market still has a lot of potential

Vietnam is a fairly densely populated country and the young population structure
plays a dominant role. Young people are easily able to change their tastes and enjoy
when approaching international culinary trends. That is the strength of the fast-food
sector.

- The growth of food delivery services

Vietnam's fast food market has shown signs of stronger growth in the near future
thanks to the rise of food ordering and delivery apps. A Q&Me survey noted that, in
2020, “Now” is the most popular app for ordering fast food online, with 24% of
respondents choosing it, followed by Grab Food (20%). 87% of respondents ordered
 9

online from fast-food chains, with KFC being the most popular, with 52%, followed by
Lotteria (30%) and Pizza Hut (21%). In general, the pandemic has also not had a
significant impact on online orders from fast-food chains.

1.5.2. Challenges

- Diversity and richness in Vietnamese cuisine

According to Nielsen, Vietnam is the country with the highest number of fast-
food/street food in Asia with over 80 dishes, of course, this is still an understated
number. There was a time when, because the number of fast foods in Vietnam was too
much and the way of processing was too complicated, people wondered whether to
include bún, phở, miến, mì... in the fast food list or not. But according to the criteria of
"fast to the hands of diners", the units, statistics, and the press gradually default to
putting those foods on the fast-food list.

In addition, Vietnam has fish sauce made from sea fish, different types of
seasoning and a huge system of spices and herbs that can meet the needs of both
qualities, smell and taste of the dish.

- "Fast" food becomes "slow" in Vietnam

The service provided by street restaurants can be 1.5 to 2 times faster than that in
fast food restaurants.

Although McDonald's possesses technology that can speed up service, it is

nothing compared to waiters and waitresses in Vietnamese “flash” food restaurants. The
service speed of fast-food restaurants is measured in minutes, while that of street eateries
in Vietnam can be measured in seconds.

In addition, it can be observed that the majority of customers of fast-food

restaurants in Vietnam are young people who often come to celebrate birthdays,
holidays, anniversaries, etc. This has profoundly influenced and changed the concept of
fast food.

- Vietnamese eating habits

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The habit of having conversations while eating might also be a contributor to the
slow growth of fast food. The vast majority of Westerners avoid talking while eating, so
their fast-food restaurants serve separate portions which are completely independent of
each other. In contrast, Vietnamese people prefer a more intimate atmosphere to chat
throughout the meal. Therefore, most fast-food restaurants have failed to fulfill this
demand.

- Unreasonable price

The inadequacy in prices is also a valid reason why Vietnamese people do not
like fast-food restaurants. A piece of fried chicken or hamburger from KFC or
McDonald's is about 40,000 VND or more, much higher than street food such as
vermicelli, pho, or banh mi.

- Fast food is considered to be unhealthy

According to a study by Columbia University and California, Berkeley (USA),

eating fast food regularly can lead to the risk of obesity in children by up to 86% and
will increase the risk of being overweight, and lacking vitamins and nutrients. fibrous,
unbalanced nutrients. Because of that, many people do not like fast food, especially
mothers with small children.
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Chapter 2. Marketing in Fast Food Service

2.1. Listening to Customers through Research

Conducting research on Fast Food is essential in the Vietnamese market because

the local culture here has many differences compared to the West where fast food is very
popular.

2.1.1. What do customers think about “Fast Food” and Fast Food?

To understand customers, many studies have found the difference in the concept
of "fast food" and fast food, research has shown that:

+ Fast food can be understood as dishes that are processed without spending
much time, serving customers quickly, it can be pho, vermicelli, bread, ... and can also
be ready-made dishes. like fried chicken, hamburgers, …

+ “Fast Food”, as the Vietnamese call it, is fast-cooked food originating from
abroad (specifically Western) such as KFC, Lotteria, McDonald's, etc., which are sold
in chain stores or the like. sold in trolleys.

→ Although the translation of the word fast food is fast food, obviously there is
not much difference, but due to cultural differences, and the emergence of Western
words, they have become popular and have their own meanings in thinking. Vietnamese
thinking.

2.1.2. Research in Fast Food Service

In the Fast Food industry in Vietnam, there have been many studies directed at
the behavior, habits and needs of Vietnamese consumers, thereby realizing the
difference in consumption culture and culinary culture. These studies show that the
consumption of fast food at these chain stores is still low, the customers are mainly
teenagers and students, but this group also uses it less often because of the price factor.
and consider these chains more like a restaurant than a fast food - take-out. The choice
of brand depends on the geographical location and the level of deliciousness and taste
of customers. Since then, studies have also shown the limitations that prevent the Fast
Food industry from achieving stable development, and showing signs of slowing down
in the Vietnamese market.
 12

However, the research on services in this industry is still limited, the explanation
for this can come from the double standard in Vietnamese thinking that: being served at
foreign fast food stores is always superior. than fast food in the street thanks to a better
service space, professional staff, and a higher cost. Therefore, the study of service
factors is considered unnecessary. Most of the service standards of these brands are
recognized, and are applied in the vast majority of other countries.

Most of the studies are aimed at analyzing the factors affecting quality, thereby
optimizing the factors that are considered important in the SERVQUAL model in order
to satisfy the satisfaction of Vietnamese customers. Existing Fast Food chains such as
KFC, Lotteria, Jollibee, McDonald's, ...

2.1.3. Service Quality Gaps Model

- As the foundation in analyzing and evaluating service quality, the SERVQUAL

model is widely applied in research when analyzing service quality. Some brands have
been researched such as Lotteria, KFC, ... most of these studies come from independent
studies of researchers (such as thesis or master's theses) but not from research. of the
brands themselves.

- In which, to evaluate the scales in the SERVQUAL model at Fast Food stores,
it is usually observed under the following questions on the likert scale:

(1) Reliability:

- Store X serves the right dish that you have chosen

- They serve you on time as promised

- They quickly correct mistakes

- They are reliable and consistent

- They bill the customer correctly

(2) Responsiveness:

- Store X serves you quickly and immediately

- Store X always have staff on the move, support each other, quickly and ensure
service quality even when crowded
 13

- They make every effort to handle your special needs

(3) Assurance:

- Store X staff can completely answer your questions

- They make you feel comfortable and confident when dealing with them.

- You feel safe when dining at X

- The staff of store X can and will gladly give you information about the menu,
its ingredients and how to prepare it.

- The employees of store X seem well trained, proficient and experienced

- Store X supports employees to do a good job

(4) Empathy:

- Store X employees are responsive to your needs

- Store X employees empathize and reassure you if something is wrong

- They make you feel special

- They can anticipate your individual wants and needs

- They are very interested in the interests of customers

(5) Tangible:

- The exterior of store X looks attractive and attractive

- Store X has an attractive and attractive dining area

- Store X employees dress cleanly and neatly

- Decorate the store in accordance with the values and image of X

- Store X's menu is easy to read

- The menu looks attractive and eye-catching

- The dining area of Store X is comfortable and easy to move.

- Comfortable dining area

- Clean dining area

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- Clean toilets

2.2. Building Customer Relationships

2.2.1. Promotional programmes

To attract and increase the use of fast food services at their chain stores, most fast
food brands use promotions and incentives for customers on special occasions (such as
Tet).

Customers on these occasions can get free Pepsi or Coca-Cola (depending on the
brand), or get preferential combos with lucky gifts when joining the game,...

2.2.2. Customer Card

In order to maintain their loyal customers, fast food stores, as well as other
restaurants and coffee services, also applied for these cards for a very long time.

Incentives for members can be discounts when the brand launches new products,
gifts on birthdays, more concessionaires on other special occasions such as Holidays or
Brand Birthdays,...

Each time they use the service, customers will accumulate reward points, which
will determine which preferential group the customer belongs to, new customers, loyal
customers, diamond customers, etc. This is one of the strategies to build common
customer relationships in this type of service.

2.2.3. Voucher

Discounts or other bonus offers to attract and entice customers to return to your
store on another occasion. Vouchers often offer a discount of 20 - 50% of the order
value. However, these vouchers often come with an expiration date to encourage
customers to visit stores as soon as possible.

Customers can receive this voucher on special occasions or on store events. In

addition, clubs/organizations/events also get these vouchers from brand sponsorship and
give them to their customers. This target group usually comes from universities and
colleges because students are often a young customer group suitable for the
segmentation of fast-food chains.
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2.3. Marketing mix 7Ps in Fast Food Service Industry

2.3.1. Product

The main reason why people would love to visit fast-food restaurants would be
the food. We need to ensure there is variety and as well that quality and consistency is
maintained throughout. If the food does not maintain the quality and consistency, we
tend to lose the USP and customers in no time would move to competitors. For
maintaining quality, we need to identify reliable suppliers who supply us with the
ingredients of acceptable standards. There needs to be a quality check done consistently.
We need to maintain a recipe management module to ensure consistency in taste.
Product lines are also one of the important decisions of brands to properly and
appropriately meet the needs of their target customers.

For each fast food brand, it is necessary to identify for themselves a main dish
that creates its own brand and a difference that helps distinguish that brand from
competitors. For example, KFC is world-famous for its traditional fried chicken Original
Recipe, created by the same secret blend of 11 different herbs and spices perfected more
than half a century ago by Colonel Harland Sanders. previous century. Pizza Hut brings
delicious pizzas from fresh, exotic ingredients with more than 14 different types of
toppings for diners to choose from such as chicken pizza with pepper sauce, shrimp
pizza with garlic butter sauce, high-mix pizza level, and tuna pizza. Burger King chooses
to serve the market a breakthrough Hamburger recipe and 100% beef ingredients
imported from Australia. Texas Chicken uses 100% fresh chicken.
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Branding in the fast food industry is also extremely important to help customers
remember the brand and create brand loyalty. Along with that, packaging needs to be
invested to increase the value of the dish. Accompanying services such as delivery also
need to be invested, optimized to give customers the most pleasant shopping experience
and keep the deliciousness of the food during transportation.
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2.3.2. Price

Price also plays an important role in the fast food industry. It needs to be very
competitive. To maintain profitability and viability it's important that we maintain the
food cost and labor cost at bay without affecting the quality. The ideal way of doing this
would be:

(i) Menu Engineering- ensure one ingredient is used in multiple dishes to reduce
wastage and maximum utilization.

(ii) Forecasting to reduce overstocking and wastage.

(iii) identifying the ideal portion size

(iv) avail credit facility from the suppliers.

In the fast food industry, there are some popular pricing strategies such as:

- Discounting: Service providers offer discounts to communicate to price-

sensitive buyers that they are receiving value. They often offer discounts on special
occasions and combo discounts.

- Odd Pricing: Odd pricing is the practice of pricing services just below the exact
dollar amount to make buyers perceive that they are getting a lower price. People often
use odd pricing to set prices according to combos such as combo 99k, 109k,... to create
a feeling of cheaper and better price when ordering each item individually.

For example:
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2.3.3. Process

The restaurant needs to have laid down service processes and standards which
are to be followed at all times so that there is no ambiguity and chances of forgetting a
thing or two diminishes drastically.

Service Blueprint of fast food industry:

 19

Fast food ordering

system:

For the fast-food industry, most

of the service, management, and
operation processes are
standardized and the same all
over the world. For direct
restaurant purchases, customers
have low involvement in the
service process. However, today,
the advancement of technology
has helped the fast food industry
to have more online delivery
services, ordering kiosks,...
therefore, the participation of customers in the fast-food service process industry is
increasing.

2.3.4. People

The employees form the main part of any business. HR should ensure they recruit
continuously and employees are trained to maintain the service standards. The
employees need to be kept motivated and trained to ensure they can give a warm
hospitable feeling to the customer without being too pushy.
 20

On the customer side, through communication efforts and other approaches,

businesses strive to educate customers so that the service process goes smoothly,
creating the highest satisfaction for customers. products without being affected by
complicated ordering or purchasing processes,...

For example: Employees of fast food restaurants such as McDonald's, KFC,

Lotteria,... are required to be professional, neat, friendly, enthusiastic and polite to
customers.
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2.3.5. Place

The restaurant needs to be located in a place that has maximum footfalls and has
adequate sitting and parking places, big cities, commercial centers that are convenient
for customers to enjoy or buy take-away. The ambiance needs to justify the theme of the
restaurant. It should relate to your target customers.

In addition, fast food restaurants need:

+ System expansion

+ Strictly manage of each distribution location

+ Improve the staff

+ Improved queue management service

Franchising and corporately owned locations are the most commonly used form
of the fast food industry to penetrate and expand the market. This is a good way to get a
lot of profit and easy to enter new markets, but there are many other risks such as
financial pressure and market volatility. Businesses need to consider when using this
method to penetrate different markets.

For example, some fast food stores have extremely favorable locations such as:
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2.3.6. Physical Evidence

- Fast food restaurants always invest in perfecting the servicescape to create the
best physical evidence and make customers most satisfied. The internal and external
environmental conditions, design, equipment, signage, staff uniforms, fanpage design,
 23

website, etc. will create a better customer experience and increase brand preference.
brand loyalty. Along with that, other intangible factors such as reports, business cards,
statements, assurance, ... also need to be focused.

Examples of some fast food restaurant servicescapes:

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2.3.7. Promotion

Promotion plays a critical role in the success of the Fast food industry. There
should be regular promotions and campaigns run to entice the customers to visit more.
The campaigns can be through the digital route like social media, websites, influencers,
 25

etc. You could also sponsor any local event. There could be email marketing, SMS
marketing, and also pamphlet distribution. Depending upon the budget, you can also go
for hoardings at prominent places.

Activities of brands on social media:

It can be seen that KFC is the brand with the most activities and also the most
effective in creating interactions. In general, the activities of fast food brands are very
diverse from Minigames on Facebook fanpage, Promotions, Seasonal events, New
product launch, Mini contests, Photo contests,... in which Minigames are the form.
Popular content that almost every brand applies.

+ KFC: Mini Games are held regularly with many attractive gifts, which is the
type of content that attracts the most attention and participation of fans on the fanpage.
In addition, KFC is also the most active brand in introducing new dishes, with
promotions and mini campaigns that continuously promote each time a new dish is
launched. In addition, in the fourth quarter of 2015, KFC was also mentioned a lot on
social media by organizing 2 KFC So Good music nights (receiving tickets when buying
Combo Sogood meals).

+ Lotteria: Lotteria's most discussed activity during this time Minigames on

Facebook fanpage. In addition, Lotteria also organizes Promotions and Photo Contests
"Spicy challenge, receive gifts immediately", but did not receive many responses.

+ McDonald's: Although there are quite diverse activities such as Promotions,

Minigames on fanpage, Halloween Events, Sponsoring Saigon Heat, etc., McDonald's
does not really create much interaction on social media.

2.4. Service Recovery

Common service failures in the fast food industry include:

- Service failure at restaurant: Mostly related to the service attitude of wait staff,
cashier, food at restaurant, store location, parking lot, set up inside restaurant, no store
space…
 26

- Failure of online shopping and delivery services: including the attitude of the
delivery staff, the quality of the food on arrival, the wrong delivery of the food, the
delivery time, the quality of the website and the ordering apps, ..

- Customer support service failure: The attitude of the call center support staff,
the employee's solution is not satisfied with the customer, the support process is
complicated,..

Service recovery strategies:

- Fixing the customer:

+ Respond Quickly: Empower employees to handle issues directly, optimize

customer complaint resolution through 24/7 customer support system

+ Provide Appropriate Communication: Support hotline to receive feedback at

the store, email to support complaint resolution.

+ Treat Customers Fairly: Deal with customer complaints and complaints fairly
for all subjects.

+ Cultivate Relationships with Customers: Regularly Email customers, provide

customer-specific discount codes, loyalty programs, ..

- Fixing the problems:

+ Encourage and Track Complaint: regularly organize periodic surveys, monitor

forums and social networks to track complaints, view customer reviews on food delivery
service sites, phone apps, etc. ..

+ Learn from Recovery Experiences: Past Recovery Experiences need to be

archived and reviewed, for Recovery Experiences to be successful, continued to be
maintained and used, conversely, should be reviewed for improvement.

+ Learn from Lost Customers: Find out the reasons why customers don't shop in-
store anymore but switch to competitors, thereby fixing the service process.

Service Guarantees
 27

In the fast food industry, most service guarantees are related to food quality and
delivery speed and delivery time that other industries do not have. Some Service
Guarantees in Fast-food Industry include:

- Guarantee of food: try new dishes, if customers don't like it, they can't pay, food
that is not the same as advertised will be refunded, bad food will be free,...

- Guarantee of service attitude: If you receive a bad service attitude from the staff,
call the hotline and you will get your current meal for free.

- Guarantee of quality and delivery time:

 28

- Guaranteed service time

 29

Chapter 3. Case Study: McDonald’s Vietnam

3.1. About McDonald’s

3.1.1. Introduce

McDonald's fast food restaurant is one of the largest franchises in the United
States as well as abroad. McDonald's was founded in 1940 as a restaurant operated by
Richard and Maurice McDonald, in San Bernardino, California, United States. They
rechristened their business as a hamburger stand, and later turned the company into a
franchise, with the Golden Arches logo being introduced in 1953 at a location in
Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise
agent and proceeded to purchase the chain from the McDonald brothers. Their top menu
items include: hamburgers, cheeseburgers, McNuggets, and French fries.

The American fast-food brand entered Vietnam in early February 2014 with its
first store in Ho Chi Minh City. After more than 8 years of operation, the system has 26
restaurants in Vietnam, mainly concentrated in Ho Chi Minh City. McDonald's goal
when entering Vietnam is to set a new standard for the fast food restaurant industry here,
while providing customers with unique experiences only at McDonald's restaurant
chains.

3.1.2. Establishment and Development History

Year Event

1937 The McDonald brothers start their hot dog stand, getting into the food
service business as a team.

1940 - McDonald’s Is Founded

1948 The McDonald brother turned their restaurant into a hamburger and
milkshake restaurant

1953 McDonald's opened its first franchise restaurant in Phoenix.

 30

1961 Kroc bought McDonald’s restaurants

1962/63 McDonald's launches its two most recognizable logos: the golden
arches and Ronald McDonald

1965 McDonald's launches its public stock.

1974 The first Ronald McDonald House opens.

1993 The company opens its first McCafe

1996 McDonald's has entered an era of rapid growth

2000 McDonald's has opened more than 11,000 restaurants outside of the
U.S.

2014 Opens its first restaurant in Vietnam.

2015 McDonald’s USA launched All Day Breakfast.

2020 McDonald’s opens its first net zero-designed restaurant at Walt Disney
World Resort, which creates enough renewable energy on-site to cover
100% of its energy needs on a net annual basis.

3.1.3. Vision, Mission, Core Values

a. Vision

McDonald's corporate vision is “to move with velocity to drive profitable growth
and become an even better McDonald's serving more customers delicious food each day
around the world.”

McDonald's Ambition is serving Good Food with Good People and being a Good
Neighborhood:
 31

- Good food: McDonald’s is proud to serve its customers the best quality food.
Our suppliers are strictly selected and meet stringent standards to ensure all the
ingredients have the highest quality.

- Good People: McDonald’s offers excellent training and occupational

opportunities to help employees grow. Aside from practical training from daily tasks,
employees can participate in in-depth training courses in other countries in the network,
through which they improve themselves to best serve customers.

- Good Neighbor: McDonald’s takes special care of the community, particularly

children and families. We are dedicated to good deeds that bring happiness and joy to
all community members.

b. Mission

McDonald's corporate mission is “ to be our customers' favorite place and way

to eat and drink.

c. Core values

McDonald's core values comprise “we place the customer experience at the core
of all we do, we are committed to our people, we believe in the McDonald's system, we
operate our business ethically, we give back to our communities, we grow our business
profitably, and we strive continually to improve.”

3.1.4. Business Activities

a. In the world:

McDonald's is the world's largest restaurant chain by revenue, serving over 69

million customers daily in over 100 countries across 37,855 outlets as of 2018. Although
McDonald's is best known for its hamburgers, cheeseburgers and french fries, they
feature chicken products, breakfast items, soft drinks, milkshakes, wraps, and desserts.
The company also added salads, fish, smoothies, and fruit in response to changing
consumer tastes and a negative backlash because of the unhealthiness of their food.

The McDonald's Corporation revenues come from the rent, royalties, and fees
paid by the franchisees, as well as sales in company-operated restaurants. According to
 32

two reports published in 2018, McDonald's is the world's second-largest private

employer with 1.7 million employees (behind Walmart with 2.3 million employees). As
of 2020, McDonald's has the ninth-highest global brand valuation.

b. In Viet Nam

Penetrating into Vietnam from 2014, by the end of 2017, the accumulated losses
of this fast food restaurant chain amounted to VND 490 billion, 2.5 times the charter
capital and leading in losses in the group of fast food restaurant chains. Currently, facing
the Covid-19 epidemic, it also greatly affects the company's revenue. However,
McDonald's continues to make efforts and has many positive improvements. Mcdonald's
Vietnam continues to be named in the list of Top 10 groups of Consumer Products and
Services in 2021. This is the 4th time that McDonald's Vietnam has achieved this
reward. In addition, McDonald's also received the 2021 Golden Dragon Award for
outstanding businesses in the food service industry.

3.1.5. Competitors

Jollibee KFC Lotteria Burger King

Time to 2005 1997 1998 2012

entry

Number of 30 135 155 20

stores

Franchise $270,000 $1,300,000 $500,000 300,000$

and
investment
costs

Average VND 45,000 62,000VND 61,000VND VND 77,000

price per
combo

Outstandin The prices are The key product is Selling key Beef is not
g features very KFC fried products that cooked by
competitive chicken, using a are completely frying in a pan,
 33

with food that "localized" different from but by grilling

is family- marketing competitors over an open
oriented, strategy, suitable and fire. Paying
knowledgeable for Vietnamese diversifying a attention to
and maximizes tastes such as lot of products, quality and
local tastes. chicken rice, choosing customer's
mixed cabbage, Hamburger as feelings when
soft bread, shrimp a specialty to enjoying.
burger... attract
customers

Strength - The menu is - Reputation: KFC - Big brands, - Among the

more diverse is the largest and high-quality top 10 most
than most famous fried products and recognized fast
competitors chicken restaurant suitable for food restaurant
- Convenient chain in the world many brands in the
location and - Distribution customer world.
open 24h system: wide groups. - Owned by a
- Much across districts in- Create financially
cheaper than Ho Chi Minh City prestige with strong
competitors and a strong customers company.
delivery team when - Local menu
- Jollibee
always - Customer service participating in selections to
is quite unique, charity suit the tastes
maintains its activities
approach to polite, and cultural
customers professional, self- - Large personalities of
according to service creates distribution different
the family equality and system with regions.
model fairness young and
- Strong financial dynamic staff
resources - Modern
- The location of equipment in
the store is each store.
beautiful, right in - All stores are
front of the big built and
and airy roads. served
according to
the principle
of "HCQST"
 34

Weakness - Poor - Human resources - Haven't built - Lack of

investment in are not stable, a strong global
Marketing and change often communicatio diversity.
communication - The brand is n strategy to - There has
easy to cause promote been a period
confusion due to business of prolonged
the red color tone advantages instability.
- Payment - Many failures
methods and in
unprofessional communication
staff
- High price
- Most of the compared to
employees are competitors
young, still
studying - Difficulty in
finding
- The brand premises and
logo has a competitive
color tone that position
is easy to
confuse with
other brands.
- Too many
products lead
to difficult
quality control
and high costs.

3.2. SWOT of McDonald’s:

3.2.1. Strengths

- Strong brand name, image and reputation

McDonald's is the leading global foodservice retailer with more than 34,000 local
restaurants serving nearly 69 million people in 118 countries each day. McDonald's
image is easily recognized everywhere. This brand is in the top ten of the most powerful
brand names in the world.

- Leader in quick-service restaurants

 35

McDonald’s is the largest quick-service restaurant (QSR) chain in the United States in
2018, according to Statista. McDonald’s accounting for transactions topped the list in
2018 with $38.52 billion.

- Technology Innovative

McDonald’s is keeping at the forefront of technology around the globe. McDonald’s is

taking revolutionary technology initiatives to make their “Experience of the Future”
dream come true. Initiatives like implementing self-service with kiosks, mobile order
and payment systems are benefiting McDonald’s image as the “restaurant of the future.”
This will create a more efficient process that will reduce the amount of lag time between
a customer’s orders and pick up of the order.

- Consistent Quality Control and Health Protocols

McDonald’s from its inception has very strong quality control and health protocols
which makes it one of the reliable fast food joints out there. The company guarantees
complete quality control from the start to the end of its product life cycle. The quality
checks on ingredients from third-party vendors, on-premises food safety protocols, and
regular quality checks all ensure a safe to consume end product. All-in-all McDonald’s
has quite a lot of unique selling points that firmly distinguish it from other players in the
industry.

3.2.2. Weaknesses

- Unhealthy food image

As we know, there are foods on the menu of McDonald's largely formed of unhealthy
meals and drinks. Nowadays, people have a tendency to take care of their health, they
tend to use healthy food. Although it is not illegal, it affects badly on customer's health
badly because of cancer. Consequently, a number of customers who care about their
health stop eating fat because of some McDonald's restaurants. It makes the revenue of
the company decrease.

- Franchise Related Issue

Mcdonald's Vietnam is dealing with issues because of dis-loyalty of its franchise staff
members. As there are a variety of franchises, it becomes difficult to control each worker
 36

who cheats. As the franchisees are located in every corner of the city, it ends up being
extremely difficult for Mcdonald’s Vietnam to deal with its operations.

- Low Number Of Outlets

Mcdonald’s Vietnam has a high number of franchisees for order taking but there are no
correct dine-in dining establishments of Mcdonald’s Vietnam everywhere. Currently,
McDonald's can only open 26 restaurants in Vietnam and they are only distributed in
big cities such as Ho Chi Minh City, Hanoi, Da Nang, Nha Trang, ..

- High employee turnover rate

Although McDonalds has many good managers as well as skillful employees, the
turnover rate is still high. Every year many of their employees are fired out of the
restaurants. Moreover, many others quit their jobs, especially part time employees
because of low salary as well as too high working pressure.

- Price quite high

Compared with traditional fast food in Viet Nam, the McDonald's product's price is quite
high, it's not suitable for almost any personal income in Vietnam.

3.2.3. Threats

- Serious environmental issue

Environment is one of the hottest topics all over the world. Any action which has an
influence on the earth and human life is criticized strongly. Consequently, if McDonalds
keep using HCFC -22, it may lose customers, especially who really care about the earth
- Public health crisis
With a growing number of obesity cases among Americans, fast food chains like
McDonalds will continue to be overshadowed by their previous products offerings, for
example Happy Meal, no fruit or yogurt, slim salad selection. Besides, people nowadays
are facing heart problems more seriously. As a result, they require nutritious and healthy
food as well as lifestyle.
- Economic recession
 37

The company's revenue streams are diversified, but depending on the length of this
"recession", they will inevitably be negatively impacted by the trickle down effect.
Recession or downturn in economy may affect the retailer's sales, as household budgets
tighten, reducing spend and number of visitors.

3.2.4. Opportunities

- Growth of the fast food industry

Fast food industry is now developing significantly. The change of lifestyle leads to the
change in people's eating habits. In the past, if just workers, drivers or someone who had
to work busily and didn’t have enough time for a home meal choose fast food; nowadays,
almost everyone eats fast food and a majority of them like fast food very much. It is a
huge chance for fast food brands to increase their revenues, especially McDonald’s. Fast
food market in VietNam is a potential market. Demand of people in big cities is
increasing. In recent years, growth rate of fast food market continue to increase

- Globalization, expansion in other countries

McDonald’s has more than 31,000 restaurants serving in almost 120 countries. Of the
31,000 restaurants, at least 14,000 are in the US. However, now, because McDonald’s
is about favors and cultures in each country it enters, McDonald’s can open more
restaurants in new areas, the countries whose culture influences people's lifestyle deeply.
The expansion of these areas is a big opportunity For McDonald’s.

- Diverse tastes and needs of customers

Customer's tastes now become more diverse. Asa result, they require a new format of
service in order to satisfy them. Nowadays, Vietnamese are more adapted to the tastes
of the West. Almost all people who are trending use fast food conveniently, especially
the majority of young people in VietNam.

3.3. McDonald’s Target Segment:

McDonald's identifies its target customers as people aged 16 - 29 years old. They are
young teenagers, who prefer a modern, fast, and "Western" lifestyle. Moreover,
people at this age often tend to find ways to express their "Western" nature through
 38

fashion, words, and especially food. Finally, this group of customers has a certain
income from middle to high, so they also easily choose McDonald's as a place to eat.

Children aged 5-14 years old. Because McDonald's believes that children at this age
have curious characteristics, enjoy novelty, and want to eat greasy Western-style
food. They tend to ask parents to buy fast food after school or on weekends.

3.4. Service Quality Analysis:

3.4.1. Service Quality Dimensions

- Reliability: Delivering on Promises

Reliability is defined as the ability to perform the promised service dependably

and accurately. In its broadest sense, reliability means that the company delivers on its
promises—promises about delivery, service provision, problem resolution, and pricing.
Customers want to do business with companies that keep their promises, particularly
their promises about the service outcomes and core service attributes

Depending on the time of day that customers come to use the service at
McDonald's, the waiting time to be served is fast or slow. Usually in the morning (8am
- 10am) and afternoon (2pm - 5pm) on weekdays from Monday to Friday, the shop is
quite empty. So customers will be served quickly. In the evening and especially on
weekends or holidays, the number of customers visiting the restaurant is often very
crowded, the shortage of staff at this time occurs often, so customers have to wait quite
a long time.

Information about the menu is always fully answered by the restaurant staff when
customers have questions. The menu always complies with the customer's request,
except for a few cases when the restaurant is overloaded, it can be confused but the
probability of mistake is very little.The restaurant's menu always ensures 100% food
hygiene and safety, in recent times, there have been no problems with food hygiene and
safety.

All firms need to be aware of customer expectations of reliability. Firms that do

not provide the core service that customers think they are buying fail their customers in
the most direct way.
 39

- Responsiveness: Being Willing to Help

Responsiveness is the willingness to help customers and to provide prompt

service. This dimension emphasizes attentiveness and promptness in dealing with
customer requests, questions, complaints, and problems. Responsiveness is
communicated to customers by the length of time they have to wait for assistance,
answers to questions, or attention to problems.

To excel on the dimension of responsiveness, a company must view the process

of service delivery and the handling of requests from the customer’s point of view rather
than from the company’s point of view. Standards for speed and promptness that reflect
the company’s view of internal process requirements may be very different from the
customer’s requirements for speed and promptness. To truly distinguish themselves on
responsiveness, companies need well-staffed customer service departments as well as
responsive frontline people in all contact positions. Responsiveness perceptions are
diminished when customers must wait to get through by telephone, are put through to a
complex voice mail system, or have trouble accessing the firm’s website.

When customers enter the restaurant and go to the order counter to order, the
staff often smile and ask "What do you need?" in a very polite and courteous manner.
Ordering fast or slow will depend on the current number of customers at the store,
usually in the evening and especially on weekends, the number of customers at the
restaurant is very crowded, so waiting to be ordered is inevitable. When a customer has
a need that needs to be solved, the staff can temporarily solve it, but mostly urgent
problems are usually solved by the manager. The restaurant's motto is self-serve, this is
a common service in the West, young people in Ho Chi Minh City or Hanoi are quite
familiar with this. However, for older customers or difficult customers, they feel this is
"disrespected", their perception is that employees have to do everything. This is also
sometimes difficult for employees.

- Assurance: Inspiring Trust and Confidence

Assurance is defined as employees’ knowledge and courtesy and the ability of

the firm and its employees to inspire customer trust and confidence. This dimension is
likely to be particularly important for services that customers perceive as high risk or
 40

for services of which they feel uncertain about their ability to evaluate outcomes. In such
service contexts the company seeks to build trust and loyalty between key contact people
and individual customers.

Before coming to work, all employees are trained in the restaurant's rules as well
as how to behave with customers, so most of the employees have a polite and courteous
attitude. However, when the restaurant is overloaded, the female staff both serve the
table and stand at the counter to order the cashier, so she is sometimes distracted from
work and the attitude to customers is not very positive. All staff are quite knowledgeable
about the menu and restaurant-related issues, so they can answer customers' questions.

- Empathy: Treating Customers as Individuals

Empathy is defined as the caring, individualized attention that the firm provides
its customers. The essence of empathy is conveying, through personalized service, that
customers are unique and special and that their needs are understood. Customers want
to feel understood by and important to firms that provide service to them.

The number of employees in each shift is the same, so at times when the
restaurant is overloaded, not enough staff to serve, when a customer has a request, it
will be difficult for the staff to be present immediately. ie. However, employees always
show that they know the needs of customers. This makes the customer more sympathetic
and will make the customer accept the wait.

- Tangibles: Representing the Service Physically

Tangibles are defined as the appearance of physical facilities, equipment,

personnel, and communication materials. Tangibles provide physical representations or
images of the service that customers, particularly new customers, will use to evaluate
quality. Service industries that emphasize tangibles in their strategies include services
in which the customer visits the establishment to receive the service, such as restaurants
and hotels, retail stores, and entertainment companies. Although tangibles are often used
by service companies to enhance their image, provide continuity, and signal quality to
customers, most companies combine tangibles with another dimension to create a
service quality strategy for the firm. In contrast, firms that do not pay attention to the
 41

tangibles dimension of the service strategy can confuse and even destroy an otherwise
good strategy

Most of McDonald's restaurants are located in very convenient locations and are
decorated with eye-catching and recognizable decorations. The restaurant area is quite
large, the space is cool, the light and temperature is just enough. The colors of the tables
and chairs are white, red, black, yellow, including the typical colors of the store. Tables
and chairs are reasonably arranged and comfortable. In addition, some restaurants also
have private rooms for reserved parties and even children's play areas. Staff uniforms
stand out and are quite neat. However, the uniforms between employees with different
positions will be different, divided into: Uniforms of service staff, uniforms of kitchens,
uniforms of management staff, uniforms of delivery staff ,...

3.4.2. Gaps of McDonald's Vietnam Quality Analysis

3.4.2.1. The Customer Gap

The customer gap is the difference between customer expectations and

perceptions. Customer expectations are standards or reference points that customers
bring into the service experience, whereas customer perceptions are subjective
assessments of actual service experiences. Customer expectations often consist of what
 42

a customer believes should or will happen. Because customer satisfaction and customer
focus are so critical to the competitiveness of firms, any company interested in
delivering quality service must begin with a clear understanding of its customers.

Example: After many times using McDonald's services, customers encounter

problems such as: slow delivery time, unfriendly service attitude of staff, not being able
to answer questions and problems... they will feel distrust of McDonald's services and
stop using it. If there is still a need for fast food service, customers will find another
supplier.

3.4.2.2. The Provider Gap

Gap 1: The Listening Gap

The Listening Gap is the difference between customer expectations of service

and company understanding of those expectations. This gap comes up when the service
provider lacks an accurate understanding of exactly what customers’ expectations are.

In accordance with customer requirements, if it is only considered from the

perspective of service providers, it will lose the objective of customer assessment of
service qualities.

Example: While customers expect that fast food is not harmful to health. Due to
the reports of fast food, greasy fried foods can lead to obesity, which is a risk factor for
cancer. McDonald's has always proven that its food is made with quality ingredients,
carefully controlled. Company perception is Quality whereas customer expectation is
Healthy.

Reasons: The reasons for this gap are the lack of orientation for McDonald’s to market
the quality of services; lack of information about customer expectations for the service.
They do not have research concentrated on improving the quality of services required
by customers; or it can be due to too much decentralization from the management
position to the employees, resulting in erroneous information transmission.

Suggest solution: Educate Management About What Customers Expect

 43

+ Sharpen market research procedures, including questionnaire and interview

design, sampling, and field implementation, and repeat research studies once in
a while.
+ Implement an effective customer feedback system that includes satisfaction
research, complaint content analysis and customer panels.
+ Increase interactions between customers and management.
+ Facilitate and encourage communication between front-line employees and
management

Gap 2: The Service Design and Standards Gap

The Service Design and Standards Gap is the difference between company
understanding of customer expectations and the development of customer-driven
service designs and standards. Customer-driven standards are different from the
conventional performance standards that companies establish for service in that they are
based on pivotal customer requirements that are visible to and measured by customers.
They are operations standards set to correspond to customer expectations and priorities
rather than to company concerns such as productivity or efficiency.

Example: McDonald's sets standards and job requirements for each position
such as staff at the order counter, staff in the kitchen and wait staff. Therefore, there
will be at least 1 service staff responsible for observing, capturing customer needs and
assisting in solving customer problems. However, if the number of customers arriving
at the same time is high (at break time), the service staff who can also become waiters
at McDonald's will not be able to fulfill customer requests in time. This has greatly
affected the perception of customers and said that McDonald's lacks thoughtfulness.

Reasons: Because McDonald's does not fully implement the service quality as
committed, there is a lack of awareness about the feasibility of the service in practice.
Managers do not plan and set service performance goals,which means that absence of
process management to focus on customer requirements as well as absence of formal
process for setting service quality goals.

Suggest Solutions: Establish the Right Service Processes and Specify Standards
 44

- Get the customer service processes right:

+ Use a rigorous, systematic, and customer-centric process for designing and

redesigning customer service processes.
+ Standardize repetitive work tasks to ensure consistency and reliability by
substituting hard technology for human contact and improving work methods
(soft technology).

- Develop tiered service products that meet customer expectations:

+ Consider premium, standard and economy-level products to allow customers to

self-segment according to their needs.
+ Offer customers different levels of service at different prices

- Set, communicate and reinforce measurable customer-oriented service standards for

all work units:

+ Establish for each step in service delivery a set of clear service quality goals that
are challenging, realistic and explicitly designed to meet customer expectations.
+ Ensure that employees understand and accept goals, standards, and priorities.

Gap 3: The Service Performance Gap

The Service Performance Gap is the discrepancy between the development of

customer-driven service standards and actual service performance by company
employees.

Example: When implementing the service to solve customer queries and

complaints, one of the criteria set by McDonald's is that employees need to have polite
and courteous communication, find out the reasons and explain in detail. However, in
fact, many customers do not get answers to their questions specifically or employees
have an unpleasant attitude when customers ask questions. This problem creates a fear
of contact with employees of customers and gradually customers will not be interested
in using the services that McDonald's provides.

Reasons: Because McDonald's plan to use human resources is not reasonable, it does
not assign the right people to the right jobs (which is ineffective recruitment). This is
due to deficiencies in human resource policies. McDonald's service management policy
 45

is still lacking empowerment, perceived control, and teamwork as well as inapproriate

evaluation and compensation systems.

Suggest Solutions: Ensure that performance meets standards and that customers
understand the quality level delivered.

Ensure that customer service teams are motivated and able to meet service standards:

+ Improve recruitment with focus on employee-job fit; select employees for the
abilities and skills needed to perform their job well.
+ Train employees on the technical and soft skills needed to perform their assigned
tasks effectively, including interpersonal skills, especially for dealing with
customers under stressful conditions.
+ Clarify employee roles and ensure that employees understand how their jobs
contribute to customer satisfaction, teach them about customer expectations,
perceptions and problems.
+ Build cross-functional service teams that can offer customer-centric service
delivery and problem resolution.
+ Empower managers and employees in the field by pushing decision-making
power down the organization.
+ Measure performance; provide regular feedback and reward customer service
team performance as well as individual employees and managers on attaining
quality goals.

Install the right technology, equipment, support processes and capacity.

+ Select the most appropriate technologies and equipment for enhanced

performance.
+ Ensure that employees working on internal support jobs provide good service to
their own internal customer, the front-line personnel.
+ Balance demand against productive capacity. Manage customers for service
quality.
+ Educate customers so that they can perform their roles and responsibilities in
service delivery effectively.
 46

Gap 4: The Communication Gap

The Communication Gap illustrates the difference between service delivery and
the service provider’s external communications. Promises made by a service company
through its media advertising, sales force, and other communications may raise customer
expectations, the standards against which customers assess service quality. The
discrepancy between actual and promised services, therefore, can widen the customer
gap.

In addition to unduly elevating expectations through exaggerated claims, there

are other, less obvious ways in which external communications influence customers’
service quality assessments. Service companies frequently fail to capitalize on
opportunities to educate customers to use services appropriately. They also neglect to
manage customer expectations of what will be delivered in service transactions and
relationships.

Example: Drive Thru is a special process of McDonald's that is mentioned by

many people because it is advertised that it only takes 2 minutes to set up. But on the
busiest occasion, customers spend 15 minutes sitting in cars waiting outside the gate.
When passing through the Drive Thru gate, it is not possible to access the LCD screen
ordering system. The waiter had to go to each car to take the order and then it took
another 15 minutes for him to receive his order.

Reasons: Because McDonald's is overpromising in its marketing measures without fully

realizing its ability to do the job or its potential. Failure to comply with the criteria as
built in the service deployed to their customers. Besides that, it also lacks integrated
services marketing communications and tendency to view each external communication
as independent.

Suggest Solutions: Close the Internal Communications Gap by ensuring that

Communications Promises are Realistic and Correctly understood by Customers

Educate managers responsible for sales and marketing communications about

operational capabilities:
 47

+ Seek inputs from front-line employees and operations personnel when new
communications programs are being developed.
+ Let service providers preview advertisements and other communications before
customers are exposed to them.
+ Get sales staff to involve operations staff in face-to-face meetings with
customers.
+ Develop internal educational and motivational advertising campaigns to
strengthen understanding and integration among the marketing, operations, and
human resource functions, and to standardize service delivery across different
locations.

Ensure that communications content sets realistic customer expectations.

Be specific with promises and manage customers' understanding of communication

content:

+ Pretest all advertising, brochures, telephone scripts and web site content prior to
external release to see if the target audience interprets them as the firm intends
(if not, revise and retest). Make sure that the advertising content reflects those
service characteristics that are most important to customers. Let them know what
is not possible and why.
+ Identify and explain in real time the reasons for shortcomings in service
performance, highlighting those that cannot be controlled by the firm.
+ Document beforehand the tasks and performance guarantees that are included in
agreement or contract. After the completion of the work, explain what work was
performed in relation to a specific billing statement.

In summary, external communications—whether from marketing

communications or pricing—can create a larger customer gap by raising expectations
about service delivery. In addition to improving service delivery, companies must also
manage all communications to customers, so that inflated promises do not lead to higher
expectations.
 48

3.5. Marketing Mix 7Ps of McDonald’s

3.5.1. Product

As an enterprise operating in the food service business, McDonald's products are

mainly prepared food and beverages. McDonald's main product line is diversified to
help customers have more choices:

+ Burgers: Chicken burger, Fish burger, Beef Burger, Pork Burger,....

+ Rice: Garlic Fish Sauce Fried Chicken Rice,McSpicy Chicken Rice, Grilled
Pork Rice (with Egg),....

+ Fried Chicken, Fried Potatoes, Sweet Corn,....

+ Desserts: Icecream, Hot Apple Pie, Butter Croissant, Cheese Cake, Muffin,
Tiramisu,...

+ McCafe and Beverages: Hot or Iced (Latte), Americano, Lychee Tea, Peach
Tea, Coca Cola,…

+ Happy Meal: is a kid's meal priced at VND 68,000 including a main course
(burger or fried chicken), a potato chip or a serving of corn, a drink (milk or soft drink)
and a toy or a “Happy Meal Readers” book. Although Happy Meal is a children's meal,
there are also many adult McFans who still buy it as usual because they love and collect
the toy that comes with each meal.

Vietnam is a country that consumes a lot

of pork, grasping that feature, McDonald's
Vietnam products have more diverse changes. In
addition to burgers with familiar flavors,
common dishes and drinks identical to stores
around the world, the company has adjusted
some sizes of the buns and released a new flavor
of the burger, the McPork Pork Burger. McPork
Deluxe and Double McPork Deluxe are suitable for the Vietnamese market. In addition,
the company also adds green vegetables to the burgers due to the characteristics of
Vietnamese people who like to eat vegetables in every meal.
 49

Although there are changes to suit regional characteristics, McDonald's products

have the same quality in product. This is also a very characteristic feature throughout
the product strategy of McDonald's. The supply of green vegetables and tomatoes used
by McDonald's in Da Lat ensures strict compliance with the quality of raw materials and
hygiene.

Packaging: By highlighting specific ingredients from the menu, increasing

awareness, this new design hopes to introduce the “playful perspective” of the brand to
customers.

The packaging of McDonald's, whether eaten at the restaurant or taken away,

shows the professionalism and convenience that they want to bring to customers. The
burger packaging has the shape of a paper box, designed with a combination of bold
lettering and illustrations showing the ingredients and the quality of the product. The
potato chip packaging is designed as a flat, vertical cylindrical paper box.

McDonald's packaging, in addition to containing food, creating convenience and

increasing excitement when eating, is also an effective form of communication for
McDonald's with its eye-catching design and clear brand identity. Besides, all these
packaging are eco-friendly as they are made from recycled paper.

In addition to the core product, McDonald's also provides additional services

such as:

+ Open 24 hours: McDonald's Vietnam is the first fast food restaurant serving
24 hours, aiming to bring customers delicious meals in a comfortable and safe space at
any time of the day.

+ Drive-thru: In 1975, in the US, McDonald's was the first restaurant to serve
the drive-thru model, buy food without having to park, busy customers only need to pull
over to the sales window, Order your food and get it delivered right there. McDonald's
Vietnam will be the first fast food restaurant to bring this model to Vietnam. In line with
the lifestyle of local people, the facilities and efficiency of the model will bring
customers hot and fresh food in the blink of an eye.
 50

+ Organizing Birthday Party and Children's Playground: McDonald's

professional organizing team will prepare everything for customers, from programming,
decoration, food preparation, games, and so on. You need to relax and have fun with
your baby on this big day.

+ Free Wifi Connection: Now customers' favorite meals at McDonald's come

with free WiFi, enjoy surfing the net, sending emails, updating profiles and connecting
with friends. With the free high-speed WiFi system installed at the restaurant, customers
can access the Internet by using laptops or from their phones comfortably connecting to
the Internet at the restaurant and sharing with the world!

+ McDelivery: McDelivery is actually an extremely famous fast delivery service

of McDonald's worldwide, operating 24/24 including holidays. In 2017, McDelivery
fast food delivery service was officially put into operation for the first time in the Ho
Chi Minh City area.

3.5.2. Price

McDonald's focus is on localization plans with different strategies in each

country. Price is a difficult factor to be standardized globally because the income of
consumers in each country is different depending on the economy of that country.
Therefore, McDonald's sets different prices for their fast foods based on analysis and
research in each country.

USA China Vietnam

Price of a Big Mac 5,71 USD 21,7 Yuan 66.000 VND

(= 132.356 VND) (= 74.152 VND)

GDP per capita 62,606 USD 9,608 USD 2,750 USD

In Vietnam, McDonald's combines two pricing strategies: price bundling strategy

and odd pricing strategy.
 51

With the goal of maximizing profit margins and sales, McDonald's bundle pricing
strategy offers different food combos at a more discounted price than buying each item
individually. For example, customers can buy Happy Meal or Extra Value Meal to
optimize product cost and value.
 52

In its odd pricing strategy, McDonald's uses affordable prices like 99,000 VND
instead of rounding that. Thanks to this extremely smart pricing strategy, McDonald's
encourages consumers to buy their products.

McDonald's strategy to penetrate the Vietnamese market focuses mainly on

middle-income customers, so the high-priced strategy is used here. Typically, the first
McDonald's store was opened in the vibrant Ho Chi Minh City, which the company
identified as a target market with high-income customers and modern lifestyles.

3.5.3. Process

The diagram below is the food service process at McDonald's, including many
closely related stages that directly affect the food service process of customers.

- Picking dishes at the Order counter: This is the first step of the food service
process. When coming to the restaurant, customers will go to the Order counter or self-
ordering kiosk. Here, the customer will choose the dish, the staff will receive the
customer's request.

- Customers pay and take numbers: After the staff has received the customer's
order, the customer will pay at the counter. The employee bills the customer and sends
the customer a numbered card.

- Guests choose their own table: After receiving the numbered card, the customer
will choose an empty table by themselves. In the process of waiting, customers will go
to pick up eating utensils such as knives, forks, spoons, sauces, tissues, …

- The kitchen department provides food and drinks: After the cashier has issued
the invoice to the customer, it will directly transfer the customer's order request to the
 53

kitchen department. The kitchen department will prepare dishes for customers within
the specified time.

- Serving guests: When the kitchen department has finished the dishes of the
guests, customers will have to receive food at the collect counter or employees will find
the correct number on the card that has been given to the guest to bring out at the table.
In the process of eating, if the customer needs to get more tools such as a knife, fork,
spoon, napkin or sauce, the customer will go to the utensil counter to get it.

- Cleaning department: After customers have left the store, the table department
will clean up to keep the table clean.
 54

Besides the process for customers to use at the restaurant, McDonald's also has a
very fast and modern take-out process. “Driving Through” (or “Drive - Through, Drive
- thru”) is a business method where cars will follow each other in rows through a
window. Here, the store staff will communicate with customers via microphone. The
special thing is that the buyer does not need to step out of the car. All product
transactions such as ordering, receiving and paying will be done right on the customer's
car. The process is described by 3 simple steps: First, the car will be driven from the
main gate into the Drive Thru area to view the menu and order food through the machine
at the ordering counter; after confirming the dish, the customer moves to the payment
counter; and then go to the final counter to receive the food and leave by the route
reserved for this service. To ensure that each process only lasts about 5 to 10 minutes,
employees at McDonald's have to perform many different stages and coordinate
professionally.

3.5.4. People

a. On the employee's side:

- Attracting and recruiting:

+ McDonald's aims to recruit many young talents of the Millennials generation

to serve the plan to expand the restaurant system. Generations of human resources born
 55

in 1986-2000 will be suitable for the open working environment at McDonald's.

+ Policy to help attract human resources to McDonald's:

1. Creating the best working environment for employees, dynamic, fun, friendly
like a second home. For 2 consecutive years, McDonald's Vietnam has been in the top
100 best places to work in Vietnam. The business holds the 4th position in the field of
the restaurant - tourism in the list announced by Anphabe in March 2017.

2. Create attractive development opportunities for each employee

3. Offer attractive application benefits suitable for each position

4. Organized McDonald's Vietnam recruitment fairs, Apprentice - Internship

program, Management Trainee program - Apprenticeship program, Career Day - Job
fair to recruit talents.

+ Recruitment process of McDonald's in Vietnam:

1. You can apply in person or online at McDonald's website after searching for
the store you want.

2. Applications are sent to McDonald's Human Resources if you are applying for
a corporate store or the owner if the store is franchised.
 56

3. In a corporate store, the area manager will call you and arrange an interview.
In a franchise store, the application is submitted to the store manager. If the store
manager feels the candidate is a good fit, he or she will call you for an interview.

4. The interview process will then begin. You will sit down with the hiring
manager for the store to talk to them. They will consider many things about you (which
I won't write down because it is proprietary) before deciding whether to hire you or not.

5. If you pass the final interview, you will be hired at the agreed rate. You will
then be scheduled for your orientation

- Training:

+ Training personnel based on the skills framework of McDonald's:

 57

Image: McDonald's Skills Framework

+ The corporation's training system will support employees to realize their full
potential, through training programs from the university exclusively for McDonald's
employees (Worldwide Marketing Hamburger University).

+ Depending on each individual's career development stage, in addition to being

trained daily through practical work in the country, employees can also participate in
intensive and long-term training courses in Singapore, the Philippines and the
Philippines. many other countries in the system to continuously update knowledge and
experience from your market and improve personal capacity.

+ Every employee of McDonald's is also provided with skill training courses that
are very useful for each career ladder and personal life. Such as: The course "Restaurant
Leadership Practise" for each employee. for employees of McDonald's restaurant and
office blocks according to the certificate of the US Department of Education.
McDonald's was also honored in the Top 50 Brands voted by students.

- Motivation and rewards:

 58

+ Salary increase for employees from April 2021 due to labor shortage when
economic activities begin to recover after the COVID-19 pandemic.

+ The program 'Employee Appreciation Month' and the policy of recognizing

employees' contributions... have brought impressive results to McDonald's Vietnam.
Increased employee satisfaction and engagement. The rate of employees transferring or
leaving is much lower than the industry average.

+ Bringing attractive benefits for each position in McDonald's, specifically as

follows:

Position Benefits

Bartender - Competitive part-time salary, parking allowance per shift

- 24/7 occupational accident insurance, participate in annual
health check
- Flexible working schedule, weekly registration
- Free uniforms
- Participate in extracurricular activities, connect internally
with restaurant and restaurant staff and the whole system
- Opportunity to be trained and become an official employee

Staff - Opportunity to work and train according to international

McDonald's standards
- Enjoy competitive PT salary and 13th month salary
- Food allowance, night shift & public holidays, parking
allowance
- Labor accident insurance 24/7
- Participate in annual health check
- Free uniforms for employees
- Participate in extracurricular activities with restaurant staff
and the entire system

Shipper Enjoy a fixed monthly salary and the 13th month salary
 59

Commission on every delivered order

Food allowance, night shift & public holidays, parking
allowance
Enjoy full health insurance benefits according to State
regulations
Occupational accident insurance 24/7
Participate in annual health check
Free uniforms for employees
Participate in extracurricular activities with restaurant staff
and the whole system

Customer Experience - Clear promotion path with the opportunity to participate in

Specialist customer care training programs according to international
McDonald's standards
- Enjoy a fixed monthly salary and the 13th salary month
- Food allowance, holiday allowance, parking allowance
- Fully enjoy health insurance benefits according to State
regulations
- Labor accident insurance 24/7
- Participate in annual health check
- Free uniforms for employees
- Participate in extracurricular activities with restaurant staff
and the entire system

Service Team Leader - A clear promotion path with the opportunity to participate
in training programs according to international McDonald's
standards
- Enjoy a fixed monthly salary and the 13th salary month
- Food allowance, night shift & public holidays, parking
allowance
- Fully enjoy health insurance benefits according to State
regulations
 60

- Labor accident insurance 24/7

- Participate in annual health check
- Free uniforms for employees
- Participate in extracurricular activities with restaurant staff
and the entire system

Restaurant manager - Participating in social insurance, labor insurance,

unemployment insurance
- Well trained in a professional environment
- Free uniforms and free meals (depending on the shift)
- Working time 5 days/week
- 13th salary month and quarterly bonus
- Free periodic health check
- Parking allowance, night shift allowance and on public
holidays

- Teamwork

+ McDonald's employees are encouraged to organize mini contests such as:

"beyond themselves", "colleagues are friends", "learners learn secrets"... At McDonald's
Vietnam, in addition to income, the Young people also reap for themselves work
experience, life skills and sincere family-like relationships in the spirit of "McFamily".
The "newbie" will be fully supported in the first months to catch up and master the work.

+ Besides daily work, McDonald's employees also regularly participate in special

"festivals" for themselves such as annual vacations, McBarista skill contests for
bartenders, McLeague sports tournaments. , one-year, three-year, five-year anniversary
program or talent contests such as 'Who can pack the best and fastest burger', 'serve
customers fastest, most'.

+ Through that, new members will be shared by their predecessors to quickly

integrate. Next, these same members will be given the opportunity to train other
 61

members. “Learning, doing, and teaching at the same time” is the secret of self-
development of the staff here.

+ “Whenever I'm off work, I usually stay to chat a little bit with my friends and
enjoy an extra meal. At that time, I often tried to see the entire restaurant space from the
perspective of a customer. Although I have only been a part-time employee for about 2
months, I feel like I am a part of this "common house". The enthusiastic guidance as
well as the sharing and concern of everyone makes me feel very happy and proud to be
a member of McFamily” - a serving staff at McDonald's happily shared.

+ "Crew Appreciation Day": On May 5, the "Employee Appreciation" program

took place at the stores in the McDonald's Vietnam system. This is an annual program
held to show the team spirit and the shared care that the company's leadership has for its
employees. The entire office staff had 4 hours working together with the restaurant staff,
sharing, encouraging, giving gifts, and taking souvenir photos.

- Staff requirements with customers :

+ McDonald's employees have strict requirements when delivering services to

customers. All McDonald's employees must always put the customer first and
communicate effectively and honestly. More specific:

- Frontline staff (Delivery staff, bartenders, waiters, cashiers):

+ Always be professional: Shown through the way you dress, behave, work as
well as solve problems, work in accordance with McDonald's standard rules and must
be consistent in all stores nationwide.

+ Politeness: No matter who the customer is, the style of speaking and handling
must always be polite and polite, creating a unique and unique characteristic of
McDonald's employees.

+ Courteous: Always greet with a happy and friendly smile when customers enter
the restaurant. They must also maintain a smile and friendliness throughout their work.

+ Empowered to proactively resolve customer issues to the extent possible.

b. On the customer side

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- Education and Training:

+ Guide customers to order through the McDonald's Vietnam app, through the
official McDonald's website.

+ In addition, McDonald's also uses automated ordering kiosks to optimize the

customer experience. It is widely communicated to guide users on how to use it.

+ Educate customers about using unhealthy fast food, but McDonald's always
tries to bring the best quality food.

3.5.5. Place

- Chanel types: McDonald's uses a master franchise (only a large company

receives a general franchise for an entire region (country) instead of continuing to
franchise for smaller partners) in Vietnam. Specifically, McDonald's bought the
exclusive franchise in Vietnam by Good Day Hospitality Company of overseas
Vietnamese businessman Nguyen Bao Hoang - CEO of IDG Ventures in Vietnam.

+ Talking about the reason for Mr. Nguyen Bao Hoang's choice of Good Day
Hospitality, the leader of McDonald's said that this contract is "the result of a rigorous
selection process many years ago". According to him, Mr. Hoang has an impressive
background in business, in promoting new business projects in Vietnam.

+ Although Good Day Hospitality does not disclose the amount to be spent to
bring McDonald's to Vietnam. But according to the calculation of world experts based
on documents on franchising, the franchisor has to spend about 1-2.2 million USD to be
allowed to open a McDonald's store.
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- Outlet locations

Currently, the brand has 26 franchised stores nationwide, this brand goal is to
open 100 stores within 10 years.

Initially entering the Vietnamese market, McDonald's chose to open 3 stores in

Ho Chi Minh City. The reason is because:

+ This is a target market with high-income customers so that McDonald's can

execute its high price strategy appropriately.

+ Moreover, this is a vibrant market with a high population density, a fairly

modern lifestyle, and a tendency to prefer novel products.

Because of entering Vietnam after competitors such as Burgerking, KFC,

Lotteria,... McDonald's chose a completely different business model. Two of the first
three McDonald's stores are located outside the city center. Since then, McDonald's has
built a very large and majestic store to attract the media and customers to visit the store,
helping to welcome the number of people moving in and out of the center at the end of
the day. McDonald's chooses the location of its stores on the strategic road leading to
the city when going from the North and Central of District 1 as well as the street in
 64

District 6 going through the city from the West direction. This will enable car travelers
from different regions to enjoy the product through the unique “Drive-thru” service.

After that, McDonald's gradually attacked the center and competed directly with
other competitors in shopping centers throughout Ho Chi Minh City, gradually
expanding to the North and some other provinces such as Nha Trang.

McDonald's always chooses the best locations in order to serve customers with
convenience. However, because of entering the market after the fast food giants,
McDonald's faced many disadvantages in terms of finding premises such as not finding
a suitable location, because in big cities and provinces it is always limited. in terms of
space, parking space. as well as the cost of the premises is too high.

To open a new store, this brand must prepare a whole year in advance from
choosing the right location to training staff and preparing logistics. The localization of
the supply and localization of the menu is also focused. Quality inspection, food hygiene
and safety are always prioritized and it takes a long time to approve supplier partners.
Opening stores outside of big cities like Ho Chi Minh City or Hanoi requires stricter
quality control of products, services and personnel.

List of McDonald's stores:

Name Address Name Address

McDonald's Tay Mo, Tu Liem, Hanoi McDonald's AB 44 Tran Phu, Loc

Vincom Smart Central Square Tho, City. Nha
City Nha Trang Trang, Khanh Hoa

McDonald's 242 Nguyen Van Luong, McDonald's 1 Street No. 17A,

Lotte Mart Go Ward 10, Go Vap Aeon Mall Binh Binh Tri Dong B
Vap District, HCM Tan Ward, Binh Tan
District, Ho Chi
Minh City

McDonald's Ground floor, Aeon Mall McDonald's 1st floor, Aeon Mall
Aeon Mall Binh Binh Duong, Thuan An, Aeon Mall Ha Ha Dong, Duong
Duong Binh Duong Dong Noi, Hanoi
 65

McDonald's Ground floor, Viettower McDonald's 5th floor, 119 Tran

Thai Ha Building, No. 1 Thai Ha, Vincom Tran Duy Hung, Trung
Trung Liet Ward, Dong Duy Hung Hoa Ward, Cau
Da District, Hanoi Giay District, Hanoi

McDonald's 240-242 Pham Van McDonald's 2 Hoang Dao Thuy,

Giga Mall Dong, Thu Duc District, Hoang Dao Nhan Chinh Ward,
HCM Thuy Thanh Xuan
District, Hanoi

McDonald's 30 Bo Bao Tan Thang, McDonald's 2 Hang Bai, Hoan

Aeon Mall Tan Ky Ward, Tan Phu Sword Lake Kiem District,
Celadon Tan District, HCMC Hanoi
Phu

McDonald's Au 683 Au Co, Tan Phu McDonald's Ground floor,

Co District, HCM Vincom Thu Vincom Thu Duc,
Duc 216 Vo Van Ngan,
HCMC

McDonald's Ground floor, Center McDonald's Ground floor,

Satra Pham Mall Pham Hung, C6/27 Hoang Dieu Apartment H3, 384
Hung Pham Hung, Binh Chanh Hoang Dieu,
District, HCM District 4, HCM

McDonald's Tan Room A1, Ground Floor, McDonald's B2 Saigon Center

Son Nhat Commercial Area Garage Saigon Center Shopping Mall, 65
Garage Quoc Noi, HCM Le Loi, Ben Nghe
Ward, District 1,
HCM

McDonald's 460 Ba Thang Hai Street, McDonald's L1-11, 12, 13

Saigon Ward 12, District 10, Vincom Masteri Ground floor
Supermarket HCMC Vincom Mega Mall,
District 2, HCM

McDonald's 123 Nguyen Hue, District McDonald's 1058 Nguyen Van

Nguyen Hue 1, HCM Vivo Linh Boulevard,
District 7, HCMC
 66

McDonald's Go 01 Quang Trung Street, McDonald's Phu 718 Bis Kinh

Vap Ward 3, Go Vap District, Lam Duong Vuong,
HCMC Ward 13, District 6,
HCM

McDonald's Ben 2-2A Tran Hung Dao, McDonald's 2-6 Bis Dien Bien
Thanh Ben Nghe Ward, District Dakao Phu, Dakao Ward,
1, HCM District 1, HCM

Examples of some locations of McDonald's in Vietnam:

McDonald's store is about to open near Ben Thanh market: Located in the "probe"
land, McDonald's store near Ben Thanh market (District1, HCMC) has a prime location,
large area.

McDonald's store near Ben Thanh market (District1, HCMC)

The first McDonald's store in Hanoi opened on December 2 at 2 Hang Bai with
a prime location: opposite Trang Tien Plaza overlooking Hoan Kiem Lake.
 67

- Managing channels

Focusing on cost management, tightly controlling business growth with strategic

and prudent expansion plans, the main locations where McDonald's distributes its
products through:

+ Restaurants
+ Kiosk
+ McDonald's Mobile App
+ Websites and others

3.5.6. Physical Evidence

“Design innovations are borne out of consumer insight which means re visiting
the whole look and feel of our restaurants, trying to reflect the local style, and upgrading
the overall customer experience in the restaurant”.

Facility Exterior:

Although McDonald's abroad uses the image of a brand clown, in Vietnam there
are not too many of these symbolic characters, but instead the famous letter M of the
company. In addition, the restaurant design often uses signs, billboards or giant standees
about the company's dishes and promotions. This also somewhat grabs the attention of
customers, and is also a form of advertising for that store. McDonald's premises are quite
 68

large, about 2,500 - 3,000m2, with parking for cars, motorbikes and a drive-thru area to
buy take-out food.

Facility Interior:

In McDonald's interior design, the space is clearly divided with the kitchen away
from the guest dining area. The interior is designed modern, youthful and close to all
ages of customers. McDonald's is very fond of open spaces to create an airy feeling, so
it is not blocked when crowded. The system of tables and chairs is also very diverse,
from double tables and chairs for 2 people to tables of 4, tables for 10 people ... with
many different designs such as leather upholstered tables and chairs, high bar tables and
chairs, or tables and chairs. wood, iron legs, ... Many designs in which it is convenient
to move, pair tables when customers have needs. In addition to serving fast food,
McDonald's also serves coffee with the famous and convenient McCafe. Therefore, the
restaurant space still has something quite "chill" so that customers can drink coffee
comfortably. Moreover, McDonald's has a play area for children and the restaurant's
interior is also quite eye-catching with branded details such as toy display cabinets -
gifts with food, or giant wall decor details, etc. The restaurant layout also arranged some
separate areas to organize parties, areas for couples, families, large groups of people,
etc. In the space of the restaurant, do not use too many outstanding colors, but focus on
colors such as white, black, and yellow. The design of this modern, not-so-sophisticated
fast-food restaurant is suitable for many customers, especially children who love this
brand because of its eye-catching display gifts. In order to create a comfortable feeling
for customers during their meal time at the restaurant, McDonald's always pays attention
to: keeping the room temperature at a stable level (neither too hot nor too cold), Play
music with sound just enough to listen to, soft music is not too exciting, and the light is
always fully guaranteed as well as warm, yellow light.

The next feature of McDonald's fast food restaurant design is convenience to

customers. Entering the store, customers will see automatic order machines without
staff, which also makes customers more satisfied, especially in the context of the
pandemic. In Vietnam, only McDonald's is a famous brand that uses this machine.
Besides, in each restaurant area, there are trash cans as well as hand washing machines
 69

so that customers do not need to travel too far. All these have made McDonald's a brand
with a design that cares about customers.

In addition, McDonald's also pays attention to equipment in the kitchen

including: monitoring screen system, machinery for modern food processing, which can
produce large quantities of products in seconds, controlled from the kitchen to the
outside of the store by the sound system… McDonald’s interiors are attractive and the
restaurant maintains clean and hygienic interiors of its outlets.
 70

3.5.7. Promotion

McDonald's marketing strategy promotes communication to attract customers to

buy its products through advertising activities on television, radio, print, and online
media. The ultimate goal is still brand coverage with consumers and increasing profits
for the company.

Outdoor advertising media such as lightboxes, signs, or printed media such as

cups, shirts, and hats printed with the company's logo are given to customers. This turned
their own customers into free advertisers for the wider McDonald's image.
 71

McDonald's has a communication strategy with many unique ads. Advertising

activities on typical social networking sites such as Facebook, Youtube, Twitter, and
Instagram, ... with many promotions to attract customers. Coupons and vouchers for
certain products attract a large number of customers.
 72

In addition, the public relations activities when organizing charity McDonald's

Global Best of Green or Ronald McDonald House, Operation Smile Vietnam charity
fund have made a good impression on customers with good actions.

In McDonald's business strategy, the company identifies children as an important

segmentation of its target customers. Therefore, the activities of giving balls, giving
Pikachu hats to babies, interacting with Pikachu, costume shows on June 1, etc. have
attracted a large number of customers who are parents on holidays and occasions.
birthday or weekend.
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3.6. Suggestion

3.6.1. Product

In 2020, McDonald's launched a dish with a combination of the quintessence of

Vietnamese traditional cuisine and a Burger called Pho Burger. The dish represents the
"localization" of McDonald's menu with the filling of two layers of Australian beef
combined with Vietnamese pho sauce. The dish is promised to be a combination of
"strange and familiar" to bring diners a special taste experience with the condensed
essence of Asian cuisine and an interesting culinary creation. Although inspired by pho,
this unique hamburger has a completely different texture than normal pho. The specialty
of pho is the delicious bone broth, McDonald's has made the evaporated water, only the
concentrated noodle sauce remains on top of the company's classic beef filling,
 74

accompanied by herbs and called it the product that

brings back fresh experience for diners.

Perhaps this brand hoped to conquer the taste

of Vietnamese diners, so it created such a strange
burger, but sadly, just posted it for sale on the
fanpage, people jumped on it. The taste of this burger
is unknown, but Vietnamese customers have
protested quite strongly, saying that the fast food
company has ruined the long-standing elite noodle soup, the price is also too expensive
for a bowl of pho. Finally, McDonald's also discontinued this product not long after.
Therefore, McDonald's should pay more attention in researching Vietnamese tastes and
Vietnamese cuisine such as organizing product trials.

In addition, an important factor in new product development is the link with the
existing McDonald's product portfolio. Because a menu that is too cumbersome and
complicated will confuse customers with choices or dishes with foreign names, difficult
to pronounce, will also cause difficulties for customers. Simplified Menu not only helps
customers have an easy ordering experience, but it can also help reduce delays in the
purchasing process.

3.6.2. Price

Currently, according to a survey by VTV, the average price for a meal in a

McDonald's restaurant is 65,000 VND. That price is quite cheap in Western countries,
because it is only about 3 USD. However, in Vietnam, 65,000 VND is quite a high price
compared to the income of most people, while the average cost of meals for office
workers in Ho Chi Minh City is only 50,000 VND.

Consequently, fast food restaurant managers should set pricing policies and
products that are appropriate for their positioning strategy for young, mostly low-income
customers. The proposed solution is to reduce the selling price by reducing input costs.
Because most of the ingredients used to make McDonald's Big Macs are imported
(nearly 90%), from Australian beef, white fish fillet caught in the Atlantic and Pacific
seas, and potatoes from the US. ... this makes McDonald's have to spend a large amount
 75

of capital to import ingredients. Moreover, the products will also not be fresh because
they are frozen, through long-term transportation to return to Vietnam. If McDonald's
can use available Vietnamese ingredients for its products, it can reduce the cost of the
dishes here.

3.6.3. Process

McDonald’s must focus on Making orders, paying and collecting food, which are
the main touch points in their customer journey.

For new processes such as Drive-thru and self-serve kiosks, McDonald's should
promote widely in the media with short-ads. Because, if a customer does not know this
process before, they will be more hesitant to try it out, or worse, these new customers
will cause process congestion affecting other customers on the waiting line. Therefore,
educating customers to understand the process is paramount, which can help the process
be carried out smoothly, minimizing incidents,....

Although McDonald's has used Drive-thru as a solution to help customers buy

take-out that can shorten delivery time, it is not really an optimal solution, or rather, it
is not fast enough. And in essence, Drive-thru is only suitable for customers who use
cars, while in Vietnam, the means of transportation for the majority of people are
motorbikes. For Vietnamese people, they love the convenience of roadside shops when
they just need to stop and buy food. Therefore, McDonald's should consider applying
the Food Truck model in front of each of its stores. And instead of having to run around
the store according to Drive-thru, customers just need to visit the foodtruck to buy
products and then leave immediately.
 76

3.6.4. People

The problem of McDonald's current non-fixed and constantly changing staff also
significantly affects the service and customer experience at the restaurant. Therefore,
McDonald's needs to optimize the recruitment process, increase retention policies, and
propose to add rewards and incentives when shopping at McDonald's stores nationwide
for employees and relatives such as 5. 50% discount voucher up to 100k, creating a
system of cumulative points for employees.

Improve staff service quality: despite being the world's largest fast food chain,
McDonald's in Vietnam still receives a lot of negative reviews.

- Evaluation of delivery staff: Slow and unfriendly delivery, lack of food, lack of
sauce, sloppy set of dishes spoils the food.

- Evaluation of service staff: Poor service attitude, not welcoming, friendly, not
fulfilling customer's request, having an impatient and annoyed attitude with customers.

Solution: It is necessary to monitor more closely the attitude of employees

towards customers, change the reward and punishment system, organize more internal
training.
 77

3.6.5. Place

The goal of opening 100 restaurants has not been achieved in 10 years, the growth
rate is still slow and it is difficult to find new locations. Need to be more flexible in
search and research to consider expanding to competition in big cities like Can Tho, Da
Nang,...

Improve ordering apps: There are many bad reviews when customers access and
use the app on smartphones (3.4/5 stars) such as unable to order, unable to apply
promotion code, unable to log in.

3.6.6. Physical Evidence

In general, Servicescape at McDonald's has been completed very thoughtfully

from the outside elements to the interior. Therefore McDonald's should only pay
attention to:

-The restaurant needs to add more equipment (knives, forks, ...) and should
carefully check the cleanliness of equipment to avoid the situation when the restaurant
is overloaded and the equipment is not enough to meet the customer's needs.

-Regularly check and maintain the machines in the restaurant to ensure that the
machines are still in good working order as well as the play area to ensure the safety of
children.

- The restaurant's space must always be clean and airy. Because the restaurant
offers fried dishes, the smell of grease is inevitable, so some professional measures are
needed to avoid the unpleasant smell of grease to customers as much as possible.

3.6.7. Promotion

According to Nielsen, Vietnamese customers are generally sensitive to price

changes and prefer promotions. Consequently, promotions and incentives are not to be
missed. For example, managers can make appropriate promotions, particularly on
special occasions, holidays, Lunar New Year, or at lunchtime, while still ensuring
product quality. In addition, many studies show that young people are more interested
in fast-food restaurants than in other stores. Because in today's competitive environment,
 78

young people are constantly faced with a wide range of choices, so attractive promotions
can increase the motivation to enter the store.
 79

Conclusion

The report has shown an overall picture of the fast food service industry as well
as consumer trends. From there, the report can make useful judgments for marketers. In
Chapter 2, Marketing of the fast food service industry, our group also mentioned the
common points and things to note that businesses need to pay attention to.

And at Case Study, McDonald's has always been one of the big players in the
world's fast food market. Through the above report, we can see that McDonald's
marketing mix strategy is highly flexible and diversified in different market areas.
Pricing, product, distribution or promotion strategies are all optimally adjusted as the
brand enters new markets. However, unlike its positioning as a popular brand in the US,
McDonald's can be seen as a rather high-end, luxury fast food company for Vietnamese
people. To achieve the set goal, this fast food company spares no effort and money for
marketing projects to both globalize and localize its dishes. Due to cultural differences,
McDonald's is still facing many difficulties to expand its business in Vietnam. To
overcome these difficulties, the famous global food company needs to make more
improvements in its services. In order to attract Vietnamese consumers, McDonald's
products need to target the tastes of each region as well as the income levels, needs and
habits of customers in order to price and distribute its products more effectively.
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[1] Services Marketing: Integrating Customer Focus Across the Firm; Valarie A.
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[2] Thị trường thức ăn nhanh Việt Nam – Dấu hiệu khởi sắc trong bối cảnh “bình
thường mới”

https://hangtienich.vn/index.php/2021/04/14/thi-truong-thuc-an-nhanh-viet-nam-dau-
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[4] Fastfood hậu Lotteria

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[5] Thị trường dịch vụ lương thực Việt Nam - tăng trưởng, xu hướng, tác động của
covid-19 và dự báo (2022 - 2027)

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[15] SWOT của Jollibee

https://maneki.marketing/swot-analysis-jollibee/

[16] Điểm Mạnh, Điểm Yếu, Cơ Hội Và Thách Thức Của KFC A Điểm ...

https://xmdforex.com/post-detail/diem-manh-diem-yeu-co-hoi-va-thach-thuc-cua-kfc-
a-diem-/150353400

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[18] Phân tích SWOT của Burger King (2022): 21 Điểm mạnh và Điểm yếu

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yeu/

[19] Lý do McDonald’s thu hút nhân sự trẻ

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[21] McDonald’s và sự thành công nhờ triển khai đào tạo nhân sự

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nhan-su/

[22] McDonald's nhận giải Rồng Vàng 2021 cho doanh nghiệp nổi bật trong ngành dịch
vụ ăn uống

https://mcdonalds.vn/tin-tuc/mcdonaldapos;s-nhan-giai-rong-vang-2021-cho-doanh-
nghiep-noi-bat-trong-nganh-dich-vu-an-uong-44.html

[23] Tác động lan tỏa từ chính sách tăng lương của McDonald’s

https://bnews.vn/tac-dong-lan-toa-tu-chinh-sach-tang-luong-cua-mcdonald-
s/203699.html

[24] McDonald's chọn công ty của ông Nguyễn Bảo Hoàng để thâm nhập vào Việt Nam

https://nhadautu.vn/mcdonalds-chon-cong-ty-cua-ong-nguyen-bao-hoang-de-tham-
nhap-vao-viet-nam-d5074.html

[25] Nhượng quyền thương hiệu Fastfood tại Việt Nam: “Cuộc chơi” không dành cho
nhà đầu tư ăn xổi

https://baodautu.vn/nhuong-quyen-thuong-hieu-fastfood-tai-viet-nam-cuoc-choi-
khong-danh-cho-nha-dau-tu-an-xoi-d142525.html