Vietnamese Pho Chain Takes on U.S. Competition

by Michael Sullivan -Morning Edition,

March 20, 2007 · As KFC and other American fast-food chains expand their presence in Vietnam, a local entrepreneur is trying to blunt the Americans' growth by beating them at their own game. In just four years, Ly Qui Trung, founder of Pho24, has built up his noodle chain to more than 50 stores in Vietnam and overseas.

Pho, Vietnam's signature dish, is eaten mostly on the street, but the restaurant chain has found a way to attract customers to come inside.

"The quality is good, especially the noodles," says accountant Dao Thuy Vy, a customer at one of the restaurants in Ho Chi Minh City, formerly known as Saigon. "They're different than normal noodles. The flavor is better, and it's safer than eating on the street."

A bowl of pho on the street costs less than a dollar. At Pho24, it's twice that. But the customers don't seem to mind.

"It's not just the food," says Nguyen Nhan Bao, another customer. "It's the staff, the service. It's all very good, very professional. And it's fast."

Trung, the chain's founder, says that initially, Pho24 catered mostly to foreigners and wealthier Vietnamese. "But our vision is for the whole population of Vietnam," he says, "and at the moment, over 50 percent of our customers are locals."

Part of his vision is to try to convince young Vietnamese that their own fast food is as good as — or better than — that offered by the multinational chains. KFC and Pizza Hut are already here. But McDonald's hasn't arrived yet. Trung wants to grab a big chunk of the market before the 800-pound gorilla crashes the party.

"I just don't want to see it happen that all young people go to McDonald's or KFC all the time," he says. [It's] already happened in many Asian countries. So we have to do very well in advance and make the young generation get used to the traditional dish."

Trung says his company's rapid growth mirrors that of Vietnam's economy in general. Just a few years ago, most Vietnamese couldn't afford a bowl of Pho24, he says, but that's changing.
Late last year, one of Vietnam's biggest venture capital firms bought a 30 percent stake in Pho24. Trung says he'll use that money to fund his expansion. Several shops are already open in Indonesia and the Philippines. A half-dozen more are set to open in Australia and South Korea. And by year end, Trung says he expects to have his first foothold in the United States with a restaurant in California.

And he's pretty much figured out how to market it to the American consumer: "It's very clean, very quick, very nutritious. Less salt, fat, sugar, matches all the requirements of modern life. So you don't get fat with pho."