SPC Group's bakery brand Paris Baguette has signed a master franchise agreement with a Vietnamese food and beverage (F&B) corporations and will move in earnest to expand its local distribution network.
According to the related industry on the 18th, SPC Group signed a master franchise agreement on 4th to transfer the operating rights of Paris Baguette's Vietnam stores to local F&B corporations Viet Thai International (VTI).
A master franchise is when headquarters (the franchisor) grants a corporations in a specific country or region the authority to develop the local franchise business. Accordingly, VTI will operate the 10 Paris Baguette stores in Hanoi and Ho Chi Minh City. The Paris Baguette corporation in Ho Chi Minh City (Paris Baguette Vietnam Co., LTD.) will also proceed with liquidation.
An SPC Group official said, "We signed the agreement after a leading corporations well-versed in the local market and customers reached out. We expect this agreement to accelerate the expansion of our local business."
The market sees this as Paris Baguette forming an alliance with a local corporations to expand its presence in Vietnam.
Paris Baguette entered the Vietnamese market directly in 2012 with its first store in Ho Chi Minh City, but over 13 years it opened only 10 stores. In 2023, it merged the local corporations separately operating in Hanoi and Ho Chi Minh City into a single Ho Chi Minh entity, but it still failed to escape losses. The Vietnam corporation's sales last year were about 5.9 billion won, with a net loss of about 1.6 billion won. This is interpreted as a strategic shift toward a partnership with a local corporations familiar with the market.
Launched in 1988, Paris Baguette operates about 3,500 stores in Korea. Starting with China in 2004, it has expanded into 14 countries, including Vietnam, the United States, France, the United Kingdom, Canada, and Singapore, and operates more than 600 overseas stores.
In Southeast Asia, the company is expanding its distribution network with Singapore as a base. It also operates stores in Cambodia, the Philippines, and Malaysia through a master franchise model. The Singapore corporation's sales, which were around 80 billion won in 2023, increased to 99.7 billion won last year.
VTI is a corporations founded in 1998 by Chairman David Thai and operates F&B brands such as Vietnam's largest coffee chain Highlands Coffee, Pho 24, and The Coffee Bean & Tea Leaf, as well as the footwear brand ALDO.
Of these, Highlands Coffee had 60% equity acquired in 2012 by Philippine food conglomerate Jollibee Food Group, which became the largest shareholder, while VTI retained a minority stake. It operates about 850 stores overseas, including in Vietnam. Last year's earnings before interest, taxes, depreciation, and amortization (EBITDA) were 1.046 trillion dong (about 55.2 billion won), up 4.5% from the previous year. However, same-store sales at locations operating for more than 15 months fell 3.7% year over year.
Accordingly, the company is expected to pursue growth opportunities by expanding Paris Baguette's distribution network and cross-selling, based on Highlands Coffee's network of about 700 stores in Vietnam.
According to market research corporations Statista, the size of Vietnam's bakery market last year was $5.31 billion (about 7.3718 trillion won), and it is expected to grow at an average annual rate of 3.8% through 2029. Although rice and pho were staple foods in the past, analysis indicates that more consumers have recently chosen bread as a meal substitute.