Don Thompson

The Big Mac makes its Vietnam debut

February 10, 2014: 2:26 PM ET

Restaurant in Ho Chi Minh City is the 10,000th McDonald's in Asia.

By Beth Kowitt, writer

McDonald's

FORTUNE -- McDonald's (MCD) got a little bit closer to conquering the globe Monday when it opened its first restaurant in Vietnam. The launch in Ho Chi Minh City marked the fast food giant's 10,000th location in Asia and entry into its 120th country.

"Clearly I think there's pent up demand for McDonald's in Vietnam," CEO Don Thompson told Fortune in a telephone interview from Sochi. "It's been on the company's radar screen for a while."

The opening comes amid a challenging period for McDonald's in its home market. On Monday its U.S. business reported its third month in a row of same-store sales declines, and in January Thompson noted that the company had lost some relevance with customers. McDonald's is becoming increasingly reliant on international markets as a revenue driver: In 2012, 68% of revenue came from outside the U.S., up from about a 50-50 split in 2000.

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McDonald's hasn't opened a new market since 2011 when the Golden Arches arrived in Bosnia and Herzegovina in July of that year and then in Trinidad and Tobago two months later. After arriving in Mauritius in 2001, McDonald's didn't enter a new country for a decade. The company slowed store growth during that period, focusing on growth through increasing sales at existing stores rather than through more restaurants.

Thompson told Fortune that entry into Vietnam shouldn't be read as a change in strategy or a refocusing of efforts. "We're not shifting all of our resources to just opening new markets," he says. However, he did note that Asia would be the site of a predominance of new units going forward.

McDonald's still has much more ground to cover in Asia in growing its store base in countries where it already has a presence and opening up in nations where it's missing (Cambodia, Bangladesh, and Laos to name a few). Thompson says the company has its hands full with Vietnam at the moment, but McDonald's is going to continue to look for new opportunities in Asia.

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Vietnam's 350-seat restaurant in Ho Chi Minh City, open 24-hours, is located at the terminus of the 1,000-mile highway that connects that city, the country's largest, with the capital, Hanoi. The location features Vietnam's first drive-through, which is open to both cars and the motorcycles that dominate the city.

Menu highlights include the McPork, a new item tailored to the local market that is made with a pork sausage patty on a sesame bun. "We wanted to introduce a pork product because that is the most commonly consumed protein here," says franchisee Henry Nguyen, adding that he thinks the iconic Big Mac and fries will be the most popular products. Most of the ingredients are at this point sourced from the U.S., Australia, Malaysia, and Thailand, but Nguyen has a goal to eventually buy them locally.

Nguyen's parents emigrated from Vietnam to the U.S. when he was about two years old, and he worked for the fast food chain in high school part-time during summers. About 13 years ago he moved back to Vietnam, where he's managing general partner of private equity firm IDG Ventures Vietnam and the son-in-law of Vietnam's prime minister.

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For Nguyen, the restaurant was a decade in the making. Ten years ago he submitted an application to become a McDonald's franchisee in Vietnam. And then he waited. Nguyen had attended Northwestern's medical school and business school, not far from McDonald's Oak Brook, Ill., headquarters, so he would drop by and visit with executives when he made trips back to the U.S.

About two years ago, McDonald's told Nguyen it was going to start the process of selecting a franchisee for the Vietnamese market. He was notified about a year later that he was selected, and construction began in August 2013. This is not his only venture into the fast food world -- he was a director at a company that brought Pizza Hut to Vietnam in 2006 -- but he says this is the first time he's put a lot of time, effort, and personal investment into franchising.

Can we expect to see other local twists on the menu, such as the classic Vietnamese banh mi sandwich? Nguyen says he wouldn't rule it out for the restaurant's McCafe counter, which will open in about a month.

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