One of McDonald's earliest outlets in Vietnam has served its last meals. The iconic Saigon branch located in downtown Ho Chi Minh City on Tran Hung Dao Street has officially shut down after a decade in business.

While McDonald's did not disclose the exact reasons for the closure, many speculate rising rental costs may have contributed to the decision. As one of the first international fast food chains to enter Vietnam back in 2014, McDonald's has struggled to keep pace with surging real estate prices in the city's prime commercial districts over the years. 

In a social media post, McDonald's Vietnam announced they would regretfully close the iconic Saigon store on September 19th, 2024 after 10 years of offering affordable meals to locals and tourists alike. The three-story outlet occupied a sizable 660 square meters of space and could accommodate around 260 diners at a time.

Situated near the historic Ben Thanh Market, the location was extremely profitable due to its prominent city center position. However, the soaring rental rates that come with such a desirable address eventually became unsustainable for McDonald's.

When McDonald's first launched in Vietnam a decade ago, they aimed to have 100 restaurants operational nationwide within 10 years. However, their expansion goals fell well short, with only 36 outlets established so far across major cities. The closure of the Saigon branch further reduces McDonald's Vietnam footprint to 35 stores total.

Within Ho Chi Minh City alone, McDonald's will now be left with only 17 restaurants. It seems the international burger chain struggled with the high operating costs prevalent in Vietnam's largest metropolis. Other big brands like Starbucks have also pulled out of prestigious downtown locations in recent times due to rental cost pressures.

While McDonald's did not elaborate on the precise rationale, the shutdown of their flagship Saigon store underscores the business challenges of maintaining international franchises in Vietnam's costliest commercial real estate markets over the long term. It remains to be seen if McDonald's can achieve better scale and profitability through alternative expansion strategies going forward.