After a few months in operation, the cafe located deep in a small alley on Hoang Quoc Viet Street (Hanoi) recently announced its closure. According to the owner, the decision to close was unavoidable since business performance was far below expectations, despite an initial huge investment.

The owner said total startup costs, including rent, renovation, design, and equipment, reached about VND1 billion. Rent alone took nearly half. The well located Hoang Quoc Viet area is considered a prime area with many universities, offices, and dense residential zones.

Reality, however, fell short. The cafe’s location was deep in a narrow alley that frequently flooded during heavy rains, discouraging customers from visiting. A few months after opening, monthly revenue averaged only about VND50 million, not enough to cover rent and staff wages.

"We realized our mistake too late. What seemed like a good location to us wasn’t necessarily good for customers. Poor accessibility, an unclear business model, and lack of customer research were the key reasons for failure," the owner said.

In Ha Dong district, Nguyen Thi Hue, who ran a lemon tea shop targeting students near a high school and several universities, also had to close down. She believed the high student population would guarantee steady traffic, especially with a trendy, affordable concept and eye-catching space.

But the opposite happened. Despite being next to schools, students avoided the shop out of fear of being caught by teachers or parents. And customers from other areas had little reason to visit the area.

Hue tried various tactics, including promotions, menu changes, and social media campaigns, but none significantly improved business. After months of barely scraping by, she decided to shut down to cut losses.

She admitted her biggest mistake was choosing a location based on personal feelings instead of researching customer behavior. Pouring hundreds of millions into a caf without understanding the customers made failure almost inevitable.

Hue noted that many first-time entrepreneurs get caught up in aesthetic designs, unique concepts, or the idea that "more foot traffic means more customers", while skipping real market research. One wrong assumption can cause hundreds of millions or even billions in losses within just a few months.

According to Hue, it’s essential to thoroughly study the location, not just count foot traffic, but determine whether those people are actual potential customers. On the same street, consumer behavior can vary dramatically within just a few tens of meters.

She also emphasized the importance of accessibility: even a beautiful cafe won’t attract guests if it's hidden in a deep alley, hard to find, or lacks parking.

Before investing, business owners must define a clear concept and customer segment. Serving students is completely different from targeting office workers or young people looking for Instagrammable spots. Misidentifying your target audience leads to misaligned décor, menu, and pricing.

Finally, plan an exit from the start, sign flexible leases, and phase in investment instead of “all-in” to avoid total loss if business underperforms.

A respected branding expert told VietNamNet that if asked about the biggest concern before starting up, 99 percent will say the fear for having no customers. Yet few anticipate this scenario when starting out. Most put all their resources and hopes into attracting customers.

When the cafe becomes deserted, many owners fall into panic and stress, often making irrational decisions. A common mistake is chasing short-term fixes, i.e constantly changing directions without a clear plan.

According to the expert, two major factors impacting cafe business are consumers tightening their spending and intense market competition. With the economy under strain, people are prioritizing savings and cutting back on non-essential expenses. Many now brew coffee at home or opt for cheaper cafes.

Recent consumer reports also show that people have become highly price-sensitive and only spend on products and services that offer clear value.

Vietnam’s cafe market is becoming saturated. New shops are mushrooming, from big chains to small independents, all trying to differentiate themselves. The battle over pricing, quality, design, and customer experience is fiercer than ever.

Duy Anh