VietNamNet Bridge - Many foreign cafe chains have stalled after a period of development, while some have closed because they could not survive the competition. 

Meanwhile, more and more Vietnamese young owners have joined the market to set up new empires – Cong, The KAfe and The Coffee House.

Starbucks is believed to be the largest coffee chain in the market. Patricia Marques, Starbucks Vietnam’s CEO, talking to the local press recently, said Starbucks had opened 19 shops in HCMC and Hanoi.

She noted that clients have become choosier. In the past, they only ordered the most popular drink, but now they order what they want.

Many foreign cafe chains have stalled after a period of development, while some have closed because they could not survive the competition.

Caffé Bene, another foreign café chain from South Korea, when setting foot in Vietnam, announced that it would open 300 shops in Vietnam within five years. However, it later lowered the target to 100.

A co-founder of the chain commented that there are too many ‘big players’ in the market which compete in the same market segment. Meanwhile, the high cost of retail rent also is a problem that hinders the chain development plan.

There was a café bearing a famous Australian brand at the Nam Ky Khoi Nghia – Nguyen Thi Minh Khai street corner in district 1, HCMC. However, it has closed, while retail premises have been given back to the landlord.

The unsuccessful operation of many foreign café chains show fierce competition in the market. Even the café chains which gain big success in their home markets and other countries also meet difficulties in Vietnam despite their powerful financial capability and experience.

A franchise expert said that retail premises in advantageous positions in HCMC are expensive with the rent of at least hundreds of millions of dong a month. With such high rents, only high-end café chains can afford the costs.

The CEO of a Vietnamese café chain which is under expansion noted there are two factors which determine the success of café chains – the clients and the staff.

Customers in large cities such as Hanoi and HCMC like to drink coffee in familiar spaces where they can talk with family members and friends, while coffee is just an ‘instrument’ for the connection. Therefore, foreign chains may not succeed if they apply the same concepts in many different markets, including Vietnam. 

Despite the stiff competition, analysts said the market is still large enough for more investors to join.

Cong (Plus) is a typical example. At first, it was a small café on Trieu Viet Vuong street in Hanoi. But just after several years of development, Cong has become a chain with 19 shops in Hanoi, Da Nang and HCMC.


DNSG