After opening the first café, %Arabica is opening a second in HCM City. %Arabica is a well-known café chain in Kyoto, Japan, founded by Kenneth Shoji in 2014. There are 140 of them worldwide.

The presence of the café chain from Japan, which plans to open more coffee shops in Hanoi, Hoi An and Phu Quoc, will contribute to an already crowded cafe scene in the Vietnamese market.

Prior to that, Café Amazon, a café chain, opened 19 coffee shops in the south, including 15 in HCM City.

Established in 2002, Café Amazon is the largest chain in Thailand with 3,900 shops. It plans to open 1,000 shops outside Thailand from now to 2025.

Meanwhile, Starbucks, a brand from the US, with 10 years’ experience in Vietnam, plans to open its 100th shop in Vietnam in 2023. As of the end of 2022, Starbucks had 87 shops, including 50 in HCM City and 25 in Hanoi. It also has cafes in Hai Phong, Hung Yen, Da Nang and Nha Trang.

Highlands Coffee leads the market in both scale and turnover. Established as a Vietnamese owned chain, Highlands Coffee was bought by the Filipino-owned Jollibee in 2011.

Highlands Coffee now has 609 shops throughout the country. Its revenue is expected to recover this year when it opens more sale points. In addition to Vietnam, Highlands Coffee also runs more than 50 cafes in the Philippines.

In 2022, the market was stirred up by information that Jollibee was seeking partners to sell 10-15 percent share of Highlands Coffee. The chain was then valued at $800 million.

The Coffee Bean & Tea Leaf belongs to the same owner. The chain also came to Vietnam early, in 2006, but the number of The Coffee Bean & Tea Leaf shops remains modest, just 15 to date.

The Coffee Bean & Tea Leaf was established in 1963 in Los Angeles in the US, but it was sold to Jollibee in 2019.

Shrinking

Experts pointed out that only Highlands Coffee and Starbucks have large-scale chains. Other chains such as Café Amazon and The Coffee Bean & Tea Leaf have faced difficulties. It is now the time to lay a foundation for long-term development and not the time to think about making a profit.

As people tighten their purse strings, the strategy that café chains are pursuing now is temporarily shrinking to prepare for long-term development. 

In late 2022, Highlands Coffee changed its brand logo for the fourth time. At times, the brand organized coffee vending on streets at low prices of VND16,000 per cup. The chain also was involved in a scandal of owing rent to retail premises and shutting down some cafes.

Meanwhile, Starbucks had to shut down its cafe at Rex Hotel on Nguyen Hue street in the central district 1 in HCM City, as well as Starbucks Press Club in Hanoi and Starbucks Lan Vien, the first Starbucks café to open in Hanoi.

Instead of opening shops at advantageous positions in central business districts, Starbucks tends to run small-scale shops in new urban areas and office buildings.

Coffee chains also try to sell online via well-known platforms ShopeeFood and Grab. Meanwhile, Café Amazon and %Arabica are reserved to open new shops though their financial capability is really good. Café Amazon, for example, is 60 percent owned by PTT Oil and Retail Business (OR) and 40 percent by Central Group. All of them are from Thailand.

Analysts warned that though holding great advantages over domestic chains, not all foreign coffee chains can succeed in Vietnam. NYDC - New York Dessert Café, Gloria Jean's Coffees and Espressamente Illy, for example, had to leave after periods of ineffective business.

 
Duy Anh