Many foreign-owned fast-food chains in Vietnam are considering exiting the market or downsizing while local brands are becoming more popular to consumers.

Consumers at Coffeebike Plus

When entering Vietnam, the Singaporean coffee and dessert chain New York Dessert Coffee (NYDC) said it aimed to open 20 cafes in five years with an investment of USD300,000 per cafe. After seven years, it finally announced its shutdown on July 20.

The shutdown of NYDC has caused many people to speculate on the leaving reasons and the question about the business of foreign cafe brands in Vietnam. One issue has been rising expenditure that overshadowed revenues or the competition from domestic brands, including Kafe, Trung Nguyen or Urban Station.

Hoang Minh, a local in HCM City said, "At first, people were attracted to the new and elegant NYDC but the food and drinks are expensive for average consumers. That's why when new cafes opened with good food and more reasonable prices, consumers left NYDC."

NYDC is not the only cafe and restaurant chain that left Vietnam after some short years, Burger King, Gloria Jeans or The Coffee Bean and Tea Leaf have either downsized their operations or shut down.

CEO of Pizza Home Hoang Tung said thanks to deeper understandings about the local habits and comfortable spaces, the local cafes were able to compete with foreign cafe chains. Cheaper prices play an important role in the rise of local cafes. Consumers can only go to foreign-owned cafes a few times a month but they can go to local cafes daily.

This is a positive outlook for local businesses but each cafe brands have their own styles and advantages. Vietnamese cafe brands were warned that if they fail adapt to ever-changing consumer demand, they would lose the advantage.

Ly Truong Chien, chairman of Tri Tri Group, also said foreign companies had better knowledge and experiences in chain restaurant management and services. Local cafes had to always innovate to meet a rapidly changing market.

According to the market research and market information group Taylor Nelson Sofres Vietnam, whether a brand fails or succeeds offers lessons to both local and foreign-owned companies. That is small business can adapt and has success when it can optimise the retail prices to bring consumers a satisfying experience.

Dtinews