VietNamNet Bridge - With the cost price accounting for only 20-25 percent, high-end coffee chains are making big profits selling coffee at VND40-90,000 per cup. 

{keywords}

Of the best-known café brands in Vietnam, Starbucks is the coffee chain with the highest prices. Every cup of Espresso, Cappuccino and Latte there is VND15,000-20,000 higher than other foreign brands such as Gloria Jeans Coffee, The Coffee Bean & Tea Leaf, Illy, Dunkin Donuts and Caffe Benne, and VND25,000-35,000 higher than Trung Nguyen and Highlands Coffee.

With the current business model, Howard Schultz, CEO of Starbucks, said the revenue from the first shop has met expectations.

Setting prices cheaper than foreign brands, the revenue of the best shop of Trung Nguyen, a Vietnamese brand owned by Dang Le Nguyen Vu, dubbed the Vietnamese Coffee King,  is about VND2.2 billion a month, while the figure is VND400-500 million a month for other shops. 

According to the manager of a Highlands Coffee shop in district 1, HCM City, a cup of coffee has the cost price of only 20-25 percent of the selling price.

On average, one kilo of coffee, priced at VND60,000, can make 30-40 cups of coffee. If selling a cup of coffee at VND8,000, one would make a profit of 50-60 percent. Coffee chains set up the prices of up to VND85,000 per cup, which means, they are making ‘super-profit’.

With reasonable prices, targeting different groups of customers, Highlands Coffee is the chain which offers the lowest prices among luxury brands. 

A cup of ice milk coffee at Highlands is priced at VND29,000, while it is VND55,000-60,000 at Trung Nguyen. Meanwhile, an Espresso is priced at VND44,000-54,000, Cappuccino VND54,000-64,000, Latte VND54,000-64,000.

Meanwhile, its customers can use free wi-fi for indefinite time and be served different kinds of food.

Cafes make money from other drinks as well. Truong Anh Tuan, deputy director of Caffe Benne Vietnam, said the revenue from lunch, sandwiches, pastries and drinks make up a high proportion of the chain’s revenue.

However, though the selling prices are high, the profits remain unknown.

One of the biggest challenges for coffee chains is the race for retail premises. 

Positioned as a high-end coffee chain, eight Starbucks shops are located in advantageous positions, despite the high rent. 

Sources said that Starbucks has to pay VND320 million a month to rent the space located near the New World Hotel.


related news

Kim Chi