Vietnamese market can be tough for foreign food & coffee brands

For the last half month, visitors to Coffee Bean and Tea Leaf at Dong Khoi Street located near the Metropolitan building in the central district 1 of HCMC can see only closed green doors.

“It has shut down, so we have lost a rendezvous,” complained Minh Hanh, who introduced herself as a ‘loyal client’ of the shop.

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The security guard of the building confirmed that another coffee shop will open there next month.

A series of coffee chains in the area opened in the last two years.

Located in an advantageous position, RuNam d'Or, just next to the Notre Dame Cathedral, with modern interior decor, is attracting a high number of clients despite high service fees.

In late 2017, Starbucks opened its first Reserve coffee shop on Han Thuyen street, not far from Bean Dong Khoi. Besides the main drinks, customers can ‘get acquainted’ with Starbucks Reverse bar, where espresso drinks are upgraded with Black Eagle.

The shop attracts a high number of expats and Vietnamese Starbucks fans. Analysts say that the former clients of Bean Dong Khoi will join Starbucks Han Thuyen. As the familiar shop has closed, going to a shop nearby is a good alternative for customers.

The close of Bean Dong Khoi has reminded Saigonese of the similar movec by Gloria Jean’s Dong Khoi. In early 2017, the Australia-based coffee brand with thousands of sale points worldwide had to close its last shop at Grand View, Phu My Hung new urban area, and quietly left Vietnam after one decade of presence.

Both Gloria Jean’s Coffees and NYDC began leaving Vietnam by closing their shops on Dong Khoi street.

Sources say that the business performance of the Coffee Bean brand is unsatisfactory. After one decade of presence in Vietnam, the brand has incurred a loss of nearly VND100 billon.

Local newspapers two years ago reported that Australian-owned Gloria Jean’s Coffees decided to close its last store in Vietnam due to slow expansion and an unsuitable business model.

In 2016, New York Dessert Cafe (NYDC) said goodbye to its customers in Vietnam via its Facebook page. It was one of the most popular foreign coffee chains in HCM City and expected to open 20 outlets in Vietnam.

While some foreign cafe chains have to leave Vietnam despite their powerful financial capability and strong brands, many others have been prospering. Their failure is attributed to the lack understanding of Vietnam’s culture.