Marketing Random

Business of coffee chain: Internal victory


Internal chains understand Vietnamese culture and consumers so they have good approaches to achieve good business results.

Internal coffee chain is booming

Dozens of coffee chains in Vietnam are rapidly expanding their network in a market where analysts say local operators better understand international names like Starbucks.

The fastest growing of these startups is The Coffee House, based in Ho Chi Minh City.

“We plan to open 700 stores across Vietnam in the next 5 years, with an average of 10 new stores every month,” the founder and CEO of The Coffee House, Nguyen Hai Ninh, told the Nikkei Asian Review. .

Plus Coffee has expanded overseas. The chain opened its first store in Seoul last month and plans for two more in the Korean capital. In Vietnam, Cong Coffee has grown to more than 50 locations since 2007, and is expected to add one or two stores monthly to 2020.

Cong Coffee attracts customers with unique Vietnamese-style décor in the late 1970s and early 1980s.

The owners of these emerging chains have a good understanding of Vietnamese culture and consumers. They set clear goals for the segment of customers they serve and develop unique content for their space toward trendy young consumers, Phuong Nguyen, a market researcher in Ho Chi Minh City. Chi Minh said.

Variety of affordable and varied beverage menus are becoming popular among students and young people working in cities. The chains provide a place where customers can spend hours with uninterrupted internet connectivity – a problem at other cafes.

These features allow Vietnam’s new chains to compete more strongly with foreign brands with better management and services, Phuong said.

The sluggishness of the international giant

The international giant Starbucks has been acting slower than expected in Vietnam. Five years after entry, the number of Starbucks stores stood at only 38. In contrast, Thailand has more than 330 Starbucks, while Indonesia boasts more than 320 and Malaysia has more than 190.

Another start is the most popular chain in Vietnam in terms of store and brand awareness. Founded in 2002 by a Vietnamese-American, Highlands Coffee provides an atmosphere designed to appeal to aspiring young consumers into Western fashion.

Highlands Coffee, Vietnam’s largest cafe chain, has grown to more than 200 locations today from 60 locations in 2014.

After being acquired by Filipino-based restaurant group Jollibee Foods in 2012, the chain expanded to more than 200 stores from 60 stores in 2014, mostly in shopping malls. shopping. Highland’s service has changed to target younger customers at more affordable prices than business class.

Newer chains including Thuc Coffee, Urban Coffee Station and Phuc Long, all of which have been launched over the past decade, are experiencing estimated revenue growth of about 7% annually. In contrast, old brands like NYDC, Australian-owned Gloria Jean’s Coffees and Korea-based Caffe Bene – and even new local chains The KAfe and Saigon Cafe – are shrinking or closing businesses. their karma.

High operating costs, including rent, and difficulty finding places are one of the main reasons for these limitations. A 200-square-meter Starbucks store in Ho Chi Minh City requires an initial investment of about $ 215,000, while a Coffee House store requires $ 86,000, a local coffee shop owner estimates.

Many older brands are slow to adapt to their business models to change customer tastes, currently following new trends around the world, Phuong explained.

Manh Duc / Nikkei Asian Review
* Source: Investment bridge

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