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Café chains boom as ‘coffee culture’ takes shape

Though the Vietnamese café market has always been bustling, more and more coffee chains are continuing to join the market.

The Vietnamese cafe market has always been bustling
The Vietnamese cafe market has always been bustling

In Vietnam, ‘let’s go for a coffee?’ is not only used to refer to the drinking of coffee, but also means a place where people meet for business or go to make friends.

The so-called ‘coffee culture’ has spurred the development of more chains, which have been making profits.

In early July 2018, Trung Nguyen International (King Coffee) launched King Coffee chain in Gia Lai province. The second and third shops of the chain opened in HCMC.

Trung Nguyen is well known in Vietnam as a coffee roaster. Its founder Dang Le Nguyen Vu is called the ‘Coffee King’.

King Coffee will have to struggle to exist and develop in a market where there are many foreign brands such as Coffee Bean & Tea Leaf, Starbucks, McCafe, Highlands Coffee and Caffe Bene, and domestic brands such as Phuc Long, Urban Coffee Station, The Coffee House and Saigon Café, which have been expanding.

Though the market is full of potential, it is not easy to run chains. Many café chains opened and then shut down after short periods.

Le Hoang Diep Thao, CEO of Trung Nguyen International, said that the business has a high elimination rate.

In the past, Trung Nguyen expanded its Trung Nguyen shop network rapidly under the franchise mode. “We opened 500 shops some years. However, we later had to narrow the network,” Thao said.

The investment rate in Vietnam is relatively high. A senior executive of PJs Coffee, an American brand which has joined Vietnam’s market, said the investment capital required for one café is $250,000. The retail premises rent in HCMC is 2-3 times higher than in New Orleans.

While the high retail premises cause investors to shrink back, Pham Dinh Nguyen, chair and CEO of PhinDeli, decided to operate a takeaway chain. To date, PhinDeli has developed more than 2,000 takeaway sale points in 40 provinces and cities.

Nguyen is optimistic about the development of the takeaway model, saying that PhinDeli sells 50,000 cups of coffee. The demand for clean takeaway coffee is high because consumers have become choosier about quality and refuse coffee mixed with chemicals and additives.

None of the owners of the coffee chains whom reporters interviewed said they would stop network expansion at a certain time, but all of them want to continue to expand.

Nguyen Hai Ninh, CEO of The Coffee House, said he would open 700 shops throughout Vietnam in the next five years.