Ngo Nguyen Kha, CEO of beverage chain The Coffee House, says his coffee and tea shops focus on enhancing the customer experience and advancing into the “next round” of the competition.
Why did The Coffee House slow down in 2021-22?
For businesses, the Covid pandemic was just like a storm for boats. To overcome a storm, in addition to considering external factors, it is also necessary to take into account the internals of the boat such as the steering, crew and equipment.
Our customers have also changed. What we used to do to succeed does not necessarily mean it will work with customers now.
I have been in charge of The Coffee House since November 2021. When I talked to my predecessors like Nguyen Hai Ninh and Vo Duy Phu, I was advised to find a new recipe to achieve the same good results for the business and provide satisfaction to customers. That put us in a position to re-evaluate and redefine what makes customers happy.
Ngo Nguyen Kha, CEO of The Coffee House. Photo by Bao Thy
The Coffee House must make products that are memorable to customers. We must make them more memorable.
We also focus on branding for each drink line. These things happen rapidly but unobtrusively: people don’t see the change until it appears. But it takes a lot of work. The Coffee House cannot go wrong and so everything is done with great care.
The Coffee House has effected many changes such as using more paper or plastic cups and launching many new product lines, and received both positive and negative feedback. What are your thoughts on this?
Actually, we still serve in glass and ceramic cups if requested by customers. The use of more paper and plastic cups is just to make the process of making the drinks faster. New products are launched to interact with customers.
Whether these changes work or not, it is important we understand what customers don’t like so that next time we can avoid them and do what everyone loves. For example, The Coffee House knows that customers love Hi-tea, so it has become a full-day tea line.
This product has been in the minds of the research and development team for a long time, but it was not until it appeared as a separate tea line that we realized this.
Among the changes, the reaction of users when The Coffee House appeared on digital platforms was beyond the management’s expectations. That success caused the company to prepare for a much bigger scale of operation and improve and optimize the process of using the new sales channel.
You have taken over The Coffee House during a period of ups and downs. How do you deal with the pressure?
Pressure is always there. But for me, it is important to determine the do’s and don’ts. If you can clearly define your do-not-do list, the pressure on yourself will be greatly reduced. Sometimes you make mistakes because you can’t determine what not to do, which costs both time and effort.
I’ve been very focused on the customer experience since I was in the technology sector, took over the fashion segment of parent company Seedcom and now run The Coffee House.
I think that will make a difference because if customers are not satisfied, everything we do is meaningless. We, people in the company, always remind each other about how to find the intersection between what customers need and what we do well.
If customers don’t need it, but you do it well, you will have to question whether you can teach the customers how to like it. If you can’t and no one else in the market can do it, what you do well will enter the “dumb zone.”
Sometimes businesses lose a lot of time and resources because they enter the “dumb zone” without realizing it.
What motivation will The Coffee House use to grow in future?
To me, a business management strategy is similar to a football strategy. For any business, not just The Coffee House, it is not important to always win, but to focus on the goal of advancing into the next round.
We need to avoid getting into matches that consume resources and bring injuries, red cards and yellow cards. At that time people will say: “Nice try, but uncalculated.”
I don’t want the business to fall into such a situation. This is a calculation The Coffee House must do well. In particular, the number of shops is key to ensuring efficiency with the current team and operating resources of The Coffee House.
Having too few outlets means “a too big head but a small body,” lack of balance. However, The Coffee House will not increase the number of shops irrespective of cost. This is not the right time because spending money to achieve growth needs to be calculated more carefully at this time.
At present the general situation is that cheap money is no longer available, central banks have not stopped raising interest rates, investors prioritize profits.
At least this year people will not sacrifice profits for growth. The Coffee House also has to adjust in the short term: its steps must be calculated and receive investors’ approval. That does not mean we will not open any new stores.
Right at the beginning of this year we reopened a high-end Signature shop in District 7, HCMC. This means The Coffee House will not go on a store opening spree but will open them in a calculated and selective manner.
How does the F&B industry face difficulties this year?
High prices are a fact and unlikely to disappear. Therefore, the pressure of growing costs will continue. In terms of demand, I don’t think it can recover when customers’ incomes do not increase, and recently there has been the situation of workers returning to their hometowns early.
Now at least we have data to forecast things. Even if the forecast is bad, we can still calculate how bad things will be to proactively respond. Conversely, if things look optimistic, we will have a basis to find the right direction.
A customer at The Coffee House. Photo by Bao Thy
In the past only domestic players ran coffee chains. Is it still the case?
Actually, whether domestic or foreign, companies can only answer the question “who participates in the market and to what extent,” but not the question “who wins or loses” in an era when everything is “flat”.
The current story is just what philosophy businesses follow to manage their apparatus and how customers feel about their products and services. Both domestic and foreign businesses must understand the customer experience and avoid the “dumb zone”.
In the past many people used to say foreign businesses cannot understand customers as well domestic enterprises do. That is not very convincing in my opinion. Even in the past, when I was making phones, people used to say it was easy for Vietnamese brands to dominate the market because they understood the customers, but the reality was different.
More broadly, those in the early stages of marketing, branding and communication are all taught by foreigners. In short, when operating a business chain, we need a system, customer analysis methods, discipline in operation… Whoever does these things well will have an advantage in the market.
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