Doing Business

Will Vietnamese Coffee Shops Survive After the Pandemic?

Linh Pham

May 4, 2020

Doing Business

Will Vietnamese Coffee Shops Survive After the Pandemic?

Linh Pham

May 4, 2020

As we are witnessing, the COVID-19 pandemic has put its impacts on every aspect of society worldwide. Economics is also a sector that has severely suffered from the outbreak, almost all of the production and services are crippled and the F&B industry is not an exception. Facing the business pressure of the pandemic, instead of choosing to give up and float, the Vietnamese F&B market witnessed many brands dare to think, dare to do, innovate, and test to survive. They choose to remain fighting, to protect their own brand and their employees. This is also a matter of Vietnamese coffee shops. This article covers how these coffee shops can survive during the crisis then we can see whether their abilities to recover are potential or not.

How are Vietnamese coffee shops influenced by the COVID-19?

Under the global pandemic, almost no industry is out of its sphere of impact. In Vietnam particularly, coffee shop business is one of the F&B industry group that has suffered a great loss due to this outbreak. The decline in the number of tourists, the limitation in the number of residents in crowded places have led to a sharp drop in revenue, while shops still have to pay very high rental costs, which are the main reasons for the big trouble of coffee shops’ owners.

According to the owner of a restaurant and a brand of coffee in District 1, this company has been in a pathetic condition in the season when domestic and international tourists both declined, of which the coffee system sometimes dropped by 50%. customer.

A lot of coffee shop shut down

Meanwhile, the Doha coffee shop at 223 Phan Xich Long, the outstanding culinary street in Ho Chi Minh City, also hangs a sign to stop operating from February 24, even though it was opened on September 9, 2019. This business admitted that the COVID-19 epidemic had an impact on reducing the number of visitors.

According to Mr.Vo Duy Phu, the director of commerce and marketing, The Coffee House, the Vietnamese coffee chain, said the COVID-19 epidemic had disrupted the system’s plan to accelerate the opening of 100 restaurants in 2020. According to the plan, right after the Lunar New Year, the chain will open more points of sale, but the impact of the epidemic makes this plan must last into May and the last months of the year.

How Vietnamese coffee shops survive during the crisis?

We have no longer heard any invitations like “Cafe?” or “ See you later at the coffee”. The whole society is conducting social distancing whether it is a crowded city or a small street. Young people tend to visit cafés after a meal at the restaurants or enjoying a movie at the cinema. Thus, the closure of these establishments has indirectly impacted the coffee store chains. So, facing this challenge, the coffee shops owners must find a way to save themselves.

Change the business model

In the epidemic situation, in order to still meet the needs of customers, have revenue but still ensure the implementation of the policy of social distancing, not gathering in crowds, the “giant” coffee shops of Vietnam such as The Coffee House, Highlands Coffee, etc. has shifted to online-home delivery business model.

Highlands Coffee has just announced to halt all services at its stores, excepting take away, as of the end of March 31. During this time, the cafés will only serve for takeaway and online orders via food delivery applications.

Coffee shops change the model of working

Similarly, Starbucks has also temporarily halted serving customers at its stores in the city until the end of the month. The Coffee House has also begun offering home delivery to keep the virus from spreading.

With the F&B brands that have been strong in the delivery segment from before, such as The Coffee House, Starbucks, etc. this is the time for brands to assert the role of the platform, while promoting to make the most of the potential, enough revenue to “stand” through the pandemic.

Furthermore, under the great competition of brands, every brand must have their own measures to attract attention and actively interact with customers. This is the “golden time” for new creations, from attractive deals of brands such as mass discount, hourly discount, combo purchase, earning points, giving drinks, etc.; to new delivery methods such as fishing rods, ordering in front of the gate, ship hotpot and home services, etc.

In recent times, aiming to increase their foothold in the local market, Highlands Coffee, Starbucks, and The Coffee House have accelerated expanding their networks with 240, 49, and 145 stores across the country. While making online ordering available, their performance depended heavily on the physical stores.

Achievements after efforts

The methods of online selling with the promotion and reasonable promotion strategies have brought positive features for some brands. According to CafeF, some coffee brands in Vietnam also increased online sales during this period:

  • Starbucks Vietnam: Since the end of March 2020 when major cities request to close, Starbucks Vietnam’s revenue from delivery has increased by 50% compared to the average of February sales.
  • The Coffee House: With discount throughout, orders from 50,000 or more are free shipping. Sales of online sales as of March 29, 2020 increased 30% from the previous week, as all The Coffee House shops were closed.

These remarkable achievements are the results of the creativity and flexibility in the online business methods of Vietnamese coffee brands, cafe and milk tea establishments from big to small. In a time when the disease is still unpredictable, the online selling time will still maintain an important role, even after the epidemic, this can become a long term trend caused by the specific changes in customers’ demands.

The role of retaining staff

The pandemic has caused many Vietnamese coffee shops to “reeling” to stay afloat, while many forced their employees to temporarily leave work due to the social distancing and the decline in revenue. The free time has been so long that a large number of staffs may or have to look for new jobs to meet their daily life demands, which is the other leading concern of the shops’ owners. Therefore, the question “ how to retain staffs?” needs to have its answer.

Mr. Phu Vo, Co Founding of The coffee house shared that: “Beside measures to improve the customers’ experience and maintain the online business, we still try to ensure the welfare of employees so that they can have days off but still get paid. Just like that, mutual support is stimulated so no one is left behind. ”

In short, it cannot be denied that no industry is outside the impaction of COVID-19. However, “In a time of crisis we all have the potential to morph up to a new level and do things we never thought possible”. Thus, we can completely believe that Vietnamese coffee shops still keep the business circle running despite any crisis. Hope that the pandemic will end as soon as possible for not only coffee brands but other industries could also come back to their normal status with great business development.

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