Vietnam sees over 30,000 F&B stores close in H1

At least 30,000 food and beverage (F&B) stores downed shutters in H1/2024 across Vietnam, reducing the total to approximately 304,700, down 4% year-on-year.

Meanwhile, new openings remained limited, according to a report by the Vietnam Food and Beverage Industry Report published by the iPOS.vn platform, which specializes in researching the Vietnamese culinary market.

The report reveals that Ho Chi Minh City experienced the most significant impact, with a 6% decrease in the number of F&B stores. In contrast, Hanoi saw a slight increase of about 0.1%.

There has also been a noticeable rise in the number of stores with short lifespans (closing within less than three months of opening) in major cities.

Several prominent F&B chains have also announced branch closures recently. For instance, The Coffee House has shut down its outlets in Can Tho city after over five years and plans to close all stores in Danang after more than seven years. Some branches in Hanoi and HCMC have also quietly withdrawn from the market.

Similarly, the first Starbucks Reserve store in District 1, HCMC closed recently after seven years of operation.

Despite the decline in the number of stores, the industry’s total revenue exceeded VND400 trillion ($16 billion), equivalent to 68% of the total revenue in 2023.

The revenue uptick can be partly attributed to inflation, with the consumer price index (CPI) rising by 4.08% compared to last year and core inflation increasing by 2.75%. Many stores have implemented promotional programs to boost demand.

Interestingly, the challenging economic environment has not significantly impacted the frequency of dining out among Vietnamese consumers. There has been an increase in the number of people eating out daily, once or twice a week, or three-four times a week, compared to the previous year.

However, spending on cafes has decreased sharply, with a significant drop in the proportion of people spending over VND100,000 ($4.01) per cup of coffee, from 6% to 1.7%. The mid-range price of VND 41,000 ($1.64) to VND 70,000 ($2.81) per cup has become more popular.

Consumers are also visiting coffee shops less frequently due to increased work pressure. According to the report, 41.7% of respondents now visit coffee shops only occasionally, and 32.3% go once or twice per week. Current economic difficulties have made consumers more cautious about spending on non-essential services.

The report indicates that businesses are also adopting a more cautious approach. In the second half of the year, 60% of businesses surveyed said they were focused on maintaining their current scale, while just over 34% planned to expand to new locations. This compares to nearly 52% of F&B businesses having expansion plans in the same period of 2023.