Fierce ‘war’ coffee chain

6 min read

Trung Nguyen, Highlands Coffee, The Coffee House ambitious to have thousands of stores but not easily reached. The chains are competing fiercely, the ground at many “coffee rotation” constantly changing owners, new people replace the old ones.

Mr. Bau’s coffee chain elected by Duc (Mr. Doan Nguyen Duc, Chairman Hoang Anh Gia Lai), elected Thang (Mr. Vo Quoc Thang, Chairman of Dong Tam Joint Stock Company) and elected Hai (Mr. Tran Thanh Hai, President of NutiFood ), has just officially opened its 100th store in Ho Chi Minh City. Launched earlier this year, despite the COVID-19 pandemic, the chain has expanded massively, confirming the footballers’ determination to make coffee.

Vinamilk has just announced that it will make a coffee chain, however, the direction of the dairy giant is quite cautious when taking advantage of the system of 430 Vietnamese Dream Milk shops to sell more coffee. Ms. Mai Kieu Lien said that this is aimed at not having to cost US $ 15,000-20,000 in renting space amidst the fierce and fiercer competition of the coffee market than ever before.

Coffee chain is fierce like?

'Cuộc chiến' chuỗi cà phê của Highlands Coffee, Trung Nguyên, The Coffee House… đang khốc liệt ra sao? - Ảnh 1.

Highlands Coffee and The Coffee House are located opposite each other at Tran Khac Chan Roundabout (Phu Nhuan Army, Ho Chi Minh City). Photo: Phuc Minh.

Tran Khac Chan roundabout (Phu Nhuan district) is located next to Tran Khanh Du bridge connecting Hoang Sa and Truong Sa roads, often named by the young people and surrounding people. Similarly, Nga Sau Phu Dong (District 1) or International Construction Site around Ho Con Rua (District 3), this area has many large and small cafes.

Favorable location, adjacent to District 1 and Phan Xich Long dining street, “beautiful view” is the reason why big coffee chains flock here, fierce competition. Many times the prime sites in this area have had to change owners and new people to replace the old ones, nobody else is the “big” coffee.

In the middle of last year, many patrons of Trung Nguyen were surprised when the store located at Tran Khac Chan roundabout closed. Trung Nguyen signboard was gradually removed, the ground was rebuilt. At that time, many people were expecting a restaurant to grow, but eventually replacing Trung Nguyen was Highlands Coffee – the “big” owner of the most coffee shops today.

Thay Trung Nguyen, the ground of Highlands Coffee is now directly opposite to The Coffee House. The two shops are only a few feet away. Meanwhile, adjacent to The Coffee House is Cong Coffee. 3 stores of 3 big chains are connected one after the other and across from the roundabout is a new brand that has been loved by young people recently: Cheese Coffee.

The situation at Ho Con Rua “Coffee Site” is equally fierce competition. Currently this area has the presence of Highlands Coffee, Cong Coffee, Phuc Long, Passio and a series of other large and small coffee shops.

The most recent change here is the departure of The Coffee House to prepare for a special “signature” store located on Pham Ngoc Thach Street, just a few hundred meters away. Notably, the first “signature” store of The Coffee House also replaced Trung Nguyen – one of the most popular business locations of “Coffee King” Dang Le Nguyen Vu.

'Cuộc chiến' chuỗi cà phê của Highlands Coffee, Trung Nguyên, The Coffee House… đang khốc liệt ra sao? - Ảnh 2.

The chain cafe model is very crowded. Photo: Phuc Minh.

The old premises of The Coffee House at the International Square was ceded to the “brother” of Ten Ren milk tea, but after that, Ten Ren withdrew from the market, Toocha took his place. However, this premises has once again changed hands, a new brand in the beverage and beverage business has hired it.

In fact, surveys show that around these “golden areas”, coffee chains are fiercely competing. Within a radius of about 1-2 km, the number of businesses with the same brand is 3-4, even there are dozens of shops competing.

Competition and exhaustion

Fierce competition, the same level of “big” this replaced “big” other and constantly expanding the chain, however, compared with the statement that the head of the brand once affirmed, it seems that the ambition of thousands of coffee shops in just a few years is not easy.

'Cuộc chiến' chuỗi cà phê của Highlands Coffee, Trung Nguyên, The Coffee House… đang khốc liệt ra sao? - Ảnh 3.

The goal of 2019 is to reach 400 stores, but so far The Coffee House has just over 150 stores. Photo: Phuc Minh.

Officially having the first store since 2014, The Coffee House chain quickly developed and expanded in Ho Chi Minh City. The opening speed of this chain’s branch is considered as a speed by F&B business, especially in the period of 2017-2018 when The Coffee House fulfills its ambition: “Everyone has 1 The Coffee House near home”. After 4 years, this brand officially moved to the North with the 100th store mark located in Hanoi.

In an interview with the press in early 2018, former CEO Nguyen Hai Ninh said The Coffee House’s ambition is that the speed of expanding the chain of next year is double that of the previous year.

By the end of 2018, there must be 160 stores, by the end of 2019, there must be 400 business points. Nguyen Hai Ninh said that the brand is still booming and has no intention of stopping opening the chain, the ambition of 5-10 years, The Coffee House will reach 2,000 stores.

However, so far The Coffee House seems to be immobile in opening the chain, in fact, this immobility happened before the COVID-19 pandemic. According to statistics, up to now, the total number of stores of The Coffee House across the country has just stopped at more than 150, the number of stores in Ho Chi Minh City accounts for more than half.

Thus, compared to the ambition of former CEO Nguyen Hai Ninh, The Coffee House could not even reach the goal of 2 years ago and is very far from the ambition of 2,000 stores in 5-10 years.

'Cuộc chiến' chuỗi cà phê của Highlands Coffee, Trung Nguyên, The Coffee House… đang khốc liệt ra sao? - Ảnh 4.

Trung Nguyen is putting high expectations on the E-Coffee franchise chain. Photo: Phuc Minh.

Or with Trung Nguyen, while many stores were replaced by Highlands Coffee, The Coffee House and the fuss about the division of assets in the divorce of the founders’ couple, the speed of expanding the energy coffee chain slowed down, then this “big” has calculated the Trung Nguyen E-Coffee franchise model.

Launched in August 2019, Trung Nguyen’s ambition for a franchise chain by the end of this year will reach 3,000 stores across the country. However, according to recent statistics, Trung Nguyen said that the number of E-Coffee stores has only reached more than 1,000 points, despite the speedy franchise, it has only completed 1/3 of the ambition.

Not only Trung Nguyen, King Coffee of his wife “Coffee King” Dang Le Nguyen Vu – Ms. Le Hoang Diep Thao, also set great ambitions when bringing this chain to Vietnam. Thao said this year, King Coffee will open 120 more stores and 5-10 years goal, there will be 1,000 coffee shops, including franchises.

However, up to now, the number of King Coffee stores nationwide has just stopped at 50 and according to the plan, Thao has about half a year to open 120 new stores, equivalent to an average of about 20 stores per month.

The giant Coffee Highlands has not been able to succeed

As for Highlands Coffee, this chain is really a “giant” when owning the largest number of coffee shops in Vietnam and not being overtaken by rivals for years. At present, Highlands Coffee’s number of businesses is up to hundreds of stores and almost dense in Ho Chi Minh City and Hanoi.

'Cuộc chiến' chuỗi cà phê của Highlands Coffee, Trung Nguyên, The Coffee House… đang khốc liệt ra sao? - Ảnh 5.

Highlands Coffee also cannot IPO to be the chain with the most stores today. Photo: Phuc Minh.

Highlands Coffee is the most present in Ho Chi Minh City, with more than 100 stores, covering all districts. Notably, in the central area of District 1, if taking the mold at a newly opened store located on Le Duan Street, about 200 meters from Notre Dame Cathedral, within a radius of 1-2 km, there are about 20 Highlands shops surrounded sealed this area.

Despite being concentrated with dense density, Highlands Coffee stores are never empty, daytime are office people and evening is the place where young people gather coffee.

Although leading in the number of stores, always crowded, but this “giant” does not seem to achieve its ambition.

DealStreetAsia once said that the owner of Highlands Coffee was planning to list this coffee chain on Vietnam’s stock market, the scale and value of the IPO were not disclosed.

According to the plan, Highlands Coffee is listed before or in July 2019, however, last year, Highlands owners had a report to the authorities about the listing could not take place as planned and will have to reevaluate efficiency.

So far, after exactly one year, there has not been any information regarding the IPO of this coffee chain.

The “football union” of football bosses or the dairy giant Vinamilk set foot in the coffee chain business with many ambitions, however, looking back at the old people like Trung Nguyen, Highlands Coffee, The Coffee House these are names age very popular, experienced but this “piece of cake” does not seem easy to eat.