Thoughts on coffeeshops

Hi,

I have some questions/remarks/findings regarding doing business (coffeeshops in particular) in Saigon. My (vietnamese) girlfriend, who has some experience as a general manager in some coffeeshops, recently opened her own small coffeshop (in fact she took over an existing coffeshop).
As I dont have any experience regardings coffeeshops or business in general, I am curious because I am not yet convinced if her coffeeshop will be succesfull.

First, doing business in coffeeshops seems saturated to me. There are literally thousands of shops ranging from small steet vendors selling ca phé dau tot high end coffeeshops and everything inbetween. So this huge fierce competition makes me to believe that not many business making enough profits? I am right or wrong about that?

Secondly, I was a bit astonished by the hight rental prices in Saigon. Just for small coffeehops with limited tables rental prices are like 8million dong, which seems so high to me. I know other costs are rather low, but those rental costs seems like a heavy burden to me.

Thirdly, after strolling around trought many places in Saigon, there doesnt seems to be a golden receipt which makes your business succesful. Vietnamese seems to enjoy all sorts of business, from those fancy new style shops to sitting on those plastic children chairs next to a noisy construction.  Or I am missing something?

Anyone here open to share their thoughts!?

thx in advanced

SEEMS, to me, you've got the situation nailed.

What's your 'angle' going to be? What will make a coffee shop unique that hasn't been tried before?

Food businesses have their hassles - starting with the business setup/lease, the equipment and then the Health Department.  The cheapest, genuine, street coffee can be had for 10,000-15,000 Dong - for a 'local' community - or for a wider clientele (tourists, business people, etc) - passers by- you need more.

Vinacom shopping plaza is looking for USD$75/metre2/month!

And costs aren't low in other establishments, you have electricity, bottled gas, bribes to police (to avoid parking hassles, etc). Then the weather can stiff your business on short notice.

thanks for you reply!
Somebody else want to elalobare?
Is there an average rental price per m2 for ho chi minh so I can compare? I know this is difficult because it depend on district etc.. but I mean for lets say a vietnamese district?

Just think of your home country and see if you can give an average,not easy. It comes down to street position if it's on a busy street the rent will be high,if it's in a small hem it will be lower. Best you actually go and look at some places as giving an average is no easy feat.

If you have the funds, you can make it into one of those DJ Cafe.....which I personally thing is absolutely retarded...however people tend to flock to them and they're always packed.

Hi Zubrowka,

Yes you are right that there are plenty of coffee shops here in HCMC. But they still can have profits as Vietnamese has habit to drink coffee anytime especially at weekend. Point is your girlfriend must do something completely different from other coffee shops. She must think well about it. As you said she was a manager before so i think she already had experience and her own idea on that

If she does not have much money, she can open a take away one with fresh coffee that is made right away when customer make orders. This is a new trend here. What she has to do is finding a good location and decorate the shop differently or have an great idea on servicing, etc....

Renting fee is not the same all the place, you can compare with some shops nearby that location. When u just start, do not open a big on as its not easy to run and manage the staff... Just think well in any situation before you start

Its just to share with you for my opinion

Thanks

Sarah

It very much depends on where?  You don't mention location.  If it is in a heavily local vietnamese what you do will be very different than an area heavily populated by expats and tourists.

Coffee and coffee alone is a hard way (in my opinion) to make money - I am looking to open one myself but I've decided to wait a year or two until I understand the Vietnamese business laws/methods a bit better (I doubt I'll ever understand them!).  I did start to develop it about 6 months ago but started to understand how much I didn't know about doing business in Vietnam.

I think you are right about the saturation of the (dedicated) coffee business, so my idea is a business that offers coffee for sale to entice visitors to stay longer and browse the other product.  This way I am not dependent on a 10,000 - 50,000VND product to cover my overheads, which as you say, can be disproportionately high depending on location.

Hi Gengi,

Yeah location is the most important. Also small coffee shop with impressive decoration is a good idea. Coffee shop in Vietnam mean you also serve fruit juice or smoothy, small cakes or maybe other kinds of products. Its your job to think to make your coffee shop differently from others.

Btw, you no need to wait from 1-2 years to understand Vietnamese business law. What you need is money, idea, how to manage staff (if u cant manage them well, even u can have profit but u still can lose money coz of them. They know trick to make you lose profit). Also u need a reliable partner to open a coffee shop with. This person will support you all what you need. Small coffee shop is not that hard... Police wont make you trouble, or they just ask for some tea money

I hope you can think positively and adapt to Vietnamese living way

Good luck

Sarah

Coffee shops are popular because cops tend to not harass those businesses much! I think everybody else has it covered to think of something that will attract attention. What demographic are you going for? Themed coffee shops are all the rage in East Asia and you're seeing them pop up here now (like the baby cafe and dog cafe in Phu My Hung).

Its located in district 10, small, densely populated Vietnamese district as far as I know the district. So she aims for the typical Vietnamese consumers, offers also take-away and tries to be a place where people come and enjoy their coffee in a rather quiet surrounding.

I know location is important, but thats in my opinion very hard to tell what location works or not. I mean you even seem people eating and drinking under a poorly litted bridge.. ;)

What I fear and wondering how can coffeeshop stay alive if you sell products with low prices (10 tot 20k), margins arent that big and what I see is that most Vietnamese dont consume much. They tend to stay some drinking one coffee, using the free wifi, but rarely drinking a lot.

Zubrowka :

Its located in district 10, small, densely populated Vietnamese district as far as I know the district. So she aims for the typical Vietnamese consumers, offers also take-away and tries to be a place where people come and enjoy their coffee in a rather quiet surrounding.

I know location is important, but thats in my opinion very hard to tell what location works or not. I mean you even seem people eating and drinking under a poorly litted bridge.. ;)

What I fear and wondering how can coffeeshop stay alive if you sell products with low prices (10 tot 20k), margins arent that big and what I see is that most Vietnamese dont consume much. They tend to stay some drinking one coffee, using the free wifi, but rarely drinking a lot.

You know it only cost .5k to make the coffee right? It's huge margins that's how they survive.

Hi Zubrowka,

If you and your gf want to do biz here in Vietnam, you should see things through Vietnamese eyes. I just give you an example, one Vietnamese bread costs $10 in AUS and USA. How much is it in VN? USA 0.5 only. Can they survive ? Also there are many thing is super cheap in VN too.

Beside that, labour fee in VN is unexceptable. One shift for 6 hours is about USD 60 per month with 4 days off per month only. This is applied for some very crowded coffee shop in city center. In the surrounding districts of HCMC is less than it I think. And they have to act professional, always have to smile to customer. Most of them are students who can survive with that low salary. If you open a small coffee shop, you may no need to hire one staff...

How much does it cost for wifi per month? USD 15 only to make your customer feel comfortable. Maybe there are some guest who stay for some hours to use wifi just to drink one cup of coffee. But if they are happy, they will just come to your coffee shop and bring their friends too.

For coffee shop decoration, they prefer to use small chair and table, it cost USD 15 for one set. And you can hang some handmade painting or dried flower to make your shop look nice and warm.

If people can earn profit, you can too. Point is its what you want to do or not :-D

Remember you are living in VN, you cant get high profit comparing to AUS or USA. LOL

Sarah

LaxFogo

You are right, maybe less that 5 thousands VND if you can find your good supplier...

Best regards,

Sarah

I am well aware that making a coffee just cost some thousand dong and you can hire students for just  9000 dong/hour and that wifi isnt expensive either like many other things.

The only other thing I was surprised before, is the high rental especially compared with other costs. I mean if you have to pay lets say around 300k dong every day for rental and electricty, you already have to quite a lot coffees just for cover your fixed costs let alone other costs and make profit. Most shops, even the popular arent busy all day, just some hours.

Zubrowka :

thanks for you reply!
Somebody else want to elalobare?
Is there an average rental price per m2 for ho chi minh so I can compare? I know this is difficult because it depend on district etc.. but I mean for lets say a vietnamese district?

I have a bookshop in Ho chiminh where part of the bookshop is planning for cafe. If you are interested we can share the place and the rental cost which is horribly high. Nowadays, some particular vietnameses who only live based on the rental collection and do nothing that push up the rental cost in the big cities.
If you want to get a cheaper price, you have to bare the cost of marketing and beginning dead-time coz nobody knows about at first. Once the shop sucessfully operated after 1 year, there will be few copy cats create the same concepts as yours and open bigger than you. So you waste one year effort.
One of the lesson i ve learnt from open business is location, location and idea very important. Good idea must go together with location. Otherwise you might let your business goes to the one who has more finance after 1 year operating.

Hope it might help :)

Rental in tphcm very high. I think that price is not too expensive if your place of business advantages. if ảound crowded shop that helps you attract more customers. if you think of a unique style for your  cafeshop you will attract more passengers

You can't swing a dead cat around Saigon without hitting a coffee shop, there are so many.
I don't see how you would make money, you have five students spending 10k each and staying three hours using the wifi, doing their homework or sleeping while you are paying twice that on AC and the space they are consuming.

Invest the money and open a Circle K or family mart, they make a profit.

What's the theme of the coffee shop?   What is the name of the coffee shop.?

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