Vietnam records at least 30,000 F&B store closures in Jan-June
Vietnam records at least 30,000 F&B store closures in Jan-June
The food and beverage (F&B) sector in Vietnam saw the closure of more than 30,000 establishments during the first half of 2024, according to a report recently released by iPos, a platform that provides management solutions for over 100,000 restaurant and café businesses.
A rising number of franchised F&B chains that make the most of proven business models to expand quickly has added vibrancy to the F&B market in Vietnam. Photo: Quang Dinh / Tuoi Tre |
The report also highlighted that the number of new store openings remained modest during the first six months of the year.
In Ho Chi Minh City’s District 1, Tan Dinh Ward boasts a high concentration of schools, offices, and wealthy residents but has seen lots of food businesses of various sizes struggling to stay open.
Nguyen Van Nam, owner of a popular eatery offering bún bò Huế (Hue spicy beef noodles) on Tran Quy Khoach Street, recounted his business’ good old days in the past three years.
He used to think that the post-pandemic period would hit his eatery hard but its sales turned out to be better than expected.
From the beginning of 2024, he had to close the eatery on Sundays and reduce the number of waitstaff from five to three, citing low demand.
The weak demand also dampened many other businesses in this commercial area.
A retail space on Tran Khac Chan Street where a Hanoi-style bún chả (rice noodles with grilled pork and meatballs) eatery had been operational for almost five years was available for lease.
A new tenant opened a cơm tấm (broken rice topped with grilled pork) eatery early this month but experienced lower-than-expected sales.
Lan, who lives on the opposite side of the cơm tấm eatery, elaborated that business in the area has slowed down, while rents for retail spaces are extremely high.
Plenty of businesses in the industry in the southern metropolis said that they have been struggling to combat declining sales since the start of this year, amid price hikes.
Hoang Tung, chairman of F&B Investment and an expert in the field, pointed out three significant challenges that the local food industry is facing, including cash flow issues, a global economic downturn, and a pullback in customer spending.
Despite massive eatery and restaurant closures in January-June, the F&B sector booked VND403.9 trillion ($16.2 billion) in revenue, reaching nearly 70 percent of the industry’s whole-year revenue in 2023, according to the iPos report.
He said that while consumers in the local market are spending less, particularly on luxury products and services, middle-class restaurants, food kiosks, and stalls are gaining popularity, catering to the needs of a broader consumer base.
Apart from casual dining, there has also been a rise in the number of franchised F&B chains. These make the most of proven business models to expand quickly, adding vibrancy to the local F&B market.
According to a leader of the Ho Chi Minh City Food and Foodstuff Association, a certain number of businesses with cautious investment strategies opted to shut down their facilities to preserve capital in an ever-changing market.
Le Duy Binh, managing director at Economica Vietnam, argued that the closure of over 30,000 F&B stores did not indicate a decline in the F&B sector or the overall economy.
He believed that it was not hard for a business to enter the F&B industry, but fierce competition would lead to a high rate of closures.
Looking on the bright side, the massive closures of F&B stores could actually benefit the industry by enhancing the quality of existing businesses, Binh said.
The increasingly expensive rental costs prompted lots of F&B businesses to move online, leading to a decline in traditional store numbers.
The Economica Vietnam managing director also warned that the industry could be seriously impacted in the future by rising inflation, increased material costs, and surging rentals for retail spaces following a recent real estate boom.
