The food and beverage (F&B) sector in Vietnam saw the closure of more than 30,000 businesses in Jan-June that was reported on 31Aug2024 by iPos, a platform that provides management solutions for over 100,000 restaurant and café businesses. Meanwhile the number of new store openings remained modest during the first six months of the year.
In Ho Chi Minh City’s District 1 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 told that: 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. 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. Experts 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. A certain number of businesses with cautious investment strategies opted to shut down their facilities to preserve capital in an ever-changing market.
Despite massive eatery and restaurant closures, the F&B sector recorded VND403.9 trillion ($16.2 billion) in revenue in Jan-Jun, reaching nearly 70 percent of the industry’s whole-year revenue in 2023, according to the iPos report. Although 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.
Experts 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. It is 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.
VIETNAMMANUAL TEAM