Summary of "Vì sao ngành F&B lỗ mà người ta vẫn làm?"
Why F&B (especially coffee shops) can look easy to start but often loses money
Market reality vs. business survival
- Industry growth doesn’t equal profitability
- Vietnam F&B 2024 revenue: 688,800+ billion VND, +16.6% YoY
- Only 14.7% of businesses grew revenue vs. last year; the rest broke even or lost money
- Cost pressure is the core stressor
- Nearly 45% of businesses are in a “critical situation” where raw materials > 30% of selling price
- Some see raw material costs rise >50%
- Customer spending is declining
- 52.3% of Vietnamese consumers spend < 35,000 VND per drink
- Willingness to spend 100,000 VND on coffee fell from 6% → 1.7%
- Implication: opening is easy; staying profitable long-term is the battle. Restaurants not aligned with these realities get removed by the market.
Closure trend (example):
- First 6 months of 2024: 30,000 stores closed
- By 1H 2025: expected 50,000 closures
Core execution problems (costs, operations, and cash management)
1) Fixed costs crush early-stage cashflow
- Rent dominates location-based models
- Ideal rent benchmark (international standard): 10–15% of revenue
- Reality described: often 25%–55% of revenue
- Example cited: Han Thuyen St (District 1, HCMC) rent 750M VND/month
- Rent is often required 3–6 months in advance + deposit, causing immediate burn before sales start.
2) Online delivery platforms create “fake revenue”
Restaurants rely on apps (ShopeeFood, GrabFood, BFood) to access demand—but pay heavy commissions.
- Typical app fees: 20%–30% of order value
- Example math (bubble tea 50,000 VND):
- App discount/charge: ~25% = 12,500 VND
- Ingredients cost: ~30% = 15,000 VND
- Packaging: ~4,000 VND
- Total cost (excluding rent/staff/electricity/water): ~31,000 VND
- Remaining to cover other ops: ~18,000 VND
- Promotions further destroy margins
- To appear in search, shops join discount/free-shipping campaigns (e.g., 30% off + shipping subsidies)
- Result: profit per order ~0 or negative
- Operational takeaway: app-driven sales can inflate topline while keeping actual take-home margin near zero.
3) “30/30/10” margin rule no longer works
Traditional framework mentioned (30/30/10 ratio):
- 30% raw materials
- 30% personnel
- 30% fixed & operating costs (rent, utilities, marketing, depreciation)
- 10% owner’s net profit
Why it breaks:
- Food services price index +4.03% in 2024
- Food prices +12.19%
- Other food items +2.7%
- Electricity/water/labor rising +12% to +15%
- When:
- raw materials > 40%
- rent ~35%
- wages ~25%
- → the model no longer balances, and profit gets eroded
- Target/timeline referenced: nearly 50% of businesses may need price increases in 2025 to survive (but risking demand drop).
4) Hidden costs and profit leakage
- Raw material loss/overuse
- Up to 35% of stores face shortages/over-consumption of 18%–25% of raw material quotas
- Example: syrup poured out 5–10 ml extra; multiplied across stores → major loss
- Spoilage & rework
- Poor storage → spoilage waste
- Staff mistakes → remakes and added costs
- Theft risk without controls
- Without management systems/cameras, owners may suffer gradual disappearance of goods
5) HR is structurally hard (turnover + KPI ambiguity)
Staffing is heavily part-time, with very high turnover:
- Industry workers: ~3 million
- ~78% (≈2.3 million) are students aged 16–22
Turnover expectation mentioned:
- ~35% consistent turnover rate
- In HR terms: quitting after 1–2 weeks is “normal”
Operational consequences:
- Hiring costs (ads)
- 1–2 weeks retraining
- Lower productivity → worse service → customer complaints
- Idle labor waste:
- Example: 5 waitstaff needed, but only busy 2 hours lunch + 2 hours evening
- Rest of day staff are idle, yet salaries still paid.
KPI challenge:
- It’s hard to set clear performance metrics for carrying/serving work, so pay may rely on minimum hourly rate and intuition rather than structured development.
6) Legal and depreciation mistakes can end businesses
- Legal compliance gaps lead to recurring fines:
- sidewalk encroachment
- missing food safety certifications
- not meeting fire safety standards
- Depreciation/reserve fund neglect
- Example: 100M VND Italian machine, 3-year usage
- Should set aside ~3M VND/month for depreciation
- If it breaks without reserves → shutdown risk
7) Confusing cashflow with profit + thin cash buffer
- Customers pay immediately, so owners can feel “rich” from daily cash inflow.
- But real profitability must account for the timing and size of cash outflows.
Cash buffer day metric
- Other industries average: 27 days
- F&B average: 16 days
- Consequence: a short shock (rain/road works/epidemic) can trigger inability to pay next month’s rent + salaries → bankruptcy risk.
Owner labor is treated incorrectly in “profit” thinking
A common mistake described:
- “Revenue minus rent/raw materials/utilities/salaries/ads = profit”
But the owner’s labor is not counted as an expense. If an owner’s labor would otherwise cost ~20–25M VND/month as an employee:
- Example given: reported “profit” 20M VND
- Subtract owner labor 25M VND
- → actual business is ~5M VND loss per month
Takeaway: being the boss can mask underpayment of your own work (“exploiting your own labor at a very low price”).
Why people still enter: the “illusion” and the business-model variety
A) Tempting unit economics (but incomplete)
Example smoothie:
- Ingredients cost: ~12,000 VND
- Menu price: 40,000–50,000 VND
- Appears as 3–4x ROI
Missing piece:
- Ingredient cost is only COGS
- Ignores rent, staff, utilities, depreciation, marketing, packaging, etc.
- So headline “gross margin” can be misleading.
B) Trend-chasing and FOMO (moat erosion over time)
- Trends mentioned: homemade lemon tea, salted coffee, soursop tea, cheesecake, etc.
- Claims:
- Trend lifespan: 3–6 months
- Low barriers → rapid saturation
- Late entrants risk being stuck with machinery + long lease + outdated menu
How big chains manage losses (high-level business execution)
Big brands (e.g., Highland Coffee, Coffee House, Phuc Long) can open prime locations despite high rental costs because they play a macro/finance game.
Strategy described for venture-backed chains:
- Optimize for market share and user data, not immediate monthly profit
- Use “burning money” / OPM (Other People’s Money) to expand footprint
- Raise funding rounds (Series A, Series B) to grow valuation
Example case: Soya Garden
- Raised significant funding; accepted that large stores won’t break even due to high costs
- Risk surfaced when the core model couldn’t adapt quickly (pandemic + depleted capital) → system collapse and mass closures
Scale advantages referenced for chains:
- Bulk purchasing discounts (thousands of tons vs small shops)
- Centralized operations reduce per-store costs (shared grinding mill, marketing team)
- Cross-subsidy: profits from mature stores offset new store losses
Alternative model example: franchise-heavy B2B monetization
Example: Miuê
- Cheap end-customer prices (ice cream cone 10,000 VND, bubble tea 25,000 VND) while still renting prime locations
Business-model explanation:
- Profit comes mainly from franchise and supply chain control:
- initial franchise fees
- selling equipment/machinery
- packaging sales
- requiring franchisees to source raw materials exclusively
- Franchise stores may have thin margins; parent company captures margin upstream.
Playbooks / frameworks explicitly mentioned
- 30/30/10 cost-structure rule
- 30% raw materials / 30% personnel / 30% fixed+operating / 10% net profit
- Stated as no longer reliable when input and rent/wage costs exceed thresholds.
- “Cash buffer days” metric
- F&B described at ~16 days vs 27 days in other industries
- Used to explain vulnerability to short shocks.
Actionable recommendations implied by the discussion
- Do rigorous financial planning with all real costs (including depreciation, owner labor, promotion/commission impacts).
- Build controls to reduce raw material leakage, spoilage, and theft (process + monitoring).
- Plan staffing for turnover risk:
- don’t rely on informal “minimum hourly” logic; invest in training and measurable performance where possible.
- Treat delivery apps as a margin decision, not a “sales guarantee” (avoid promotion structures that drive profit to near zero).
- Ensure survival planning using cash buffer days rather than “daily cash feels good.”
Presenters / sources
- Presenter: Nóng
- Sources referenced (general): “overview report on the food and beverage business market in Vietnam” (as cited), General Statistics Office (GSO) report, and several food delivery app commission/discount rates presented as “our research” (ShopeeFood/GrabFood/BFood).
Category
Business
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