Food and beverage business and the challenge of the "great purge"

Even though it was the lunch rush hour, many restaurants were still empty.

Grand opening, quiet closing

Walking around the “culinary streets” in Thai Nguyen City such as Phan Boi Chau, Bac Son, Luong The Vinh… it is not difficult to realize that the number of customers has decreased significantly compared to the previous period. Even at the same location, the restaurant name and food and drink business constantly change. Some other restaurants and eateries quietly closed after only a few months of grand opening.

At a long-standing restaurant located in Picenza urban area (Dong Bam ward, Thai Nguyen city), the owner has posted a sign for transferring the premises. Meanwhile, the restaurant has been in a state of "closed doors and locked doors" for several months now. Many restaurant owners, large and small, have complained... "sales are not as good as before".

Remember the time before the COVID-19 pandemic, there was a period when the food service business became the "center" due to the emergence of a series of eateries and restaurants with a variety of choices for diners. However, after going through a period of "straining" after the pandemic, plus economic difficulties, people had to "tighten their belts", gradually changing their eating habits at restaurants, leading to increasingly difficult business.

Ms. Dao Thi Huyen, owner of Manh Hoach Fresh Chicken Restaurant (in Group 11, Tuc Duyen Ward, Thai Nguyen City): Compared to the previous period, the number of customers coming to eat at the restaurant has decreased by 60-70%. On the busiest days, we only receive orders for 5-6 trays of customers, and on some days, we even have no customers coming to eat. To reduce operating costs, I had to let my employees go, and only use family members as labor.

Located on the busiest street in Thai Nguyen City, the Hundred Flowers Roasted Duck restaurant (No. 480, Phan Dinh Phung Street) owned by Ms. Nguyen Thi Men's family is also in a similar situation. Ms. Men confided: Even after the COVID-19 pandemic, my restaurant was still full of customers, and we usually had to make reservations to get a table. But since the end of last year, the number of customers has gradually decreased. During peak evenings or weekends, the restaurant still has many empty tables.

Due to lack of customers, some restaurants have had to cut staff to reduce investment costs.

With business sluggish, Ms. Men estimates that the restaurant's revenue has dropped by about 20%. To cover the costs of rent, labor, ingredients, etc., she has to spend money on advertising and stimulating demand by offering discounts for take-out or delivery customers.

With a large population, a large concentration of workers and students, Thai Nguyen is considered a potential market for those in the culinary business. But in reality, from the end of 2023 until now, in order to survive, restaurants and eateries have encountered many difficulties.

Mr. Tran Van Son, owner of Son Thuy restaurant (in group 1, Thinh Dan ward, Thai Nguyen city) shared: A few years ago, I borrowed money from the bank to invest in upgrading the restaurant to a capacity of 700 guests. In the beginning, the restaurant operated stably, so paying the bank interest was quite easy. However, in the past 2 years, the number of customers has been less. To minimize losses, I proactively accepted take-out orders, something the restaurant had never done before.

Food business change status

According to information from Sapo (the most used multi-channel sales and management platform in Vietnam, with more than 323,000 stores in operation), the food service industry will bring in 688.8 trillion VND in 2024. However, nearly 60% of food stores saw a decrease in revenue over the past year.

For Thai Nguyen province, although there are no official statistics, actual records also show that food service establishments in the province have decreased in both quantity and revenue.

Many restaurant owners share that the food and beverage business is increasingly difficult due to the general impact of the economic recession. Along with the authorities tightening the inspection and handling of alcohol concentration violations, customers have gradually abandoned the habit of eating and drinking at restaurants.

Many restaurants and eateries are deserted and empty.

Sharing their agreement with the State’s regulations, many restaurant and eatery owners also admitted that the tightening of regulations on alcohol concentration when participating in traffic has somewhat reduced the number of customers coming to eat at their restaurants. Many restaurants also said that they have launched promotional “tricks” to attract customers but they have not been very effective. Some restaurants accept free parking and arrange cars to pick up customers after eating and drinking but have not been effective.

Another factor is that a significant number of people are becoming more familiar with a healthy lifestyle, limiting the consumption of processed foods, so they no longer prefer to "eat out" as before. In addition, with the development of digital technology, home delivery and online sales channels such as ShopeeFood, Facebook, TikTok... are also chosen by many people to order food and drinks instead of going to restaurants and eateries.

Many restaurants and eateries are deserted and empty.

Ms. Vo Thi Thanh Binh, owner of two beverage shops June Coffee and November (Thai Nguyen City) said: Currently, revenue from customers ordering delivery drinks accounts for 70-80% of the shop's income. Many customers also pay more attention to the quality of ingredients and service instead of choosing to follow short-term trends.

According to Ms. Binh, this shift forces businesses to change towards investing in using quality ingredients, focusing more on consumer health. At the same time, they upgrade customer service and change promotion channels as well as sales methods.

Purification is beneficial to the market

According to economic experts, the closure of some food service outlets due to their business models no longer being suitable for the market is not entirely negative. On the positive side, the "great purge" of the industry has been and is contributing to improving and enhancing the quality of the remaining restaurants and eateries.

A report published by iPOS.vn (a company specializing in the production and trading of software and hardware solutions in the field of restaurant/cafe management) shows that in 2024, the number of food and beverage stores will increase by 1.8% compared to 2023, while revenue will increase by 16.6%.

In Thai Nguyen, total retail sales and social consumer service revenue in 2024 will still increase by 18.2% compared to the previous year (reaching 79.4 trillion VND). Of which, the accommodation and catering services group alone will reach more than 13.4 trillion VND (up 20.3% compared to 2023).

Revenue growth figures show that the food service industry still has great potential for development, not to mention that this is one of the essential and fundamental areas in social life. Because, despite economic difficulties, people can cut back on many expenses, but spending on food and drink is very difficult. However, due to changes in consumer habits and market demands, food service business owners at the present time are forced to "step out of their comfort zone" for a long time.

Take-out and delivery are being chosen by many customers instead of dining at restaurants.

Dr. Ngo Thi Huyen Trang, lecturer at the Faculty of Marketing - Trade and Tourism (University of Economics and Business Administration - Thai Nguyen University) commented: Changing market demands force the food service industry to innovate in order to survive. For example, many restaurants and eateries are currently looking for ways to adapt by "rejuvenating" their customer base by designing flexible spaces and creating check-in locations.

Some traditional restaurants have come up with plans to find new customer files instead of just maintaining the same number of regular customers as before. - Dr. Ngo Thi Huyen Trang

Experts also predict that the trend of online sales in the food service business will be promoted more in the near future, due to the increasingly expensive rental prices causing the number of traditional restaurants and eateries to decline. However, according to forecasts, food service businesses will still be greatly affected by factors such as rising inflation, escalating raw material prices, and sharply increasing premises costs.

To adapt flexibly to these changes, according to Dr. Ngo Thi Huyen Trang, business people need to build a chain of solutions to strictly control raw material costs, find stable sources of input materials at competitive prices; use human resource management software, and train employees to optimize work performance.

In particular, while the new consumer trend will focus on applying technology and focusing on sustainability, restaurants and eateries focusing on upgrading the quality of food and drinks in the direction of "clean, green, safe" is one of the feasible solutions to meet the increasing needs of customers. Along with that, delivery services also need to be upgraded in a professional and transparent direction on the app system, website... so that customers can feel more secure when choosing. Restaurants and eateries that meet these criteria will have a huge advantage in the fierce competition of the food service industry.

Source: https://baothainguyen.vn/kinh-te/202504/kinh-doanh-an-uong-va-thach-thuc-tu-dai-thanh-loc-c2137bf/