Can't stand it anymore
From March 1, a pho restaurant in Linh Dam (Hoang Mai, Hanoi ) announced a price increase of 5,000 VND/bowl due to rising prices and asked for customers' understanding. From the lowest price of 35,000 VND/bowl, customers now have to pay 40,000 VND. The highest bowl of pho is up to 70,000 VND, not including the 10,000 VND/serving of fried breadsticks and 5,000 VND/cup of iced tea.
Mr. Tuan (pho restaurant owner) explained that due to the increase in input costs, he had to reluctantly raise the price. The restaurant has been in business in the apartment area for over a year and has a stable number of customers. However, since the price increase, the number of customers has decreased significantly.
According to Mr. Tuan, consumers tend to tighten their spending, so when the selling price is high, they also calculate and look for other options.
This pho restaurant owner is worried that if revenue decreases, it will be difficult to survive for long due to increased costs for premises and staff. In addition to selling directly at the restaurant, Mr. Tuan also registered to sell pho on online food ordering platforms, but the number of orders is not much, not to mention having to cut back a portion to those platforms.
After a period of running a coffee business, Ms. Nguyen Thi Hoa (Thanh Xuan, Hanoi) officially closed her shop after a long period of suffering losses.
When the lemon tea trend was on the rise, Ms. Hoa and two friends invested in opening a beverage shop in Thanh Xuan district. The Covid-19 pandemic broke out, and the shop was severely affected. When it reopened for business, the lemon tea trend among young people declined, Ms. Hoa was forced to switch to a popular coffee shop model for students and young people.
However, the explosion of beverage brands has made it difficult for coffee shops, the number of customers coming to the shop has decreased significantly, not as crowded as before.
“The shop was her brainchild” when she started her business, but she couldn’t sustain losses forever, so in the end, Ms. Hoa decided to close the shop when the lease expired, accepting a big loss rather than maintaining this situation for long.
Mr. Phung Anh The, founder of Maycha Milk Tea, commented that competition is becoming increasingly fierce as cheap shops appear, using low-quality ingredients to attract price-sensitive customers. Consumer trends not only change spending habits but also strongly impact the business strategies of enterprises in the beverage industry.
Not only small food and beverage stores, even big brands are facing difficulties and are forced to increase prices. A typical case is Highlands Coffee when this brand increased its price by about 10-15%, causing much controversy in the consumer community.
Starbucks and The Coffee House coffee chains are also continuously cutting stores. Recently, The Coffee House has even been acquired by Golden Gate; VNDirect wants to divest from the owners of King BBQ, Thai Express,...
Burden of cost
According to Mr. Nguyen Thai Binh, co-founder of Concepts Academy, the price of raw materials in 2024 will increase due to the impact of many macro factors. Global inflation and economic fluctuations will cause import costs to escalate, while transportation costs will increase due to political instability and fluctuating fuel prices.
Tax policies and import regulations have also been tightened, along with climate change affecting the supply of agricultural products, causing a decline in the output of coffee, sugar, rice, and vegetables. At the same time, increased exports, especially of rice and coffee, have limited domestic supply, pushing prices up.
Meanwhile, consumers are tightening their spending on food and drink. A recent report by iPOS shows that the most common spending level for breakfast is currently between VND21,000-30,000, lunch is around VND31,000-50,000 and under VND35,000/drink.
According to iPOS, 2024 will see a natural purge as many underperforming independent stores are forced to close due to operating cost pressures and declining purchasing power.
By the end of 2024, the number of restaurants in Vietnam is estimated to reach 323,010, up 1.8% year-on-year. In 2024, 44.8% of businesses recorded raw material costs accounting for 30% or more of the selling price, of which 6.2% of businesses had costs exceeding 50%, pushing profit margins into danger.
Under pressure from rising raw material prices, according to iPOS, up to 49.2% of food and beverage businesses plan to increase prices in 2025 to cope with cost pressures.
However, raising product prices is not an easy decision. Balancing costs, profits and customer purchasing power will become a matter of survival in 2025, when the market is increasingly competitive.
Mr. Do Duy Thanh, Director of FnB Director, believes that this year the food and beverage market will recover strongly thanks to the increasing demand for culinary experiences, tourism, etc. However, businesses also face escalating operating costs and fierce competition from domestic and foreign brands.
Therefore, Mr. Nguyen Thai Binh noted that price increases need to be carefully considered due to high input costs but weak market purchasing power. Sudden price increases can affect sales as customers become more cautious in spending.
Instead of raising prices across the board, businesses should optimize costs by negotiating with suppliers, adjusting processing formulas or product quantities. If it is necessary to increase prices, a flexible strategy should be applied according to regions, customer groups and combined with improving product value to maintain attractiveness.
Despite facing many challenges, the food and beverage industry in Vietnam is forecast to continue growing by 9.6% in 2025. Revenue from the F&B chain is expected to reach VND55,208.9 billion, an increase of about 14.4% compared to 2024.
Source: https://vietnamnet.vn/tang-gia-pho-5-000-dong-chu-quan-dung-ngoi-khong-yen-2389925.html
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