The Coffee Club heads to Vietnam
Vietnam Investment Group (VI Group) has signed a master franchise agreement with Minor International’s subsidiary Minor Food to bring The Coffee Club to Vietnam.
Under the joint venture, VI and Minor plan to open 100 The Coffee Club outlets over the next five years.
“With the flourishing coffee market and favourable macro trend, we are very optimistic about the opportunity to strengthen our presence in the country and grow The Coffee Club brand nationwide,” said Paul Kenny, CEO at Minor Food.
According to Chaiyapat Paitoon, deputy chief financial officer and strategic planning for Minor International, restaurant businesses show strong potential in Vietnam because people “want a wider variety of cuisines, paving the way for foreign players to come in and offer different choices in addition to traditional, local and street food”.
“The Coffee Club offers a distinctive restaurant experience with great selections of food and beverages menus, excellent coffee and a welcoming relaxed atmosphere enriching the contemporary lifestyles of the Vietnamese consumers,” said David Do, VI Group MD.
The joint venture plans to open 20 The Coffee Club restaurants next year.
Minor is no stranger to Vietnam’s F&B market. It first established its restaurant footprint there in 2009 launching three casual-dining restaurant brands, including The Pizza Company, Swensen’s and Thai Express. It now has 83 outlets nationwide across those brands, 60 of them under the Pizza Company banner.
Apart from The Coffee Club, Minor is also looking for opportunities to launch other restaurant brands into Vietnam at a later stage.
Opening its first store in Brisbane in 1989, The Coffee Club claims to have become Australia’s largest home-grown cafe group with more than 400 outlets throughout Australia, New Zealand, the Maldives, Seychelles, Thailand, Indonesia and the UAE. Thai-headquartered Minor International owns 50 per cent of The Coffee Club.
Analysis: fit for Vietnam?
Entering Vietnam market means The Coffee Club is competing with fast-growing coffee chains like local operators The Coffee House and Highlands, and international chains such as Starbucks and The Coffee Bean and Tea Leaf, the latter of which has struggled to gain critical mass in the market and several months ago closed its flagship in downtown Ho Chi Minh City. Fellow Australian restaurant chain The Hog’s Breath Cafe also gave up last year after about seven years in the market.
If The Coffee Club’s Vietnam outlets follow the Australian format, they will focus more on lunches, brunches and dinners than coffee as their name might suggest, although it does serve coffee on site and for takeaway.
The company faces challenges in sourcing ingredients, many of which will come from offshore, and finding real estate at an affordable price. Those two factors combined will create price pressure for the brand, despite the affordability of labour in Vietnam.
Author: Yen Hai Nguyen
This article first appeared on Inside Retail Asia, a sibling publication to Inside Franchise Business.