Why are cafes so popular in Indochina?
Dec 11, 2019
Asia, Southeast Asia in particular, has been a hot spot for International Franchise and Brand expansion for a long time already. And these days there is an abundance of data available to Franchisors on the internet for free. If they wisely have invested in some form of GIS (geographical information system), they will have access to even more information to determine the appropriate target countries and specific models that will offer the greatest likelihood of success for their brands.
However, digital data can never replace on the ground information on the culture, lifestyle, and spending habits of local residents. Too often companies don’t invest on local market entry studies and this key important data which often would significantly change their strategic decisions.
“Why are cafes so popular in Indochina?”
One of my first memories visiting Southeast Asia (ASEAN) almost 20 years ago and still one of the standout things tourists notice today is the sheer number of cafes and the number of locals in them, at all hours of the day and night. Insight into this would be of great value to any F&B companies (including many Quick Service Restaurants and Casual Dining Restaurants) looking to enter the market. Yet, as of writing this article, a Google search provided no answers.
For countries like Vietnam, Cambodia, and Myanmar the answer is quite simple. Household accommodation is often very basic and overcrowded. For example, according to www.statista.com, Vietnam has a total population of 95 million, with only around 20million households, about an average of nearly 5 people per home. Therefore, it becomes part of the Vietnamese lifestyle to “hang out”, meet friends, and even engage in entertainment activities like playing video games at a tea house or a café instead of at home. It is now an ingrained part of both the lifestyle and culture of Vietnam and the Asia region.
How might this impact a potential brand looking at the region?
1. More space allocated for dine in seating.
An average of 30 minutes per guest in most places increases to more than 2 hours in the region. With take away and delivery still at less than 10% each of total sales, this creates a significantly different sales model in Indochina than in the US, for example.
2. Creates a demand for systems to encourage additional sales per customer.
For example a system like Starbucks, which gives you access to the Wi-Fi for only one hour per purchase or roving employees with tantalizing desserts designed to encourage a second purchase from customers.
3. Design changes.
For example, think of just 1 item, the chair. Do you want to make it comfortable making it easy for your customers to sit for 2 to 3 hours per visit, or maybe slightly less comfortable than the norm to try and maintain your turnover? This has a much greater impact when you have 80% dine in guests rather than 40%.
4. The list goes on and on ….
A simple question, a simple answer, yet one that both might be overlooked by a Franchisor thousands of kilometers away and might mean the eventual success or failure of a brand’s market entry. Lesson learned? A small investment now for accurate and up to date on the ground information is vital and not to be overlooked.
Now it’s time for me to pack up and move on before I need to buy another one hour Wi-Fi access and more caffeine than my body can handle.
Author: Robert Beausoleil has over 25 year of F&B and Franchise experience and has lived in ASEAN for more than 12 years. He is currently the Director of Franchise Development & Operations at VF Franchise Consulting.