The total revenue of the Vietnam F&B industry reached an impressive 403.9 trillion VND in the first half of 2024, despite a significant number of store closures.
In the first six months of 2024, Vietnam F&B industry faced fierce competition among businesses, with over 30,000 stores shutting down due to the challenging economic situation.
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In the first half-year 2024, Vietnam F&B industry saw revenue growth despite a decrease in store numbers
In the first half of 2024, Vietnam F&B sector recorded approximately 304,700 stores nationwide, a decrease of 3.9% compared to the same period last year. About 30,000 restaurants and cafes have closed across the country, while the number of new openings is very limited.
Ho Chi Minh City saw the most significant decline, with a 5.97% reduction in store numbers, while Hanoi experienced a slight increase of about 0.1%. Notably, the number of stores operating for less than three months is rising in major cities.
This period is viewed as a cleansing phase for businesses in the Vietnam F&B industry. Despite the challenges, the revenue of the F&B industry reached 403.9 trillion VND (as of the end of July 2024), equivalent to 68.46% of the total revenue for the entire year of 2023.
Revenue in Vietnam F&B industry maintained a positive growth rate in the first half of 2024 (Source: iPOS.vn)
Vietnamese F&B businesses adapt flexibly to challenges in 2024
High rents threaten the survival of Vietnamese F&B businesses
The main reason for the widespread closure of F&B outlets in Vietnam is the surge in rental prices. In Ho Chi Minh City, rental prices for street-facing properties increased by 25-40% in just the first half of this year.
Currently, rental costs are viewed as one of the biggest barriers for Vietnamese F&B businesses. With average rental costs accounting for about 14.34% of revenue—rising to 20-25% in major cities—maintaining business operations is becoming increasingly difficult. Many bustling streets in central Hanoi and Ho Chi Minh City are becoming deserted as prime rental spaces remain vacant.
Additionally, changes in consumer eating habits contribute to the industry’s difficulties. Rising raw material prices and decreasing customer traffic are putting pressure on F&B operations.
Streamlining models and diversifying sales channels applied flexibly to face challenges
Despite the challenges, Vietnamese F&B businesses are adjusting operations flexibly, cutting unnecessary costs, and optimizing cash flow. They continuously innovate in product development, offering unique dining experiences to attract customers.
Furthermore, F&B outlets are ramping up promotional programs and diversifying sales channels to stimulate demand and encourage quicker purchasing decisions.
With creativity and adaptability, the Vietnam F&B industry is successfully finding ways to overcome difficulties while continuing to deliver unique culinary experiences to customers.
Numerous advantages for Vietnam F&B Industry to robust in the last months of 2024
The boom of the middle class and gen Z is gradually becoming a main Vietnam’s F&B market driver
Currently, the middle class makes up about 13% of the national population, with an expected increase of 4 million people in 2024. This group is largely concentrated in urban areas, making it easier for the F&B sector to reach its target market. With the rise of the middle class and a growing preference for dining experiences, F&B chains are experiencing strong growth.
Additionally, Gen Z—a younger consumer demographic—represents a significant potential customer base in the F&B industry. They are willing to pay for new and innovative experiences. However, this group tends to have low brand loyalty, so F&B businesses must continuously track and update consumer trends to attract and retain customers.
Expectations for Vietnamese consumer spending on F&B services in 2024 (Source: Mekong ASEAN)
The tourism sector indirectly boosts revenue for Vietnam F&B industry
Moreover, the robust recovery of the tourism industry serves as a key driver of growth for the F&B sector in 2024. From the beginning of the year until now, revenue from restaurants and cafes during holiday periods has surged, particularly in major tourist cities such as Quang Ninh, Da Nang, Nha Trang, and Phu Quoc.
In the first eight months of 2024, Vietnam welcomed 11.4 million international visitors, a 46% increase compared to the same period in 2023. Revenue from accommodation and dining services is estimated at 481.2 trillion VND, up 14.3% year-on-year. The strong development of the tourism sector provides a solid foundation for positive growth opportunities in Vietnam F&B industry, especially during the peak spending and travel season at the end of the year.
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