Golden Gate Group, the powerhouse behind Kichi Kichi, Gogi House, and Manwah, has reportedly acquired The Coffee House from Seedcom, signaling a major shift in Vietnam’s competitive food and beverage (F&B) industry.
Acquisition Details Remain Unconfirmed
According to Deal Street Asia, Golden Gate Trading and Service Joint Stock Company has taken over The Coffee House, although Seedcom has yet to make an official statement regarding the transaction. A VnExpress source revealed that the deal was finalized in December 2023.
At the same time, Golden Gate’s board of directors held an extraordinary meeting, deciding to cancel its planned 53% cash dividend payout for 2023 to redirect financial resources toward large-scale domestic and international expansion projects for the 2024-2025 period. The company sees this as a strategic move to reinforce its long-term growth.
Golden Gate Faces Profit Decline Amid Expansion Plans
Golden Gate has also closed several underperforming branches following a sluggish year in 2023. Its audited financial report shows that revenue dropped nearly 10% to VND 6.29 trillion, while after-tax profit plummeted to VND 139 billion, just one-fifth of the previous year’s figure. Excluding the pandemic period (2020-2021), this marks the company’s lowest profit since 2017.
Despite the downturn, Golden Gate remains committed to aggressive expansion, leveraging its strong brand portfolio to navigate market challenges.
The Coffee House Struggles Amid Market Shifts
Once a leading coffee chain in Vietnam, The Coffee House has seen a significant decline in performance. According to Vietdata, its market share in 2023 fell to nearly the 2021 level of 2.02%, while revenue dropped 11% to approximately VND 700 billion. The chain also recorded negative after-tax profits in both 2022 and 2023, with losses in the hundreds of billions of VND.
The Coffee House has undergone major store closures, reducing its footprint to just 93 locations—over 50 fewer than at the end of 2023. Most of the closures occurred in Ho Chi Minh City, Hanoi, and neighboring provinces, while the chain completely withdrew from Da Nang and Can Tho.
CEO Ngo Nguyen Kha previously acknowledged that customer behavior has shifted, making previous strategies less effective. The Coffee House was once a pioneer in offering stylish café spaces, high-speed WiFi, and a comfortable atmosphere for freelancers and students. However, instead of focusing on physical stores, the company pivoted toward digital ordering, with its app accounting for 50% of daily transactions by mid-2024, reaching 1.8 million downloads.
Vietnam’s F&B Market Faces Intensifying Competition
The struggles of The Coffee House reflect broader challenges in Vietnam’s F&B sector. According to iPOS, Vietnam had around 304,700 F&B outlets in early 2024, but the number has declined by 3.9%, with at least 30,000 stores shutting down due to intense competition and changing consumer habits.
iPOS CEO Vu Thanh Hung noted that despite the continued expansion of the industry, consumer spending growth has not kept pace with the rapid proliferation of F&B businesses since the pandemic. Even well-established brands with strong customer loyalty are feeling the pressure of economic fluctuations.
Expert Insight: A Strategic Move for Golden Gate
Sophie Dao, Senior Partner at GBS, a firm advising foreign investors in Vietnam, views Golden Gate’s acquisition of The Coffee House as a calculated strategic move. “Vietnam’s F&B landscape is evolving rapidly, and only brands that adapt to changing consumer behaviors will thrive. Golden Gate’s investment in The Coffee House could revitalize the brand by integrating operational efficiencies and leveraging its existing expertise in foodservice management,” she said. “With its experience in scaling restaurant chains, Golden Gate has the potential to reposition The Coffee House as a stronger player in the market.”
Looking Ahead: Can Golden Gate Turn The Coffee House Around?
With the Vietnamese coffee market becoming increasingly competitive, Golden Gate’s acquisition signals a potential turnaround for The Coffee House. However, success will depend on whether the company can reinvent the brand, optimize operations, and align with shifting consumer trends.
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Source: Vietnam Insider