Generation Z motivates Vietnamese entrepreneurs to open bubble tea shops

It was past 10 in the night, but the bubble tea shop was packed.

"I opened this milk tea shop just a few months ago, but people have been pouring in every day. My six employees struggle to serve all customers, especially in the weekend," 33-year-old Nguyen Quang Dung told VnExpress International.

Located in northern Bac Ninh Province in an industrial area with some 10,000 young workers, Dung’s milk tea shop sells 150-200 cups every day, and he himself has to join his waiters in serving a large crowd.

"It’s busy, but investing in milk tea shop is one of my best decisions. I have no regrets," said Dung, who works fulltime as a manager at a nearby power plant.

Dung is among many Vietnamese entrepreneurs who have been investing in the bubble tea industry in recent years, lured by good profit and high demand among the young population.

The number of bubble tea stores in Vietnam reached 2,000 last year, with a new store opening every four days, according to the Vietnam Association of Small and Medium Enterprises.

Even though bubble tea entered Vietnam in 2000, the surge in the number of outlets has only happened in recent years, mostly through franchising.

Vietnamese brand TocoToco opened its first bubble tea outlet in 2013 and now has almost 200 across the country. Taiwanese brand Ding Tea also has around 200 outlets, while local brand Bobapop has over 100.

About 30 major bubble tea brands are operating in Vietnam. They are all seeking to compete for a slice of the $282 million dollar market, according to British research firm Euromonitor International.

Hoang Thi Hien, owner of bubble tea chain Pozaa Tea with outlets in Hanoi, Ho Chi Minh City and other localities, said that the number of outlets increased last year.

"Many investors want to partner with us. In 2017 we had only eight shops, but the number has increased to almost 60 by the end of last year," she said.

She is confident that this figure will rise to 200 this year.

Generation Z demand

Visiting a bubble tea shop is among the most popular leisure activities among generation Z, people born between 1996 and 2015, according to a survey by market research firm Nielsen.

The survey of 210 Gen Z people in Hanoi and Ho Chi Minh City last October found 81 percent of respondents saying bubble tea shops were their favorite hangouts.

Vo Van Quang, a branding strategy consultant and marketing mentor, said: "Most 15-year-old girls don’t drink coffee, but they’ll gladly pay for a cup of bubble tea. Teenagers are a large customer group for tea-based drinks, hence the high demand for bubble tea." 

High demand and high profits are irresistible lures for entrepreneurs.

Nguyen Phi Van, a branding expert and board chairwoman of consulting firm Retail & Franchise Asia, said that an investor can earn up to 40 percent in profit on each cup of bubble tea, which sells for VND25,000-60,000 ($1-2.6).

Therefore, entrepreneurs are willing to make big investments of up to VND1 billion ($43,000) for one store, including furnishing and brand franchising fees.

"It takes less than a year for an investor to recover his capital, that’s why this business has been attracting so many," Van said.

Visiting a bubble tea shop is among the most popular leisure activities among generation Z. Photo by VnExpress

Many bubble tea entrepreneurs have other full time jobs and are using their savings to make more money. They can create their own brand or partner with a well-known brand.

Tran Thi Thuy Nga opened a bubble tea shop last September in the central Quang Ngai Province with an investment of almost VND800 million ($34,430).

Even though Nga’s store is located in a very small town, students have been coming in every day with their friends and family. Nga often has to ask for help from her family members to join her eight employees in serving customers.

"I haven’t recovered my capital yet, but so far I’m very happy with the revenue and demand," Nga said, without revealing specific figures.

She did reveal plans to open another shop soon.

Dung, the bubble tea investor in Bac Ninh, has revenues of VND180 million a month ($7,760), and his profit is around half the amount. Dung estimates that he will recover his investment of VND700 million ($30,146) in just six months.

He is also planning to open a second bubble tea store four kilometers away from the first one, which has been operating for only four months.

"I’m confident that both stores will do very well."