Low-cost café franchising booms despite Covid

At 9.00 everyday a Napoli café franchisee on Dong Nai Road, District 10, HCMC is crowded. Its owner, Hoang, says: "We directly serve hundreds of customers a day. The number of customers making orders via apps is double that."

A café franchised by Milano on Pham Van Chieu Road, Go Vap District, also gets hundreds of customers daily, one of its employees says.

Many other similar outlets are also making good profits despite the pandemic, mainly selling through apps and e-commerce websites.

Nguyen Duc Hung, founder of Napoli Coffee, told VnExpress that after starting in 2010 his company has so far franchised 3,000 outlets which fetch hundreds of billions of dong (VND23,000 = $1) annually.

"We franchise an average of two to three coffee shops a month. Some of our partners want to open more shops though they already own five".

Now there are thousands of Milano franchisees across the country. Trung Nguyen E-Coffee franchised coffee shops are present in 54 cities and provinces.

The franchisors do not seek royalties for their trademarks or other such fees, and most of their profits come instead from construction and decoration of coffee shops or sales of packaged coffee and beverages they produce

Napoli offers three franchising packages costing VND70-350 million for cafes of 50-100 square meters in size. The packages include a five-year warranty, decoration, furniture, lighting, uniforms, and the coffee-making process, and exclude the costs of sanitary equipment and salaries.

Trung Nguyen E-Coffee offers franchising packages worth VND65-175 million.

Le Anh Tu, a lecturer at Van Lang University in HCMC, said the low-price café franchising model thrives despite Covid because franchisors support franchisees a lot and products are sold at reasonable prices like VND12,000-30,000 for a cup of coffee.