All insights Food & beverage 5 min read

Translated from the Vietnamese original

While working on a recent study into whether people actually want to eat a full meal at a coffee shop, I found that the answer was not on the menu. It lay in how the market’s filters have shifted.

A few years ago, a good location and a striking interior were enough to win while the market was rising. Luck was easily mistaken for capability. That period of hot growth is over. What has replaced it is a race for a place in the customer’s mind.

Today’s market map

The map now has clear owners:

Highlands

Holds the mainstream, with close to 1,000 outlets.

Phúc Long

Restructuring around flagship stores and adding food (cakes, ice cream) to raise the value of each bill without needing more traffic.

Starbucks

Firmly anchored in premium.

The Coffee House

Holding on in the mid-range, and showing signs of moving into longer visits (working, staying longer) since coming under Golden Gate.

The Coffee House adding pizza and pasta to its menu looks like a bet on a new reason to visit. It is not trying to beat rivals at coffee alone. It is using its parent company’s ecosystem to fill the gap between café and co-working, for customers who work for two or three hours and need to eat on site.

The shake-out begins when the map is full

The map is crowded not because the market has shrunk, but because too many flags have been planted in the same place. The mainstream is already taken, while the wave of “fashion coffee” has focused on concept rather than core value.

Between 2018 and 2023, the number of brands competing in the mid-range multiplied, but total demand did not grow at the same pace. The result was crowded competition and thinner margins. The shake-out has spared no one. Café Amazon withdrew after five years. At the cheap end, Mixue also stopped expanding to focus on making each outlet more efficient.

This is about reading the market’s phase correctly. When the cycle turns, the winner is not the one who expands fastest, but the one who knows where real value is created and has the nerve to cut what drains resources. Taxes and rents are only accelerants. The root cause is the reversal in capital flows and consumer spending.

Players taking a different route

While the big players defend their ground, a few newer concepts are going another way:

Every Half

Focused on specialty coffee.

Contrast Coffee

Positioned as a 24-hour working café.

They refuse to wrestle the giants head-on for demand that is already taken. Instead, they serve needs that exist but have not yet been named: people who drink coffee for the quality of the beans, and people who need a serious place to work. But they still have one problem to solve: unit economics. Without it, these emerging niches are not yet the blue ocean they appear to be.

Every Half, having built its store base, is moving into packaged coffee (capsules, drip bags): a way to earn more per customer and improve the economics beyond the four walls of the café. Choosing the right niche is not enough. The niche also has to be able to feed the business.

The three filters of today’s market

1. 1. PositioningWhere do you stand on the map? If customers choose you for exactly the same reason they choose a competitor, you have no position.
2. 2. Real demandWhat problem do you solve, or are you selling something that is merely “fine”? A niche is only worth having if the need behind it can grow over time.
3. 3. Unit economicsDoes the model actually make a profit on every unit it sells? Any emotional value that does not rest on positive economics is just a cost.

These three filters are the core of every business: the right strategic position, the right demand, and a profit.

The market has not changed its nature. This phase simply forces every business model to show its true one.