The Vietnamese coffee chain is planning to open dozens of new stores this year following improved profitability generated from the closure of underperforming WinMart kiosks
A Phuc Long Coffee & Tea store in To Hien Thanh, Vietnam | Photo credit: Phuc Long Coffee & Tea
Phuc Long Coffee & Tea has indicated it will change course on its WinMart coffee kiosk strategy after full-year profits rose following further closures of the underperforming sites.
The coffee chain will instead focus on opening between 30 and 60 coffee shops in the strategic cities of Hanoi and Ho Chi Minh City and is targeting sales growth of VND 1.79trn-2.17trn ($73.3m-$88.9m) in 2024. If achieved, the revenues would represent year-on-year sales growth of 17-41%.
Phuc Long Coffee & Tea, operated by retail conglomerate Masan Group, achieved 30% year-on-year EBITDA growth in the 12 months ending 31 December 2023 to reach VND 255bn ($10.4m).
Its total full-year net revenues fell 3% to VND 1.53trn ($62.9m), which Masan Group attributed to ongoing kiosk closures and lower footfall in the first half of the year amid an economic slowdown in Vietnam.
Phuc Long Coffee & Tea launched its kiosk model in May 2021 and set a goal of opening 1,000 kiosks within Masan Group’s WinMart network. However, in November 2023 Masan Group said the kiosk network’s contribution to WinMart third quarter revenues fell 75%.
Masan Group opened 28 net new bricks-and-mortar Phuc Long Coffee & Tea stores in 2023 to reach 156 outlets.
Phuc Long Coffee & Tea is also seeking to boost revenues through the integration of its loyalty programme into Masan Group’s existing WIN membership, providing customers with discounts and incentives when using the coffee chain.
Additionally, the operator will boost local store marketing and launch new seasonal products this year in a bid to attract a younger consumer base.
Masan Group acquired an initial 20% stake in Phuc Long Coffee & Tea in May 2021 for $15m and increased its majority stake to 84% in August 2022 – raising its value to $453m.