A reduced convenience store kiosk footprint boosted Phuc Long Coffee & Tea’s third quarter profits by 33%, but the underperforming counters continue to hamper revenue growth
Masan Group has said closing underperforming Phuc Long Coffee & Tea kiosks within WinMart convenience stores has boosted the chain’s profitability, with EBITDA rising 33% year-on-year to VND 78bn ($3.2m) in the three months ended 30 September 2023.
The business closed 150 Phuc Long Coffee & Tea kiosks in the first nine months of 2023, with the 92 remaining primarily handling online orders received during peak hours for its busier flagship stores.
Phuc Long Coffee & Tea launched its kiosk model in May 2021 – the same month Masan Group acquired its initial 20% stake in the coffee chain for $15m. It increased its majority stake to 84% in August 2022.
The retail conglomerate set a goal of opening 1,000 kiosks within its WinMart supermarket network as part of plans to ‘hyper-scale’ the Vietnamese coffee business.
However, despite initial success – the concept increased sales by over 20% in the third quarter of 2022 – Masan Group said the kiosk network’s contribution to its WinMart revenues fell 75% in the third quarter.
Phuc Long Coffee & Tea’s total third quarter sales fell 16% year-on-year to VND 377bn ($15.3m) – its second consecutive quarter of revenue decline – following a period of difficult trading conditions and a sustained fall in out-of-home coffee consumption across Vietnam.
However, Masan Group said Phuc Long Coffee & Tea stores outside its WinMart supermarket network experienced ‘slight’ revenue growth to reach VND 876bn ($35.7m) in the first nine months of the year – accounting for 75% of the coffee chain’s total 2023 sales to date.
Phuc Long Coffee & Tea opened six new flagship sites to reach 147 stores during the third quarter and is seeking to open 11 new stand-alone outlets before the end of 2023.
