F&B could witness year of transition

What trends will impact the food and beverages (F&B) industry, and what are the hurdles for Vietnamese businesses?

Nguyen Thai Duong, marketing director at iPOS.vn

The F&B market in Vietnam is undergoing a strong transformation. According to our market report released last week, it will continue to witness a significant expansion of brands, with a forecast of over 331,000 stores by the end of 2025, a growth rate of 2.6 per cent over 2024.

However, instead of strong development in central areas, we have noticed a shift towards suburban areas and second-tier, third-tier cities, where there is still ample room for growth, lower rental costs, and increasing consumer demand.

In addition, the franchise model is also booming. Many businesses looking to expand, instead of operating independently, are opting for franchising to optimise costs and risk management. This is an opportunity for those who want to invest in the F&B industry but lack experience.

However, businesses are also facing many challenges. Operating costs are increasing, with high raw material prices, rental and labour costs. Competition is intensifying as large F&B chains continue to expand, narrowing the opportunities for small independent stores.

Furthermore, customers are increasingly demanding higher standards, not only in the quality of food but also in the service experience. This compels businesses to innovate and optimise operations if they want to survive and thrive.

The report also shows the strong impact of raw material prices. What should F&B businesses do to optimise costs?

In 2024, around 45 per cent of F&B businesses surveyed for our report said that raw material costs accounted for 30 per cent or more of their selling prices, with 6 per cent of businesses having costs exceeding 50 per cent, pushing profit margins to dangerous levels.

Conversely, only around a quarter of businesses have a raw material ratio below 20 per cent of selling prices, indicating that input cost pressures are increasing significantly, forcing businesses to find ways to adapt.

The increase in raw material prices is driven by various factors, including inflation, escalating transportation costs, limited supply, exchange rate fluctuations, and rising labour wages. Some F&B businesses have raised prices by 5-15 per cent, sought new suppliers, and applied technology to manage costs.

There are three main solutions that F&B businesses can consider for costs optimisation, ensure sustainable operations, and improve efficiency.

The first solution is to optimise rental costs. According to our research, a large number of premises have been left vacant. This is an opportunity for businesses to negotiate with landlords to obtain more reasonable rental prices.

Next, F&B businesses need to manage raw material costs. While the trend of rising raw material prices persists, businesses can seek reliable suppliers to establish long-term procurement contracts. This helps stabilise raw material prices, limiting the impact of market fluctuations.

Diversifying suppliers is also an important solution to give businesses more control in cost management. Lastly, leveraging technology to save operational costs is crucial. Technology plays a vital role in streamlining business operations. Implementing technological solutions not only helps manage personnel effectively, but also reduces losses and enhances cost control. According to iPOS calculations, technology can help businesses save around 3 per cent of total operating costs.

What is the iPOS plan to expand the market and cooperate with partners in the food industry in sustainable development?

Currently, we are focusing on providing comprehensive operational management solutions to help restaurants perfect their processes, reduce costs, and enhance business efficiency. We are also encouraging the integration of technology with food delivery platforms and electronic payment systems to help businesses expand sales channels and reach more customers.

By leveraging technology, iPOS.vn’s products help businesses predict trends, manage inventory, and especially optimise operations. In the current volatile market environment, making decisions based on data rather than intuition will be the key to ensuring stable business growth.

What is your forecast for the Vietnamese F&B market for the rest of this year?

The market is expected to continue growing. We predict that the franchise model will have room for expansion by leveraging the advantages of scale and brand to increase revenue. However, small independent stores may face more difficulties due to cost pressures and changes in consumer behaviour.

Furthermore, the franchise trend is expected to see further development, as many individual investors seek to enter the industry but prefer a less risky model.

The digital transformation factor and technology integration will become a crucial competitive advantage. If F&B businesses can adopt technology early, optimise operations, and enhance customer experience, they will have more opportunities for development in the future.

This can be a year of significant transformation. Businesses need to have a systematic strategy, be flexible in adapting to changes, and especially leverage technology to maximise business efficiency.