Lesson from The KAfe, Gloria Jean's closures: customer attention needed
Gloria Jean’s Coffee is a big chain that has been in 39 countries where it has opened over 1,000 shops. However, in Vietnam, it suffered the same fate as the KAfe, a startup.
The KAfe officially shut down its shops in mid-April. Despite investment capital of $5.5 million from a foreign investor, the café chain still had a bitter ending.
Gloria Jean’s, a well known brand in Australia, opened its last shop at Grand View in April.
In 2006, when Gloria Jean’s came to Vietnam through a franchise contract with a Vietnamese company, Billy Sin, Asia’s business director, said that Vietnam, like other regional countries such as Thailand and Malaysia, was a market to develop food and drink services.
He said that Vietnam was the biggest coffee exporter, but it only had advantages in Robusta beans. Gloria Jean’s focused on developing Arabica.
However, things did not go as smoothly as imagined. After six years in Vietnam, Gloria could only open six shops in HCMC.
When The KAfe had to shut down, analysts said this should be seen as a warning for Vietnamese startups in the coffee cafe market. When Gloria Jean’s Coffee left, they said the same thing.
In 2012, a Gloria Jean’s shop on Dong Khoi Street closed because of the high retail premises rent. The number of shops in HCMC had decreased by half by the end of 2015, and to two shops by the end of 2016.
To date, all Gloria Jean’s shops have closed. Gloria’s fanpage has stopped updates since December 2016.
In 1992, the brand entered the Indonesian market and opened 15 shops. However, it also had to close most of the shops and now maintains only two.
The reason behind the failure, according to analysts, is that the franchisee only focuses on expanding the network, while not paying appropriate attention to the locals’ taste and demand.
Hoang Khai, president of KhaiSilk, a well known businessman, commented that The KAfe failed because it did not understand consumer habits. However, he stressed that not only startups make such mistakes.
Mentioning Starbucks, Khai said it does not pay high attention to customers. Though Starbucks is present all over the world, it only has one shop in Australia.
In Vietnam, many well-known brands also failed. ILLY, for example, closed after it opened two shops in HCMC, while NYDC left after five years in Vietnam.
The KAfe to change CEO
Second accusation leveled at KAfe over unpaid debts