Thriving F&B Sector Secures Prime Real Estate in Ho Chi Minh City Amid Economic Challenges

Continuously Acquiring Prime Locations

Recently, the Rạn Biển Restaurant chain leased the land plot at 2-4-6 Hai Bà Trưng, Saigon Ward, and is currently in the process of construction and site preparation. This prime location in the heart of Ho Chi Minh City boasts four frontage sides.

The acquisition of this over 6,000 m² prime location by the aforementioned restaurant chain has sparked widespread discussion. In such prime locations, rental costs can soar to billions of dong per month.

Despite economic challenges and fluctuations, prime locations with high rental prices remain sought after by F&B brands.

A notable example is the 11-13 Hàn Thuyên location, with a usable area of 210 m², which the landlord listed at 750 million dong per month. After being vacant for 8 months, Adoré – World Coffee decided to lease it for business operations.

Previously, this location was occupied by Starbucks. However, due to disagreements over the new rental price, the American coffee brand had to vacate.

The 2-2A Trần Hưng Đạo site is also undergoing rapid construction in preparation for McDonald’s return in the near future. This location housed the brand for 10 years (from 2014) until the store closed in September 2024 due to lease expiration. After a year-long hiatus, McDonald’s began renovations in September 2025 to resume operations.

The 2 Đồng Khởi site, located at the intersection of Đồng Khởi and Ngô Đức Kế, is also being renovated by Casa Cafe for a late October opening. This prime location spans 800 m², and real estate agents reveal that the rental price is no less than 1 billion dong per month.

Facing Declining Purchasing Power and High Rental Costs

While the F&B industry continues to secure prime locations, not all brands manage to survive.

Kissho Restaurant at 14 Nguyễn Huệ, once known as the largest Japanese restaurant in Ho Chi Minh City with a 1,000 m² space in the city center, has been closed for over two years due to operational difficulties. To date, the 14 Nguyễn Huệ site remains vacant and without a new tenant.

Recently, the Monkey in Black coffee brand closed its last store on Sư Vạn Hạnh Street, Hòa Hưng Ward, after 10 years of operation. Trần Thanh Tùng, the brand’s founder, admitted that high rental costs and thin profit margins could not offset the risks. Currently, the F&B sector faces numerous challenges, and he has no plans to re-enter the industry.

Nguyễn Nhật Nam, owner of a high-end restaurant near the Nguyễn Huệ pedestrian street, shared that he leases a space with a total floor area of nearly 900 m². Monthly rental costs amount to 750 million dong.

According to Nam, economic difficulties have significantly reduced customer numbers. Meanwhile, high rental costs show no signs of decreasing. Consequently, his restaurant has had to reduce staff to maintain operations.

“The restaurant’s workforce has been cut by 50% compared to a few years ago. This is a necessary measure during this challenging period,” Nam stated.

Nam explained that rising input costs, increasing rental prices, and unchanged selling prices—due to fears of customer backlash—have forced the restaurant to reduce staff, despite not wanting employees to lose their jobs.

Nam emphasized that staff reductions and operational efficiency improvements are essential for survival in the food service industry amid ongoing economic challenges.

Lê Thái Hoàng, owner of a 32-branch restaurant chain in Ho Chi Minh City, Hanoi, and Da Nang, noted that rental prices in Ho Chi Minh City and Hanoi have risen by 5-15% over the past few years, particularly in central areas. In suburban areas with high population densities, rental prices have increased by 10-15%.

Hoàng advised F&B brands to optimize leased spaces, reduce area sizes, and focus on boosting online sales to improve revenue and profits.

Hoàng also highlighted that in the F&B industry, three cost categories require close monitoring: rental, labor, and material costs. These typically account for 65-75% of revenue, depending on the business model and location. Therefore, actual profit margins face significant pressure from these costs, especially rental expenses. Effective management and optimization of every square meter of space are crucial for profitability.

Trần Thăng Long, an economist in Ho Chi Minh City, noted that while the F&B industry remains promising, it faces numerous challenges. Escalating rental costs force many major brands to abandon prime locations as profits fail to cover expenses. Additionally, fluctuating material and labor costs strain operations, while customers remain price-sensitive.

“The market also witnesses fierce competition as new brands emerge, and easily replicated menus blur distinctions,” Long remarked.

Long predicted that the F&B industry’s growth rate would slow in 2025, significantly lower than the “hot growth” phase of 2024. This demands higher standards in management, cost optimization, and long-term strategy development, rather than relying on natural growth in purchasing power.

According to iPOS research, Vietnamese consumers are significantly reducing spending on beverages over 50,000 dong. Nearly 84% opt for drinks under 50,000 dong. High-end and luxury dining services have seen a sharp decline in users.

In the F&B sector, only about 15% of businesses report revenue increases, while over 85% face pressure from rising material, labor, and rental costs.

In central Ho Chi Minh City, many major brands pay 350-500 million dong per month for a 100 m² space, with revenues ranging from 1.2 to 1.8 billion dong. Actual profit margins often hover around 10% or lower.

The market also sees shifts in consumer behavior. Customers prioritize “real value”—quality food and drinks at reasonable prices over luxury. New models like franchising, compact kiosks, cloud kitchens, and delivery services are booming, helping businesses reduce costs and reach consumers faster.

However, growth in 2025 is expected to slow compared to 2024. Experts believe the F&B industry can no longer rely on luck or rapid growth but must focus on operational refinement, suitable business models, and long-term strategies.