Vietnamese love coffee almost as much as they love food. It’s a staple of social life in a country that has grown to become the world’s second-largest producer of coffee beans. 

Opening a cafe or coffee shop in Vietnam for foreign firms or individuals, however, is not always easy. Not only are there a number of technical and licensing requirements that need to be met, but Vietnam has also developed its own very distinct and unique coffee culture which can make penetrating Vietnam’s coffee consumer class challenging.

Understanding the nuances of Vietnamese coffee culture and the complexities of business establishment procedures in advance of entering the market can therefore be crucial to the success of a new cafe or coffee shop in Vietnam.

Vietnam’s coffee culture

For foreign firms or individuals looking to open a cafe or coffee shop in Vietnam, there are quite a few differences in how Vietnamese consumers take their coffee, compared to many Western coffee consumers.

In general, Vietnamese-style coffees are served iced and are made using robusta coffee as opposed to the more common Arabica in Western markets. The somewhat bitter taste of the robusta has led Vietnam to develop its own unique range of coffee drinks. When developing a menu, firms would do well to keep these key beverages in mind.

Types of coffee drinks in Vietnam

The four main types of coffee drinks in Vietnam are:

• Vietnamese iced coffee (Cafe Sua/Nau Da): Condensed milk, coffee
• White coffee (Bac Xiu): Condensed milk, regular milk, coffee usually in a tall glass
• Coconut coffee (Cafe Cot Dua): Coconut cream/milk, crushed ice, coffee
• Egg coffee (Cafe Trung): Whipped egg whites, coffee

Western coffee in Vietnam

Whereas Vietnamese coffee is much more popular in Vietnam, Western coffee can also be found in most mid-sized towns and cities. Espresso machines are relatively common in mid-tier cafes and coffee shops, though experienced baristas can sometimes be challenging to find.

There are also a number of big foreign coffee chains currently operating in Vietnam. Starbucks, for example, reportedly now operates 87 locations across seven provinces in Vietnam. That said, a number of big coffee chains have entered the market only to leave after only a few years–Australia’s Gloria Jean’s Coffee and The United States’ NYDC.

Vietnamese coffee brands

As a nation of coffee-lovers, and as one of the world’s biggest coffee exporters, a whole plethora of Vietnamese coffee brands have emerged. These brands are available all over Vietnam and have been instrumental in developing the local coffee industry. For more information see–Vietnamese Coffee Brands: Quick Guide 2024

Vietnamese instant coffee

Vietnam is perhaps most well known for its filter coffee, however, the country also produces a range of Vietnamese instant coffees for local consumption and export. For more information see–Vietnamese Instant Coffee: Quick Guide 2024

Establishment procedures for cafes in Vietnam

Cafes in Vietnam with foreign ownership are generally established as a limited liability company either as a wholly owned foreign enterprise or a joint venture with a Vietnamese partner.

This article provides a broad overview of establishment procedures with a more thorough, detailed technical guide available here: How to Form a Company in Vietnam: Technical Guide 2024

Wholly foreign-owned cafes in Vietnam

A wholly foreign-owned cafe or coffee shop in Vietnam allows a foreign investor complete control over a company’s operations. It is, however, generally more costly and time-consuming.

Specifically, before they can apply to register a business, foreign entrepreneurs who want to set up a wholly foreign-owned company will need to first apply for an Investment Registration Certificate (IRC) which they do not have to do with a local partner.

An IRC is basically required to ensure that foreign firms are not engaging in business in restricted or forbidden business lines. The conditions for approving an IRC are outlined in the Law on Investment which also states that IRCs should be issued in between 5 to 15 days. In reality, however, it is usually around 30 to 45 days.

Joint venture cafes in Vietnam

With a local partner foreign business persons do not need to file for an Investment Registration Certificate, but rather the Vietnamese partner establishes the company and the foreign investor buys a share. In this sense, working with a local business partner can considerably reduce setup costs and application processing times. 

Joint ventures, however, can be risky. A mismatch in work ethics and management styles can cause conflict in the workplace, particularly in cross-cultural settings. For example, whereas in Vietnam it is common to financially penalise staff for arriving late or for using their phone during work hours, in Western countries, this would be unacceptable. Understanding these little nuances of cross-cultural communication, in a joint venture environment, may be crucial to a business’s success.

Cafe franchises in Vietnam

Cafe franchises in Vietnam are common. There are a number of coffee chains spread out around the country–the Coffee House and Highlands Coffee for example. Buying into a franchise is an option for foreign investors but foreigners should be mindful that establishing a business via a franchise has its own governing regulations for foreign traders.

Those regulations are covered in Decree 35/2006/ND-CP and Decree 120/2011/ND-CP.

In order to open a franchise in Vietnam approval must be granted by the Ministry of Industry and Trade. Said approval requires traders to compile an application including the following:

• A franchise brochure containing the full details of the agreement to be entered into between the franchisor and the franchisee.
• Documentation proving the existence of the foreign trader as a legal entity.
• Documentation outlining the protection titles of any industrial property rights.
• Audited financial statements of the franchisor for the previous year.
• Evidence of sub-franchise approval (if applicable).

According to Decreed 35/2006/ND-CP after submitting a franchising application to either the Ministry of Industry and Trade or the provincial Department of Industry and Trade, applicants should receive a response in five working days.

Visas for foreign cafe owners in Vietnam

Foreign business persons who establish a cafe in Vietnam are likely to qualify for investor visas. The length and cost of an investor visa will depend on the value of the investment. There are four categories of investor visas.

Vietnam investor visas

Investor visas in Vietnam are known as DT visas (DT stands for đầu tư which translates to investor). There are four types of investor visas which vary in length depending on the value of the investment.

Investor visas in Vietnam 2023

Source: Law on Entry, Exit, Transit, and Residence of Foreigners in Vietnam

Choosing a location for a cafe in Vietnam

Choosing the right location for any business can be the difference between success and failure. Firms and individuals looking to establish a cafe in Vietnam should consider the best market for their products and services. That said, future coffee shop proprietors, wherever they choose to establish themselves, will very likely have to sign on to a commercial lease. 

Market research

Market research is essential when choosing a location for a new cafe in Vietnam. Given the number of cafes in Vietnam’s biggest cities, and the propensity for consumers to frequent establishments closest to their home or place of work, the right location depends greatly on the individual establishment and therefore offering broad advice can be difficult.

It should be noted, however, that in both Hanoi and Ho Chi Minh City there are specific enclaves in which the bulk of foreigners live. In Hanoi that area is known as West Lake (Tay Ho) and in Ho Chi Minh City it’s District 1. Foreign coffee businesses may find these areas easier to penetrate with Western coffee. In other areas, coffee shops may need to double down on products catering more to local tastes.

Retail real estate rents in Vietnam

Rental costs can be a significant factor in choosing the right location and these will depend on a broad range of factors, however, the following ballpark figures for Hanoi and Ho Chi Minh City from CBRE may be useful as a rough guide as to what to expect.

Average rent, ground/first floor, per-square-metre

Commercial leases in Vietnam

The Law on Real Estate Business 2014 regulates leases broadly and this includes commercial leases. A typical lease agreement in Vietnam will have several key features:

• The length of the lease: In Vietnam a commercial lease typically runs for about five years;
• The payment terms: How often rent payments will be made and how. Typically, rent payments are made quarterly, however, they can also sometimes be monthly, every six months, or yearly; and
• The division of responsibilities: who is responsible for what and when between the landlord and the tenant.

These are just the broad strokes but are also the most pivotal components of the agreement. Other aspects of the agreement can generally be negotiated between the landlord and the tenant without too much direction from the real estate law.

Key regulations for cafes in Vietnam

Cafes are considered catering businesses under the law and therefore are required to meet food safety and hygiene standards. These are outlined in the Law on Food Safety.

A failure to adhere to these standards may result in administrative fines of up to VND 100 million (US$4,156).

With respect to the Law on Food Safety, before a new cafe can be opened in Vietnam,  the proprietor must apply for a food safety certificate per Decree No. 15/2018/ND-CP.

Getting a food safety certificate

In order to establish a cafe in Vietnam, business owners need to get themselves a food safety certificate. To apply for a food safety certificate, an application must be completed and submitted to the Ministry of Industry and Trade. The application should include:

• A photocopy of the firm’s business registration certificate.
• A written request from the business owner for food safety certification.
• Health certificates of any staff coming into contact with food in the establishment.
• Details of the equipment, facilities, and appliances and assurance that they comply with food safety requirements.
• Staff food safety training certificates.

Cafes in Vietnam that trade without a food safety certificate may be hit with a fine of up to VND 40 million (US$1,662).

Hiring cafe workers in Vietnam

Entry-level cafe workers and wait staff in cafes and coffee shops in Vietnam are generally paid around minimum wage. Minimum wages in Vietnam are different for each of one of four key regions. These are outlined in Decree 38/2022/ND-CP. 

Regional minimum wages, current as of June 2022

See also: Minimum Wage in Vietnam 2024: Your Questions Answered 

Cafe manager wages in Vietnam

Whereas entry-level staff are paid close to minimum wage, managers of cafes and coffee shops in Vietnam can earn substantially more. According to labour recruitment firm Indeed, the average wage of a cafe manager in Hanoi is VND 12,873,330 (US$535.11), and in HCMC VND 10,378,337 (US$431.40). Note that Indeed’s data is taken from a relatively small pool, however, job listings for cafe managers do tend to give a wage range from VND 10 to 15 million (US$410 to US$623).

See also: Average Salary in Vietnam 2024: Quick Guide

Intellectual property protection

Protecting intellectual property in Vietnam can be challenging. It is common for local businesses to use brand names and logos of other more well-established businesses. As of 2022, Vietnam remained on the Office of the US Trade Representative’s Special 301 Report which labelled IP enforcement as ‘a serious challenge’ for the burgeoning nation. That said, it is a signatory to most international intellectual property treaties and it has made a number of key reforms in recent years to strengthen IP protections.

Trademarking a cafe’s intellectual property in Vietnam

With respect to establishing a coffee shop or cafe, there are a number of items of intellectual property that coffee shop owners may want to consider trademarking. A unique product name, a brand name, or a company logo could all be the subject of a trademark application.

Note that Vietnam is a signatory to the Madrid Agreement and therefore, firms with trademarks approved in other countries that are also party to the agreement will automatically have their trademarks recognised in Vietnam.

Likewise, businesses that register a trademark in Vietnam will automatically have protection in the other countries party to the agreement.

Filing a trademark application in Vietnam

In order to apply for a trademark a firm must first complete an application that includes:

• A trademark registration declaration,
• An image of the trademark between 3cm x 3cm and 8cm x 8cm,
• A list of products and services that are to be registered;
• A power of attorney, if necessary, and
• Proof of payment of all necessary fees and charges.

Trademarks in Vietnam are then filed with the Intellectual Property Office of Vietnam (IPVN). It can take 12 to 18 months for a trademark application in Vietnam to be approved.

Fees and taxes for cafes in Vietnam

New businesses will need to register with the General Department of Taxation in order to pay their taxes and ensure they are tax-compliant. There are also a number of recurring fees and taxes that new cafe owners in Vietnam should be aware of.

Business licence fees

Limited liability companies in Vietnam are required to pay a business licence fee annually. This must be paid by January 30. These fees depend on the registered capital of the firm.

Business licence fees, 2023

Source: Decree No. 20/VBHN-BTC

Value-Added tax (VAT)

The specifics of the VAT are outlined in Law No. 13/2008/QH12. Broadly, this is a consumption-based tax on goods and services in Vietnam. It is generally charged at the point of sale for retail businesses. There are some exceptional circumstances in which VAT declarations and payments can be made quarterly, however, payments are usually made to the General Department of Taxation each month. VAT is generally charged at 10 percent of the sale price, though for select specialty items, it is only 5 percent, and some items are also exempt.

Personal Income Tax (PIT)

PIT is levied on a worker’s wages in Vietnam. The amount to be collected is on a sliding scale, the more a worker earns the more PIT they pay. Employers are required to collect PIT on an employee’s wages and pay said tax to the General Department of Taxation each month. If approved by the authorities an enterprise may be able to make tax payments quarterly instead. The PIT is governed by Law No. 04/2007/QH12.

Corporate Income Tax (CIT)

CIT is the tax a company pays. The standard CIT payment is 20 percent of assessable income, however, on large investments foreign firms have been known to receive tax breaks. This tax is paid yearly though firms can make payments quarterly. The CIT is governed by Law No. 14/2008/QH12

Getting help opening a cafe in Vietnam

There are a broad range of tax agents, lawyers, market research firms, human resource professionals, and all-in-one consultancies in Vietnam that can assist entrepreneurs to open a cafe in Vietnam→Let us connect you with a market entry expert.

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