History Established in early 2016 with its first store located at a corner of Dong Khoi Street,the Katinat Saigon Kafe system under Katinat Café Joint Stock Company Café KatinatCompany w
Chapter 1: INTRODUCTION
Market Overview
In 2019, Vietnam was in the top 10 most attractive destinations in Asia when talking about F&B, according to IBM's assessment In 2022, Vietnam's F&B market experienced a significant recovery after the Covid-19 pandemic The scale of F&B industry revenue in
2022 reached nearly 610 trillion VND, an increase of 139% in comparing with the previous year The eating-out market alone recorded a revenue of 333.69 trillion VND, recovering close to the milestone before the Covid-19 pandemic breakout.
The pandemic has formed new habits and standards in the choices of the majority of consumers The traditional store model is gradually being replaced by convenience stores, increasing the ecosystem of direct interaction with consumers Accordingly, the F&B market has witnessed the birth of many service experience models such as: combining coffee shops with co-working space, cloud kitchen, mobile coffee model or indoor coffee kiosk model llocated in supermarket chains.
Coming to the present started from final months of 2023, Vietnam's F&B market became quieter, and user spending intensity eventually decreased significantly Economic difficulties, which effected from various factors especially the tension in Europe, are directly impacting people's input The psychology of tightening spending is clearly identified in both the retail and consumer markets in general and the specialized F&B market in particular.
However, the overall picture of Vietnam's F&B industry is not all gray Despite the global economic debate, the food and beverage (F&B) market in Vietnam is experiencing rapid expansion by leading chains Businesses with great financial potential and resources such as Katinat Saigon Kafe, Phe La, Mixue, Trung Nguyen, Highlands, are taking advantage of this opportunity to expand their scale nationwide Trung Nguyen recently made a shocking milestone for the whole Vietnam’s F&B industry as the first player to ever enter China’s market Accordingly, the number of KOLs and Influencers working in this industry also increased sharply, notably Ninh TiTo, Khoai Lang Thang, Pit Ham An,
Besides some very remarkable coffee chains, there are also the appearances of some new powerful international and domestic players (especially in Ho Chi Minh City) we can mention that Rang Rang Coffee, EveryHalf, %ARABICA from Japan with minimalism, Cotti Coffee from China – the biggest coffee chain in China as the moment this reported written
The specialized F&B market is forecasted to expand 18% this year and reach VND 1 million billion by 2026 F&B specialized trends in 2024 in Vietnam will witness fierce competition between large chains to gain market share while some other smaller chains will have to be conservative in order to survive The Coffee House is a large coffee chain but after the Covid-19 pandemic, it now has to operate under limited revenue & profit, except the new concept store at Crescent Mall in Ho Chi Minh City, none of new location to be opened in from 2022 till January 2023.
Development Trends
Cloud Kitchen, also known as Virtual Kitchen, operates entirely through a delivery service, with no actual dining space It cooperates with delivery platforms such as GrabFood and ShopeeFood in Vietnam This model allows small business owners to overcome capital constraints and eliminate the need for physical infrastructure, furniture or extensive staff A central kitchen is established solely to maintain product quality,while other tasks are outsourced to third parties A quite successful example was BaeminKitchen as they established 2 Cloud Kitchen in 2 targeted districts in HCMC to be namedBinh Thanh Dist and Dist.1 Sadly due to unstable money flow of itself and its host company, Baemin stopped every business in Vietnam from 31 December of 2023.
The beverage market in Vietnam has had significant changes from the past to the present In the past, the market was centered around traditional products such as coffee and tea However, with the introduction of new and exotic drinks like milk tea and blended beverages, the landscape has transformed While coffee remains integral, the popularity of specialty coffee and takeout options has surged These influences have promoted the growth of the soft drink, juice, and healthy beverage, catering to the diverse needs of today's consumers.
The F&B sector in Vietnam is undergoing rapid digital transformation, characterized by a shift from offline to online sales methods and the integration of multiple channels.
An emerging trend is the increasing emphasis on online marketing in the VietnameseF&B market Accelerating, restaurants are investing more and more in setting upFanPages, websites, and app designs to develop utility systems and cultivate brand images Leveraging this trend effectively allows businesses to retain customers for longer periods of time, giving them a competitive advantage in the F&B industry and laying the foundations for exponential growth.
Overview Of Katinat
Established in early 2016 with its first store located at a corner of Dong Khoi Street, the Katinat Saigon Kafe system under Katinat Café Joint Stock Company (Café Katinat Company) was known as a typical coffee brand in Ho Chi Minh City not only because of its drinks but also because high-quality products, comfortable and inviting atmosphere, serving a diverse customer base This is suitable for almost all types of customers.
By the end of 2021, Katinat Saigon Kafe chain has 10 branches in District 1 and District 3, with additional stores in Bien Hoa Despite having a relatively low reputation in Ho Chi Minh City due to limited marketing efforts, this brand has seized the opportunity to restructure the F&B market after Covid-19 By July 2022, Katinat SaigonKafe had expanded significantly, adding 23 more branches across Ho Chi Minh City,Dong Nai, Binh Duong and Tien Giang These new branches are different from the original branches, having larger spaces spanning multiple floors with aesthetic vibe.Additionally, the brand has undergone a significant makeover, including changes to its identity, concept and store colors.
In early 2023, Katinat Coffee & Tea House (previously Katinat Saigon Kafe) continuously expanded and added branches, bringing the total number to 45 stores in major provinces and metropolis area Katinat is constantly expanding branches at a rate of 2-3 rows per month After D1 Concepts became its shareholder, Katinat opened its first store in the North which located in Hanoi By June 2023 Katinat opened more branches in Hanoi
By the close of 2023, Katinat had clinched the fourth spot among the most coveted cafe chains, outpacing industry giants like Starbucks, Trung Nguyen Legend…
Current Position of Katinat
Katinat's remarkable success stemmed from its innovative business strategies, blending elements of tradition and modernity to create a warm and inviting atmosphere By combining old-world charm with contemporary flair, Katinat offered a cozy ambiance,
Katinat Store at 378 Le Van Luong Street, Ward Tân Hưng, District 7 complete with tables by the glass windows, allowing patrons to immerse themselves in the vibrant pulse of Saigon.
Through adept media marketing and strategic collaborations with affiliates, Katinat swiftly captured the interest of the young demographic Moreover, the introduction of captivating merchandise, notably the phenomenon "rainbow cups" distributed to customers in late 2022, further enhanced its appeal, drawing in a significant number of patrons.
Katinat's menu was thoughtfully crafted to cater to a diverse range of tastes and preferences Committed to sourcing ingredients from sustainable and eco-friendly sources, Katinat ensured that its beverage selection remained dynamic and seasonally adjusted This dedication to quality and freshness provided customers with a distinctive and refreshing experience, contributing to the brand's enduring popularity.
Chapter 2: Analysis
PESTLE Analysis
Tax incentives are utilized in the majority of nations, both established and developing
—including Vietnam—to entice and encourage investment in various industries Although tax incentives can be administered through a variety of levies, the most common and versatile type of tax incentive is the corporate income tax incentive In addition, starting from late 2021, numerous tax reductions has been applied in order to share difficulties with enterprises and to encourage customers spending more.
Vietnam benefits from a climate that is ideal for agricultural growth, particularly for tropical fruits, which are of exceptional quality and have a wide variety of regional flavors Accompanying that is the increasing popularity of the local cuisine priority trend, which has a big impact on consumer preferences.
In 2023, worries of an economic downturn rise even as inflationary pressures lessen In reality, the largest challenge facing F&B businesses this year, according to 84.6% of those who took part in the poll, is the worldwide economic downturn Between 2021 and
2023, this rate rose dramatically from 60% to 83% and 84.6%, respectively As a result, purchasing power weakened, with consumers tightening their spending due to reduced income or concerns that the economy could get worse in the future.
Additionally, business units in the industry are under increased pressure to compete due to rising input costs Sales for the F&B industry have decreased as a result of all these challenges.
In response, commercial banks' lending interest rates have slowly dropped from 2.0% to 4.0% since the start of the year thanks to The State Bank's action Declining interest rates will benefit food and beverage companies by lowering borrowing costs, expanding capital availability, accelerating production, and creating new distribution routes. Another factor contributing to the drive for F&B growth is an increase in international visitors Many signs show that foreign visitor numbers are beginning to rise again, which will likely have a significant impact on the food and beverage sector's future expansion. Finally, one of the factors propelling industry growth for organizations is the ongoing trend of switching from traditional to modern channels According to a consumer survey conducted by Vietnam Report, most people who purchase for food and drink in large cities do it either online, at convenience stores, shopping malls, or supermarkets.
Vietnamese people have long since grown to rely on coffee as a necessary component of daily life It is hard to misunderstand the Vietnamese coffee culture that was progressively established since the 1880s.
The way society views health has changed significantly in the twenty-first century Making healthy decisions is more popular than ever, which is encouraging people to exercise more, eat better food, and give up bad habits Coffee does contain a significant amount of caffeine, despite the fact that multiple studies have shown that it is not
"unhealthy" to consume too much in a day Many people are opting to give up caffeinated beverages such as tea as part of the health consciousness trend in order to improve their mood, sleep quality, and other aspects of their lives This could lead to a decline in the market for coffee (and correspondingly, an increase in the market for decaffeinated coffee products) Therefore, having a diverse menu is a big advantage for Katinat to appeal for multiple demographics.
In reality, when contemporary technology advances, business owners now have to deal with the challenge of utilizing it to seize new commercial prospects In addition to seizing the moment, utilizing contemporary technology in the coffee shop industry will provide entrepreneurs additional competitive benefits, such as business owners being able to control the business's food raw materials sources with the smart brain of the software, save human resources through transaction, ordering, and service activities.
With the popularity of mobile ordering in Vietnam, Katinat stands to gain from services like GrabFood and ShopeeFood by providing clients with increased convenience and maybe boosting order volume Additionally, they can broaden
Katinat's clientele accommodate those who would rather sip their tea and coffee at home or at the office
Cashless payment options like e-wallets are becoming increasingly popular in Vietnam, especially among younger demographics Katinat should ensure they accept these payment methods to cater to tech-savvy customers.
Strict adherence to Vietnamese food safety regulations and having necessary certificate is essential to maintain customer trust and avoid legal repercussions
In addition, Tax policies in Vietnam can affect Katinat's profitability Understanding and complying with tax regulations is crucial for their financial health.
Moreover, labor laws and regulations concerning working conditions and employee rights in Vietnam Labor department websites, legal databases, or HR consulting firms can provide relevant information.
Vietnamese consumers are becoming more concerned about sustainability Katinat can improve its brand image by using eco-friendly practices in Vietnam, such as sourcing ethically traded coffee beans, elimanating the usage of one-time utensils and serving- ware, and promoting reusable cups.
VRIO
The VRIO framework is a tool for analyzing a company's resources and capabilities to determine their potential to provide a sustained competitive advantage VRIO stands forValue, Rarity, Imitability, and Organization Applying this framework to Katinat, without specific insider knowledge of the company, we can hypothesize about their core competencies based on public information and general insights into the coffee and tea house industry.
High-Quality Products and Customer Experience: Katinat offers specialty coffee and tea of high quality in a welcoming and comfortable environment, meeting and exceeding customer expectations Seasonal drinkware not only serves as a unique product but also sets a trend, stimulating attention and discussion on social media platforms and through word-of-mouth.
Unique Brand and Concept; Partnerships with Companies and Platforms: Katinat's unique concept and brand, along with partnerships with other companies and platforms to offer high-value vouchers to customers, create a rare advantage that is not easily replicated by competitors.
Unique Marketing Strategy through Social Media and Word-of-Mouth: The creativity in developing unique products like seasonal drinkware and using them as a natural marketing tool through social media and word-of-mouth, along with solid partnership relations, creates a significant barrier to imitation efforts from competitors.
Leveraging Opportunities Through Partnerships and Community; Effective Marketing and Brand Management: Katinat has demonstrated organizational flexibility and customer focus by leveraging partnership opportunities and effectively marketing and managing its brand The combination of creativity, strong partnership relations, and operational efficiency is key to maintaining Katinat's competitive advantage and sustainable growth.
Katinat has built a system of core competencies by offering unique value to customers,creating rarity in the market, and organizing its business and marketing activities effectively These elements not only make Katinat stand out from the crowd but also create a sustainable competitive advantage in the bustling coffee and tea industry.
TOWS of Katinat
3.1 Strength – Opportunities: Maximize Strengths to Seize Opportunities
Katinat can harness its diverse and rich menu as a springboard to introduce seasonal and new beverage options that align with customer trends, similar to strategies employed by Starbucks This approach not only diversifies their offerings but also caters to evolving consumer preferences Additionally, they should capitalize on their strong marketing campaigns and unique product offerings to expand into northern provinces and international markets, leveraging their existing brand strength to capture a new audience. Furthermore, enhancing the in-store experience by refining the cafe’s atmosphere and layout will help make Katinat a preferred destination, supporting a broader menu that includes sweets and desserts, thereby enhancing overall customer satisfaction and retention.
3.2 Weaknesses – Opportunities: Overcome Weaknesses by Exploiting Opportunities
Katinat should address its modest network by targeting expansion in untapped domestic areas and exploring international opportunities, which would significantly broaden its market influence This involves identifying strategic locations that promise high foot traffic and minimal competition Alongside geographic expansion, there is a critical need to boost advertising efforts Increasing investment in traditional advertising channels to complement their existing social media efforts will enhance the brand’s presence in both new and existing markets, helping to build a more robust market identity and attract a wider customer base.
3.3 Strengths – Threats: Use Strengths to Counteract Threats
To mitigate the impact of competition from established brands such as HighlandsCoffee and The Coffee House, Katinat can leverage its strategic choice of prime locations and its unique, high-quality product offerings These differentiators are vital in competitive regions where brand differentiation can influence consumer choice.Moreover, Katinat should continue to employ clever and engaging marketing strategies to maintain customer interest and distinguish itself from both large competitors and local businesses This will foster customer loyalty and pique curiosity about new products,helping to secure a stable foothold in the market.
3.4 Weaknesses – Threats: Minimize Weaknesses and Avoid Threats
Katinat needs a focused expansion plan to strategically enter highly competitive markets This should start with strengthening its base in the Southern provinces,establishing a strong local presence before moving north Such a phased expansion approach allows for adjustments based on market feedback and minimized initial risks.Additionally, Katinat should regularly introduce innovative products to stay competitive against established chains Focusing on unique local ingredients or cultural themes can offer a distinct selling point that differentiates their offerings from those of mainstream competitors, thus capturing interest from niche markets and cultural enthusiasts.
Value Chain Analysis
Katinat places a strong emphasis on selecting ingredients from reputable suppliers For example, Katinat mainly sources the finest tea leaves and Robusta beans from legitimate farms in Buon Ma Thuot, Daklak, and other highland regions Moreover, they maintain a tight inventory management system from transporting stocks to storing at each branch, which helps control quality from the source They conduct frequent evaluations of suppliers to ensure compliance with quality and social responsibility standards The company also focuses on choosing suppliers committed to sustainable practices. Selecting premium ingredients not only guarantees a unique flavor for the products but also reflects the brand's values of sustainability and social responsibility While cost control and profit optimization are considered, they also negotiate to achieve the best price and quality for the benefit of the company and its clients, creating a win-win situation for all parties involved.
In terms of product development, Katinat continuously experiments and innovates unique products to meet the evolving consumer trends and preferences, ranging from traditional coffee drinks to refreshments and beverages, enriching the menu variety To achieve this, Katinat has established a strong marketing team that quickly captures trends through social media.
At Katinat, the quality and brewing technique are elevated thanks to a team of skilled baristas who have undergone an initial two months of training along with advanced courses in brewing, customer service, and store management This not only improves their brewing skills but also ensures the consistency of product quality, turning every drink into a unique brand experience for customers In addition to focusing on training and skill development for employees, Katinat also concentrates on creating a positive work environment and attractive compensation policies, believing that employee satisfaction directly impacts customer satisfaction To optimize the workflow and reduce waiting time for customers, Katinat implements the latest technologies in production process management, from automating certain brewing steps to using order management software and POS (Point of Sale) systems, aiming to increase work efficiency and deliver the best service to customers.
As e-commerce continues to flourish, Katinat has seized the opportunity to broaden its reach by establishing partnerships with leading delivery platforms in Vietnam, including Grab and Shopee Food This strategic move enables customers to enjoy Katinat's diverse beverage offerings from the comfort of their homes, by simply placing orders online. This convenience aligns with modern consumer preferences for quick and easy access to their favorite drinks without the need to step outside.
Katinat has adopted a multi-channel marketing strategy that spans social media and email marketing to boost brand recognition and draw in customers They effectively utilize customer data to develop personalized marketing campaigns, precisely targeting the preferences and needs of their specific customer segments and potential buyers. Customer service is at the heart of Katinat's operations, with a keen focus on monitoring each order even after delivery to ensure satisfaction Additionally, the unique design and spacious seating areas in each store, strategically located to maximize accessibility, serve as key features of Katinat, making it an appealing destination for a broad range of customers across different age groups and professions.
Katinat is committed to providing top-notch service, ensuring every customer is warmly and professionally welcomed the moment they step into the store Staffs are thoroughly trained in communication skills and have a deep understanding of the menu,enabling them to advise customers on drink selections that suit their personal tastes.The customer experience at Katinat is uniquely designed through beautifully arranged,spacious, and modern yet cozy café spaces, ideal for gatherings with friends, relaxing, or working Significant investments have been made in both physical and digital infrastructure to support business operations Furthermore, Katinat benefits from prime locations that are bustling and crowded.
Competitive Strategy
The lifting of the social distancing order and the subsequent "new normal" period— which is regarded as the period of food and beverage market restructuring—marked a turning point in Katinat's development Closed stores compel many firms to reduce expenses and maintain good cash flow.
After a number of prime locations at sizable roundabouts in the city center were given back, Katinat swiftly took control and constructed grand, exquisite businesses Seizing the chance, Katinat opened 23 more locations by the end of July 2022, increasing its total to 33 locations across important provinces and cities such as Ho Chi Minh City, HCM, Dong Nai, Binh Duong, and Tien Giang With the help of innovative and methodical initiatives, Katinat's commercial approach has grabbed control of the southern tea and coffee market.
The new acquired stores later have both large spaces and high floors unlike the small and narrow spaces of the original ones Along with that, this firm updated its colors, concept, and brand identification to reflect a more opulent and sophisticated style has numerous strategic locations across HCM City, including roundabouts, that radiate to numerous districts and take advantage of niche markets for potential customers Katinat is a "late-born" brand, but with time, it "threatens" major competitors in the market like Highlands Coffee, The Coffee House, and Phuc Long.
Many guests have been won over by Katinat's menu because to its assortment of diverse and interesting drinks In order to guarantee input materials for the production of high-quality beverage products, the brand has also refined the supply chain procedure Additionally, having comprehensive certifications for raw material quality and food safety gives customers additional peace of mind while they sip beverages Additionally, Katinat is well-known for its lovely and practical retail layout as well as its incredibly committed and considerate customer care team.
It can be considered that Katinat’s competitive strategy is the focused differentiation strategy given on how they emphasized on constructing an identity that sets them apart from the crowd such as offering a large variety of beverages for all demographics, or creates an image that is a combination of old features and modern style with consistency.Focused differentiation strategies have their own advantages and disadvantages For the pros, by catering your target audience’s needs and preferences, a differentiation strategy allows you to tailor your offerings to precisely meet those requirements This relevancy resonates strongly with customers, forging a strong bond and engendering loyalty Even in the face of competitive alternatives, customers who derive value from the product itself are more inclined to stick with it.
Although the firm gains most from enhanced brand loyalty, customers can also profit from it by saving time and energy A brand's loyal customers are more likely to have faith in the caliber and reliability of the goods and services provided by that brand
Additionally, they could be less likely to put in the time and effort to investigate and contrast options This may save the client time and effort when making decisions and lead to a more positive experience all around.
On the other hand, differentiation strategy calls for a significant investment of time, energy, and money This focus on investment and development can put strain on every aspect of a business Katinat may need to spend more on high-quality materials, skilled labor, and specialized equipment in order to create products or services that stand out from the competition These higher costs can reduce profitability and may also make it difficult for companies to compete on price.
Moreover, Katinat becomes heavily reliant on the satisfaction and continued patronage of its target segment If customer preferences shift or new competitors emerge within the niche, the chain's success can be jeopardized.
Chapter 3: Prepare For Katinat Evolution
Concepts Of Development
At the present, the process of handcrafted drinks at Katinat is time-consuming and lacks synchronization between baristas and between stores Katinat will need to completely standardize its processes and recipes to ensure the equal skills of its baristas at every store and the taste of the drinks On the other hand, Katinat will also have to put more concentration on the R&D of coffee beverages since it has been identified as a fancy cafe chain where people enjoy coffee in styles.
During the plan of standardization of its drink recipes and handcraft process, the management of input raw ingredients is essential because the same ingredients with different suppliers can deliver different tastes In a wider point of view, in order to use one ingredient in many different drinks to lower the cost, the consideration of suppliers becomes critical E.g The condensed milk of Ngoi Sao Xanh is less sweet and less condensed than Ong Tho but Ong Tho gives a bold sweetness which can reduce the amount of usage per drink, Ngoi Sao Xanh is a valuable option since it’s cheaper and easier to customize sweetness even though the amount per drink may get larger
Furthermore, if Katinat wants to elevate its value in the eyes of consumers, they must ensure all its raw ingredients are truly high quality, uniform in taste, and easy to store.
To standardize recipes and handcrafting drinks, we recommend creating three basic flows for coffee beverages, tea beverages and ice blended beverages. ã Coffee beverage:
Add flavor syrup, flavor ingredient
Add milk, coffee, ice, topping, decoration ã Tea beverage:
Add topping, decoration ã Ice blended beverage:
Add sauce, flavor syrup, flavor ingredient
Adjust sugar syrup, add ice
During peak hours which may require two baristas or more on a same flow, the first barista can conduct till before the Finish step, the second barista will continue the flow at this step and ready to hand-off the drink to the customer For the coffee beverage flow, the additional third barista can join helping at the Prepare step since pulling Espresso takes at least 3 minutes for a double shot This collaboration between baristas can only achieve efficiency in time and high quality outputs especially customer satisfaction when their skills are well-trained and equally performed Moreover, we can enhance the speed of baristas by standardizing the quantification of ingredients in the first place so that when handcrafting drinks, the baristas will not have to measure by hand In order to do that, Katinat will need to design custom dispensers for each different ingredient Instead of using measuring cups, baristas can directly pump ingredients into cups with a fixed- adjusted amount, applying arithmetic sequence in case of requirement of different amounts in various drinks In the end, the customers can feel respectful and well-served when finding out the familiar delicious taste of their favorite drink is exactly re-created at every store they reach
Once the standardization is set, Katinat can create new beverages based on the three- basic-flows as recommended above, however they should put more effort and concentration on inventing new coffee products as they have been identified as a fancy cafe chain An ultimate goal for them is not only turn themself valuable visually but also the valuable chain from where the coffee beans formed and taken care until the final product as a coffee drink reaches the customer Katinat can first start by diversifying the current coffee section in their menu, the more Katinat offers the higher satisfaction in customers seeing various options to please their coffee-addiction Then, Katinat will be able to dive into the process of bringing coffee beans from soil to market Getting deeper can give them more opportunities to take control over the output quality of coffee processing and any aspect that is involved in the growth of coffee trees such as soil, climate and even humans Finally, Katinat will have chances to create its own unique coffee blends from its premises which give them distinct competition among others. Nowadays, there is a culture that everyone will possibly stay longer to work or to gossip with friends, so that they usually purchase food items available at stores Katinat, at the moment, offers mostly sweet cakes or packed snacks which are quite limited options for customers They should think of expanding its food offerings in store, adding options of savory foods and less-sweet cakes, these items must be easy to store in temperature-controlled refrigerators with long expiration dates (suggested longer than one day but less than 5 days) For savory foods, a stove is needed to warm up before serving to customer, criteria in selecting suitable stove are fast-warming and not a microwave due to a reputation that microwaves burn the food outside and leave cold inside which can negatively impact quality and customer satisfaction Promotions at night visit will help increase the consumption of these food items in order to increase revenue and reduce waste
With the rise of technology, applying software in processes can create an efficient workflow at every stage of a company Katinat is not an exception in this game POS is the first technology integration we should ever mention when walking into every cafe nowadays, it helps cashiers to take orders from customers, making transactions cashless and update the order to baristas without the involvement of handwritten papers as in the 2000s Moreover, if POS software and inventory management systems are connected, we are able to use POS as a tool to calculate the remaining stock, cost of drinks or even the cost and profit of a store excluding external costs such as real estate rent, electricity,
As Katinat is planning to expand its market, technology integration becomes critical since there is numerous information and data to be processed from managing employees to controlling the business, supply chain management systems maybe the most considered because any small failure in the supply chain can significantly lead to a crackdown of a whole business Katinat needs as well to create a direct connection between its systems with bank services and card machines so that customers can just tap to pay with Apple Pay, Google Pay, Samsung Pay or any card that supports Tap-to-Pay technology, which then reduces any error during the interaction between employees and card machines Pay via QR code method is available but in need of digitalization and integration because cashier still have to ask for proof of transaction before customers can leave the counter
In general, Katinat should take Enterprise Resource Planning as the core for long-term development and management in order to achieve full technology integration for a growing cafe chain not only nationwide but also to be ready for entering foreign markets Taking more advance on technology integration, it is possible for a membership system to be built and operated in order to create new customer experiences
Getting valuable means getting recognition from the public, Katinat also needs a plan to expand its appearance in the eyes of customers more frequently in advance to gain larger market share among other competitors They can reach customers via various channels from classic to most modern Social media is one of the most powerful ones because most people nowaday have at least one active social account Lately, Katinat has launched a long-term project by collaborating with KOLs, KOCs, influencers and online reviewers in order to connect and interact with new customers and recent customers on its fanpage on TikTok and FaceBook which has achieved a notable attention and excitement of a large number of online users, this practice can be referenced as Affiliate Marketing
However, the practice is used not only by Katinat, for long-term Katinat may get “burn- out” of its ideas They should consider aiming for the combination of sponsorship with social projects and charity events to deliver sustainable values not only for the brand but also for the community including its customers
Furthermore, environmental protection is to “kill two birds with one stone”, it helps reduce costs of single-use serviceware and plastic trash which then can gain more support from society since the environment is a serious issue that not only citizens devote their attention to but also the governments of countries and international organizations Katinat first begins with researching suitable and sustainable policies to protect the environment from downstream upward, then conducts the usage of reusable cups and reusable utensils in stores In addition, they must ensure hygiene of these serviceware after each time use to eliminate risks of infection by using certified dish machines and dish solutions recommended by agencies of health In general, along with those policies to be made, Katinat will need to design a routine for cleaning serviceware with criteria relating to hygiene and health safety for both employees and customers Katinat can as well encourage customers to bring their own reusable cups and get a discount for it Starbucks has been doing this practice for years and they have achieved recognizable successes
The formation of Katinat dates back to 2016 and has been gaining some reputation for its tasty and trendy beverages with unique “vintage-royal” hybrid interior spaces at their locations We also have seen a re-formation in 2023-2024 period as they are launching a new interior concept for new opening stores and multiple renovations at their old locations In the short-term, these actions play as a statement that Katinat is changing and becoming a higher-level F&B brand, however in the long-term, Katinat should understand that its drinks and unique store design cannot be identified as the core strength They need to focus on the development of its employees as they can deliver better service and achieve higher satisfaction from customers, which then elevates the brand value The development should be based on the mission of the brand, surrounded by the passion and joy serving customers The input training process is also crucial as it is the basic foundation to form further understanding of the value in each employees’ mindset To enhance efficient interactions between employees, it is fundamental to make sure every operational employee can take over any position in the store as they are assigned daily by shift supervisors E.g The cashier can be the barista and the barista can finish the cashier's tasks in any circumstances without errors Further interaction can be earned by every employee well performing an identical routine.
Once training & development plans are fully set up, Katinat can now be ready to deliver the best customer experience among other competitors in market All employees must serve customers with dignity, passion, dedication and above all is professional, it is required that employees understand about what they are doing, what goal they are aiming and which values they are delivering to community Not every customer can be fully satisfied, employees also need to learn how to recognize when their efforts can be flashed back by fastidious customers in order to prevent any further uncontrollable situation For management level, random surveys can be conducted on customers relating to any aspect that customers interact with during visiting a store with the aim of understanding satisfaction level, in exchange, customers can receive discount vouchers or free drink vouchers on next visit for taking part in the survey In addition, Katinat can establish a customer service center to receive feedback directly from customers via various technological approaches from chatbox on social media to traditional hotline or email The center will then work closely with top management level in office and at operational locations (retail stores) to solve problems that customers are facing and fix any loopholes that may negatively impact on the operation and safety of the brand generally, employees specifically.
Furthermore, Katinat will be able to build its membership system to increase customer experience based on the technology integration as said before Typically, there are two levels or more of membership by tier which are basic member, silver member and gold member Each tier of membership will eventually have different benefits and rewards After reaching a milestone in money spending or earned points, the customer will automatically be upgraded to a new tier with additional welcoming rewards, moreover, the customer will receive exclusively better service every time they visit stores We suggest two common solutions: Traditional membership card/account; Membership card/account as an e-wallet/gift card
- First solution as a traditional membership card/account, cashier will ask customer for a physical member card or phone number that is linked to the membership account to accumulate points, customer can then use points to redeem for rewards.
Idea Prioritizing: Global Expansion
Expanding into new markets is an essential course of action for any business, and Katinat Cafe perceives China as one of the most appealing opportunities While there are numerous countries with thriving economies and diverse cuisine landscapes, China offers an exclusive set of potential, making it an excellent choice for Katinat's global endeavors.
China's immense population and booming urban middle class make it an extremely appealing market for businesses of all sizes At roughly 1.4 billion, China holds the largest population in the world Urbanization trends and the nation's swiftly growing upper class combine to create a large base of consumers with significant purchasing power In comparison to smaller or less populous nations, Katinat Cafe has outstanding potential for expansion thanks to this scale.Katinat Cafe's distinct blend of Western and Asian culinary traditions satisfies Chinese consumers' shifting tastes, with a menu that appeals to both classic tongues and experimental foodies Furthermore, China's dynamic economy and vibrant cafe culture offer Katinat Cafe ample opportunity for growth
The foregoing chart illustrates a robust annual growth trajectory in coffee market revenue within China, with an especially notable surge of 35.4% observed in 2021 This remarkable expansion occurred against the backdrop of the global COVID-19 pandemic, which exerted substantial pressure on various sectors of the economy during 2019-2020 Despite these challenges, the coffee market in China demonstrated resilience and sustained growth momentum. Such resilience underscores the market's inherent potential and allure for strategic entrants like Katinat seeking to capitalize on emerging opportunities Projections indicate a continued upward trajectory, with the coffee market in China anticipated to achieve a record revenue of 24.8 by the year 2028 These forecasts highlight the favorable prospects and long-term viability of the Chinese coffee market, signaling a conducive environment for Katinat's developmental endeavors within this dynamic and evolving landscape Urban areas of the nation, such as Shanghai, Beijing, and Guangzhou, have a thriving consumption of food or drinks, and people are becoming more and more interested in trying out foreign foods and eateries Katinat Cafe can exploit China's consumer market vibrancy and capitalize on the country's desire for innovative cuisine and cross-cultural interaction by strategically establishing its stores in busy urban hubs.
Another important factor in Katinat Cafe's decision to expand into China is its cultural connection Katinat Cafe's offerings are in line with the rich cultural heritage of China Chinese consumers are drawn to the fusion of Western and Asian flavors because they are accustomed to a wide range of culinary influences Katinat Cafe can effectively serve the increasingly diverse palates of Chinese consumers by introducing its innovative menu along with its culturally resonant decor This approach helps the brand develop profound connections with its intended audience Through the adoption of regional customs, tastes, and culinary traditions, Katinat Cafe can establish significant ties with Chinese customers and encourage a loyal client base within this highly competitive sector.
Besides, Katinat Cafe may accomplish sustainable development over time by entering China. Notwithstanding the intense competition in China's food and beverage sector, Katinat Cafe may be able to stand out as an exclusive market for itself thanks to its unique identity and solid popularity among consumers By prioritizing quality, authenticity, and client retention, Katinat
Cafe can set itself apart from rivals and cultivate a loyal customer base, which will guarantee long-term success.
Implementation Plan
With its large base of consumers and transforming cuisine setting, China offers Katinat Cafe tremendous growth potential as a marketplace for expansion However, cautious preparation and execution of strategy are necessary for an effective entry into this lightning-fast market
Firstly, Katinat Cafe's expansion strategy should be based on careful actions of market research and analysis Through an in-depth analysis of Chinese consumers' behaviors, tastes, and trends, the café can efficiently adjust its menu to suit the tastes of the region This entails being aware of the hidden variations in culture that influence consumer behavior in addition to culinary preferences
According to a survey conducted by Alibaba Group Holding and Ele.me in 2021, Chinese consumers typically prefer coffee that is convenient and portable for on-the-go consumption.Historically, before Starbucks entered the Chinese market in 1999, instant and ready-to-drink(RTD) coffee dominated the market However, fresh coffee has now become the second most favored type of coffee product, accounting for 36.7% of preferences by the end of 2021, althoughRTD coffee still holds a slight edge at 36.8% China's growing preference for fresh coffee reflects changing tastes and health consciousness among consumers With exposure to international coffee culture and a desire for richer flavors, fresh coffee has gained popularity as a premium, higher-quality option compared to instant varieties
China’s coffee market by product type
In terms of consumption, unlike more established markets in Europe and the US, the Chinese coffee market is still in its early stages, offering substantial room for growth While the global growth rate of coffee consumption averages 2% annually, China's coffee consumption rates are skyrocketing at a remarkable 30% per year Data conducted by Alibaba Group Holding and Ele.me also reveals that Chinese coffee consumers prioritize product quality and taste (52.2%) while also showing expansion of cafe cultures among consumers (31.3%) and lifestyle (28.4%).
Coffee consumption factors of Chinese consumers 2021
Equipped with understanding gained from market research, Katinat Cafe cultivates a market entry strategy intended to economically enter the Chinese market This requires selecting the best locations for its store while taking competition, customer traffic, and demographic information into consideration To create excitement and establish itself as an elegant dining location, Katinat Cafe can open flagship stores in well-known city Shanghai Shanghai's lively and diverse atmosphere makes it an ideal spot for coffee businesses like Katinat With a large population of young city dwellers and expats adopting Western trends, the demand for coffee is on the rise. Additionally, as a global financial hub, Shanghai attracts a steady flow of visitors and business travelers, offering Katinat opportunities to cater to various customer segments.
In addition, the café must maintain its essential character while modifying its branding, menu,and atmosphere to appeal to Chinese customers In order to create a sense of engagement and relationship with the target audience, localization efforts go beyond menu modifications and include furnishings, design, and even advertising messages To stand out among 8.500 coffee shops in Shanghai, Katinat Cafe must not only offer unique and exclusive drinks like rambutan milk tea and ambarella tea or avocado smoothies but also enhance its daily menu offerings for sustaining customer interest and loyalty Skillfully blending tea and coffee recipes to create new flavors is an art that Katinat Cafe can leverage to set itself apart in Shanghai's competitive coffee market By combining the rich, bold flavors of coffee with the aromatic and nuanced profiles of tea, Katinat can craft unique and innovative beverages that appeal to a wide range of tastes For example, blending creamy milk tea with a shot of espresso coffee with floral tea flavors can create refreshing cold brewing drinks Experimenting with different tea and coffee varieties, as well as complementary ingredients like fruits, and syrups, allows Katinat to create signature drinks that captivate customers and keep them coming back for more This blend of creativity and attention to flavor profiles can elevate Katinat's menu offerings and establish it as a destination for innovative and unforgettable beverages in Shanghai.
Luckin Coffee is the highlighted illustration of how to introduce innovative products tailored to Chinese tastes For instance, the Brown Sugar Boba Latte cleverly combines elements of traditional milk tea, such as boba pearls and brown sugar, with the creamy richness of a coffee latte, appealing to local preferences for sweet and indulgent beverages Additionally, offerings like the Newer Latte, featuring a creamy milk latte, cater to the Chinese palate's appreciation for velvety textures and indulgent flavors By adeptly blending familiar ingredients from both coffee and tea traditions, Luckin Coffee has effectively captured the attention of Chinese consumers and expanded the boundaries of coffee culture in the region.
Luckin Coffee’ best sellers drinks
A vital aspect of Katinat Cafe's entry into the Chinese market is the creation of partnerships.Working together with regional distributors, suppliers, service providers and even local counseling guarantees smooth operations and dependable supply chains Additionally, forming partnerships with landlords and real estate entrepreneurs secures prime locations for KatinatCafe Using platforms consisting of WeChat, Weibo, and Douyin to effectively engage withChinese consumers, advertising alliances with regional businesses and publications enabling directed advertising efforts are other strategic moves for Katinat.
For Katinat Cafe's Chinese operations to run effectively, operational planning is also essential.
It involves acquiring and cultivating an employee pool of qualified individuals who are fluent in both Mandarin Chinese and English, with a focus on providing outstanding customer service and empathy for other cultures In order to source premium components and machinery and maintain standardization in the quality of products across all stores, supply chain management systems and business models must be set up carefully.
Katinat’s new business model canvas for its China expansion effort
Lesson Learned From Previous Efforts of Trung Nguyen
As it attempts to create an impression for itself and cope with the fierce rivalry, Katinat encounters an array of possibilities and obstacles in China's booming marketplace Examination of the techniques and accomplishments of Trung Nguyen Cafe, an important innovator in the Vietnamese coffee market, delivers insightful information about how to effectively compete in the Chinese market while utilizing Katinat's positive aspects to map out a niche for itself.
One of the largest shortcomings Katinat faces in China is how to stand out in an overflowing marketplace for coffee shops in the country Success in the plethora of cafes that cover urban landscapes requires standing out from the rest of the crowd The way that Trung Nguyen Cafe has been able to capitalize on the authenticity of culture is a significant illustration Through the preservation and remembrance of Vietnamese coffee culture, Trung Nguyen has established an exclusive niche by highlighting the G7 coffee Similar to this, Katinat can set itself apart in China by utilizing its blend of Asian and Western flavors This may require an enormous innovation in Katinat’s products such as tea or coffee but overall bringing in a large advantage for the brand Katinat may attract consumers looking for authentic and unforgettable experiences by highlighting its distinct culinary arts and crafting a memorable experience that appeals to both local and foreign palates.
For Katinat in China, upholding standards and consistency through all of its stores is a further obstacle Future achievement can be impacted by incompatible cuisine service and quality, which may undermine customers' sense of loyalty and trust Katinat learns numerous lessons from Trung Nguyen Cafe's commitment to quality and reliability Trung Nguyen has established respect and allegiance from customers by cultivating a reputation for using premium coffee beans and reliable brewing techniques By insisting on the sourcing of top-of-the-line supplies and enforcing rigorous standards in food preparation and service, Katinat is capable of mimicking the aforementioned approach In order to gain the devotion and loyalty of its Chinese consumer base, Katinat must constantly deliver an outstanding experience.
In addition, Katinat must adjust to shifting market trends and customer tastes in China. The food and beverage industry in China is ever-changing, with demand being influenced by new trends and fluctuating tastes among consumers Trung Nguyen Cafe demonstratesKatinat an important thing by being willing to be creative and branch out its product line Trung Nguyen went deeper into unveiling new coffee blends, staying flexible in a market that is changing quickly By constantly offering innovative drinks and modifying the offerings to suit the country's shifting palates and trends, Katinat can also emulate this level of achievement.
Long-Term Strategy (Re-Branding)
As mentioned about the concentration on coffee product of Katinat in the concept of development, in recent years, people only think about tea beverages when talking about or visiting Katinat which leads to an assumption that in customers’ mindset, Katinat is a tea house However, in the original brand orientation, Katinat believes it will passionately bring every new taste from every corner of regions in the land of Vietnam closer to customer, “each tea bud, each coffee bean is an endless source of inspiration for breakthrough formulas and dedicated products that help Katinat conquer the taste buds of customers”.
In behind the scenes, Katinat is not an individual company, it was managed by D1 Concept – a joint-stock corporation based in Ho Chi Minh City – who is also managing Phe La which is a tea house that has gained success in F&B market despite being a young player If Katinat put effort and concentration on coffee section in its menu, it would be a perfect balance for D1 Concept with one brand for tea house and the other brand for coffee house Alongside with long-term developments, it is essentially recommended Katinat should have a rebranding strategy on its operation in order to conquer and highlight its position as a coffee house chain in domestic market creating a strong foundation to put the first step into international markets E.g Vinamilk's complete rebranding project in 2023 was an extremely successful landmark of its journey that has captured attention and applause from both consumers and business experts Rebranding must be conducted simultaneously on visual appearance, core values & mission, customer segmentation and most important of all is legal protection Katinat will not protect itself and fight against brand counterfeiting if there is lack of legal protection such as trademark registration At the moment this report written, there is a sign that they are having a rebranding action as they started to build up new design concept for its new opened stores and renovate its old locations, some new stores are located in unique places such as Ben Bach Dang – an historic port lied on the bank of Saigon river which has an spectacular city view The overall purpose of the rebranding strategy is to re-image Katinat as a brand of coffee house and tea house with coffee as its strength in public view When mentioning Katinat, people will quickly think of a stylish coffee house chain from Vietnam that conquers the taste buds of customers by each tea bud, each coffee bean as an endless source of inspiration.
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