Competing by discounting is hardly a long-term strategy of F&B businesses.

Competing by lowering prices is hardly a long-term strategy for F&B businesses. — If an F&B business focuses on just one discount factor, it may not guarantee income (illustrative photo). Photo: FB

Many F&B businesses are competing by lowering product prices and accepting lower profits to promote to customers. In your opinion, is this a sustainable way for F&B businesses to develop?

- The most important thing in F&B is the quality of food and drinks. However, in times of economic downturn, spending on eating out is down about 20-30% compared to the same period last year. Restaurants are suffering losses due to low demand. On the contrary, consumption of essential items is increasing with impressive growth figures from food chains.

Promotions are essential to convince customers to eat out, or eat with a large group. At this stage, restaurant owners can think of promotions as a solution to increase sales. However, focusing on only one discount factor may not guarantee income. However, overusing promotions can affect the brand. Customers who are used to promotions will feel cheated when paying full price for a product.

Mr. Nguyen Hoanh Tien - Senior Deputy General Director of MoMo. Photo: NVCC

Many F&B business owners have a smart way of doing promotions, helping customers spend more for a single service. The promotion part is the benefit that the owner shares with the customer. This is a win-win relationship (both sides benefit).

What is your forecast for the F&B industry in 2024, sir?

- The market has had many major fluctuations in the recent period. Favorable macro factors are gradually emerging, such as the growth of international tourists, or new FDI capital flows... On the contrary, bad debt in banks tends to increase, leading to the need to set aside reserve funds, from which the cash flow in the economy is not too abundant. Consumers are having difficulties, so they also tighten their spending. These two groups of factors are struggling at the present time. Currently, there is no strong driving force to help the market improve in early 2024. At the same time, the tourism market - an indirect factor affecting F&B - will tend to decrease due to increased supply and travel costs. However, every bottleneck has a way to be untied.

F&B businesses need to find ways to untangle themselves and find new sources of growth, not just waiting for the market or the festive season. In my opinion, focusing on taking care of old customers, using promotions in stores intelligently and finding effective ways to attract more customers are the points that F&B businesses should pay attention to.

In the short term, what should F&B businesses pay attention to, sir?

- Looking back to 2023, we see a big decline in consumers' eating out. People are looking for more economical options. There may not be many changes by the end of this year. At the same time, the tourism market - an indirect factor affecting F&B - will tend to decrease due to increased supply and travel costs. In this situation, F&B businesses need to find ways to untangle themselves and find new sources of growth, not just waiting for the market or the holiday season. In my opinion, focusing on taking care of old customers, using promotions in stores intelligently and finding ways to effectively attract more customers are the points that F&B businesses should pay attention to.

Source