Investing 1.5 billion to open a decor-focused cafe leads to significant losses

Despite investing heavily in space design to attract a large early crowd for photo opportunities, a Hanoi cafe saw revenue fall sharply as customers did not return.

In 2024, Mr. Pham Quoc Hung (31) opened a cafe in a Hanoi district popular with young people. With capital of more than VND 1.5 billion, he adopted a “living-virtual lifestyle” concept, targeting customers who enjoy taking photos and sharing on social media.

Initial draw from design and social-media check-ins

From the outset, most of the budget went into interior design. The cafe featured exposed brick walls and warm golden lighting, along with minimalist tables and chairs, seasonal decor corners, and dedicated photo spots. Even the signage, cup packaging, and staff uniforms were designed to look cohesive and improve brand recognition.

On opening day, the cafe quickly attracted customers. Many visitors came out of curiosity, and groups of young people visited for check-ins, photos, and social-media posts. On some weekends, the cafe was fully booked, with customer numbers exceeding initial expectations.

Revenue during the first two months was positive, leading Hung to believe the model was on the right track. However, after the initial busy period, operational problems emerged.

What weakened performance after the early buzz

Several factors contributed to the decline. Customers rated the drinks as average, saying they lacked differentiation from other cafes in the same segment. Some drinks looked appealing, but the flavor did not justify the price.

Service also fell short. Staff training was not thorough, the ordering process was slow, and the customer experience was inconsistent.

More importantly, the cafe had little strategy to retain customers. There was no loyalty program, no incentives for repeat visits, and no aftercare. As a result, most customers came mainly for photos and left, leaving the repeat rate low. From the third month, the number of customers began to drop clearly.

Decor corners that initially drew attention also became less “fresh,” and the viral effect on social media faded. Revenue from repeat customers was not enough to cover costs due to the low repeat rate.

“Customers still praised the cafe for its beauty, but they do not return for a second coffee,” Hung said, adding that he had to cut staff and shrink operations.

Model change after nearly half a year

After nearly half a year, the cafe was forced to adjust its model to reduce losses. The large investment in design did not deliver the expected results.

Expert view: attracting first-time visitors is not the same as building repeat demand

Operating consultant Tran Khanh Minh Son said this is a common mistake among new beverage business models. He noted that many cafe owners confuse attracting first-time customers with the reasons people return.

Decor can drive initial curiosity and crowding, but sustainable revenue in the beverage industry depends mainly on customers returning multiple times, not on one-time visits for photos.

If the product is not strong enough, service is not consistent, and there is no customer-retention strategy, the model is likely to stall after the initial buzz.

According to industry norms, space is only one part of the customer experience, alongside beverage quality, service speed, staff attitude, and post-sale engagement.

Key questions before investing heavily in design

Before making major design investments, business owners should answer three questions: whether the product is sufficiently differentiated for customers to remember and return; whether the operating team can deliver a stable experience; and whether the model includes a strategy to retain customers after the first visit.

“Customers may come for a beautiful photo corner, but they will return if the drinks are good and the experience is excellent. In F&B, sustainable revenue always comes from loyal customers, not from living-virtual buzz,” the expert said.