The Jollibee Food Corp-backed coffee chain opened 25 net new stores in the third quarter of 2024 but saw sales fall 5% as many of the country’s leading operators grapple with higher operational costs and increased competition
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Highlands Coffee currently operates 815 stores across Vietnam and the Philippines | Photo credit: Duc Van
Highlands Coffee has posted a third consecutive quarter of year-on-year like-for-like sales decline after opening dozens of new stores during the period.
The Jollibee Food Corp (JFC)-owned coffee chain saw third quarter revenues fall 5% in the three months ended 30 September 2024 to ₱569m ($10m). However, EBITDA across the first nine months of last year increased 3% year-on-year to ₱1.7bn ($29m).
Highlands Coffee opened 26 net new outlets in the third quarter and 57 across the first nine months of 2024 to reach 772 outlets in Vietnam and 43 across the Philippines, currently its only international market. The coffee chain has diversified its domestic store network over the last six months by opening to-go kiosks and coffee carts by petrol stations – high footfall sites that typically represent lower investment.
Founded in 1999, Highlands Coffee sold an initial 50% stake to Filipino fast-food group JFC in 2012. The third quarter earnings release marks the first time the Manila-based F&B giant has published financial data for Highlands Coffee separately from its group results since taking a controlling 60% interest in the coffee chain in 2017. JFC’s café portfolio also comprises US coffee chain The Coffee Bean & Tea Leaf, bubble tea brand Milksha and South Korean value-focused operator Compose Coffee.
World Coffee Portal research shows Vietnam is the fifth largest branded coffee shop market in East Asia by outlets, led by 2,000-store Milano Coffee. Highlands Coffee faces domestic competition from low-cost franchise operators Trung Nguyen E-Coffee and Viva Star Coffee, as well as Ho Chi Minh City-based Katinat and Phuc Long Coffee & Tea.
While many Vietnamese branded coffee chains have scaled their domestic footprints over the last 12 months, others have struggled with rising interest rates, rents and raw material costs in the country since the pandemic.
Masan Group-owned Phuc Long Coffee & Tea saw its own third quarter sales increase 13% year-on-year in 2024 which it credited to the ongoing closure of underperforming supermarket kiosks and new high street flagship locations – an expansion strategy in contrast to Highland Coffee’s. However, Phuc Long Coffee & Tea has a significantly smaller store network, with 174 outlets nationwide.
Conversely, premium operator The Coffee House shuttered more than a third of its stores in 2024 – downsizing from 150 outlets at the end of 2023 to 93 sites – in a bid to cut costs and improve sales performance of its higher footfall locations. Additionally, take-away focused Laha Coffee posted a second consecutive year of net store closures, shuttering more than 30 outlets over the last two years to operate 47 sites.