Katinat marketing strategy: when rent is the ad budget

In 2022, Katinat's net revenue rose 403% to VND 300 billion. In 2023 it reached about VND 470 billion, roughly a 1.35% market share, according to Vietdata figures cited by CafeF. The same source holds a detail that gets less attention: the chain's profit went from just over VND 6 billion in 2021 to nearly VND 60 billion in 2022, then fell to about VND 40 billion in 2023. Revenue grew about 57% while profit dropped by about a third.

Those two numbers show both the strength and the limit of the Katinat marketing strategy. Our reading at 126Insights: Katinat grew fast because it turned its stores into its media channel. Its sites sit on big street corners, attractive enough that customers photograph them and post online, so rent doubles as advertising. That only pays off when each store draws enough customers. If you are deciding which stores to open or close next year, Katinat's lesson belongs on the table: every site should be judged on profit and loss like a marketing expense.

What does Katinat sell in a VND 35,000 to 70,000 drink?

Menu prices at Katinat run from VND 35,000 to 70,000 (CafeF). That is well above the budget tier: Mixue sells at VND 25,000 to 30,000 (Tuổi Trẻ).

What does the gap pay for? Our interpretation: part of it is the seat. A VND 50,000 drink at Katinat works like a ticket to a living room with a glass wall facing a roundabout, where you spend an afternoon and leave with a few photos. If that reading is right, the site is part of the product, and rent is more than an operating cost line.

When did you last pick a cafe for the drink, and when for the seat?

Katinat marketing strategy: the site is the main media channel

Vietnamese has an old saying, "nhất cận thị, nhị cận giang": to do business, first be close to the market, then close to the river, where people pass by. Katinat applies it in a modern city way. Its first store is at 91 Đồng Khởi, District 1, Ho Chi Minh City. From the start, the chain picked sites with a sidewalk, facing a roundabout or a main road. After Covid, when many "golden" roundabout sites were handed back by their tenants, the chain leased them in bulk (CafeBiz).

The specific locations: Đồng Khởi, Bến Bạch Đằng and opposite Notre-Dame Cathedral in Ho Chi Minh City; the shore of Hoàn Kiếm Lake next to Thủy Tạ and the Yên Phụ gate in Hanoi (VietnamBiz). Someone walking past the lake sees the Katinat sign the way they would see a billboard, except this billboard also sells drinks. VietnamBiz also notes that prime locations lift revenue and cut marketing costs (VietnamBiz). That is why we call Katinat's rent one expense doing two jobs: a place to sell and a place to advertise.

To see that this is a choice, set it beside brands that chase customers through e-commerce marketplaces, such as Coolmate with Amazon, which 126Insights has analyzed (126Insights analysis). Both routes make sense. The difference is that Katinat pays for its advertising through a lease.

Photo by Khanh Nguyen on Unsplash

Social media amplifies what the store already has

Social media does the spreading. In November 2022, when the chain had about 20 stores according to CafeF, Katinat released a limited-edition rainbow cup. A pretty cup held up against a glass window with the street behind it is a photo customers take and post themselves, and the brand pays nothing for those impressions.

Notice the order: the store creates the frame, and social media multiplies it. Remove the site and the online content loses its setting. That is also why the model is capital-heavy: more good photos means leasing more good corners.

How much of every VND 100 in revenue does Katinat keep?

Using the Vietdata figures that CafeF cites: in 2022, nearly VND 60 billion of profit on VND 300 billion of revenue, about VND 20 per VND 100. In 2023, about VND 40 billion on VND 470 billion, or about VND 8.5. If you take the average price of VND 50,000 a cup that CafeF and TheLeader use for their calculations, each cup left about VND 4,000 in profit in 2023.

To be fair, 8.5% is not a low margin for the industry. Highlands had a net margin of about 4.5% in 2023, per Vietdata figures cited by Markettimes. Highlands' figure is after-tax profit, while Katinat's is not labeled as before or after tax, so the two should only be compared loosely. What deserves attention is the speed: Katinat's margin fell by more than half in a single year.

Where did that VND 100 go? According to Hoàng Tùng, founder of FoodEdu Academy, a food and beverage outlet's costs fall into two groups (CafeBiz). Fixed costs include rent and depreciation of the investment. Variable costs include wages, marketing, ingredients, utilities and other items. The share of each depends on whether the shop follows a "lean" or an "experience" model. A chain that picks central corners and roomy spaces so customers stay long belongs to the second group.

Katinat has not published a breakdown by item, so what follows is our own hypothesis about the falling profit. According to VietnamBiz, Katinat had 10 stores at the end of 2021. Each one then sold drinks and also introduced the Katinat name to people who had never heard of it. By mid-2024 the chain had 78 stores, also per VietnamBiz. Later stores struggle to add as much awareness as the first ones did, while the rent still has to be paid in full. The "media" part of the rent fades, and the cost stays.

Photo by Trash Busters on Unsplash

2026: a bigger market, and chains are closing stores again

According to Momentum Works' report "Southeast Asia Coffee and Tea Chains 2026", Vietnam's coffee and tea chain market is worth more than USD 1.3 billion, the third largest in Southeast Asia (VnExpress). Also per Momentum Works, coffee chains account for USD 725 million and tea chains for USD 617 million. Vietnam ranks behind Indonesia and Thailand (VietnamFinance).

The market is growing, but the way chains grow has changed. Tuổi Trẻ reports that many chains have moved to "selective growth" and are shrinking their outlet counts (Tuổi Trẻ). According to VietnamFinance, Weihan Chen of Momentum Works says the next phase will be decided by operating capability more than by store count (VietnamFinance). In a VietnamBiz article from December 2024, Đỗ Duy Thanh, an F&B director, said that handing back underperforming sites is a necessary adjustment (VietnamBiz).

Two chains that are large by store count take a very different road from Katinat. According to VietnamFinance, Milano has about 2,500 stores. Mixue entered Vietnam in 2018 and reached 1,000 stores in 2023 (Tuổi Trẻ). They compete on outlet density, and Mixue adds low prices. Katinat picks fewer sites and asks each one to do more. In our view, as the whole industry recounts profit per store, a model that bets heavily on locations will feel the pressure of rent most.

Risks of using real estate as a media channel

The three risks below come from how the model works and apply to any chain that goes this way:

• Rent. This media channel is not yours. If the landlord raises the price at renewal, your "advertising" cost rises with it, while revenue may not. We have written about the risk of building a sales funnel on rented land in digital advertising; for a food and beverage chain, rented land is literal.
• Capital. Every good corner needs a deposit, design and fit-out before the first drink is sold. Growth through sites is growth paid in cash.
• Copying. A glass front facing a roundabout can be leased by any competitor with money, on the opposite corner. In 2023, when Katinat opened in Hanoi, VietnamBiz compared the chain's habit of choosing street-corner spots on busy roads with Aha and KAFA (VietnamBiz).

Beyond those three, a beautiful space only brings customers in once. Whether they come back is decided at the counter, by the drink and the wait time, which is exactly the operating capability Momentum Works points to.

Run profit and loss on each site like an ad channel

126Insights' suggestion for food and beverage chains planning next year: give each site two lines on its profit and loss sheet, one for sales and one for media. Four metrics are worth tracking monthly for every store:

1. Rent divided by the store's revenue. A ratio that creeps up over several months is the first warning sign.
2. Revenue per square meter or per seat, so you can compare stores of different sizes.
3. The number of customers tagging the store on social media each month. This is the advertising the site delivers. If it falls while rent stays flat, you are paying billboard prices for a drink counter.
4. The share of takeaway or delivery orders. A high share means customers mostly come to buy and leave, and that store may be able to move to a smaller space.

A store that loses money on both lines should close, however nice its corner. A store that only breaks even on sales but brings in plenty of brand mentions can stay, as long as you call that expense by its right name and compare it with the price of an equivalent ad campaign.

Before you sign one more lease for next year, ask yourself: if you took the drinks away, would you still be willing to pay this much just to hang a sign on that corner?