University of EconomicsHo Chi Minh City

BUSINESS SCHOOL
ACCOUNTING FACULTY

ESSAY
SUBJECT: MICROECONOMICS
Topic:Mon Hue in the F&B market-
Microeconomic perspective

Lecturers: Master Nguyễn Hữu Lộc

Class code:22C1ECO50100184
Student: Trần Nguyễn Hồng Ngọc
Lock – Grade: K48 - KNC03
MSSV: 31221026727
 PROLUGE
Today, F&B is always a potential and growing field. True proof is that
every year hundreds and thousands of restaurants and eateries are opened to meet
the dining needs of customers.
According to market research firm BMI, Vietnam has become one of the
most attractive F&B markets globally. The F&B industry contributes 15.8% to the
country's total GDP (in 2021) and total food spending. Food and beverage
accounted for the highest proportion with about 35% of the target.

This market is currently becoming a "delicious bait" for investors, young

startups are also appearing more and more because of the huge profit margins.
Because the cost of the product is not high, it usually only accounts for 30% of
the product value, so with only a small amount of capital, if you know how to do
business, the profit brought is not inferior to any other industry. . This leads to an
increasingly expanding market, F&B will be in the TOP of the industry groups
that have the greatest influence on the market economy.
However, this is a highly competitive industry, the elimination rate is
extremely fast and the behavior of customers will be greatly determined by the
brand, so businesses and individuals at any time should not be subjective. .
Otherwise the consequences will be very bad. A good example of a failure in the
F&B industry is the bankruptcy of Mon Hu 2019.
TABLE OF CONTENTS
Heading..............................................................................................................4
1. Problem:........................................................................................4
2. Researchobjectives........................................................................4
3. Research
subjects..........................................................................4
4. Practical significance...................................................................4
Content
1. Overview........................................................................................5
2.Database.........................................................................................6

2.1 Production
cost....................................................................................6

2.2 Organizational behavior.....................................................................6

2.3 Corresponding graph..........................................................................6

2.4 The reason Mon Hue went bankrupt.................................................7

3.Recommendations on production
cost..............................................8

4.Conclusion ........................................................................................
8
Heading

1. Problem:
To be successful in the F&B industry is not an easy thing, it takes many
factors. Some typical factors such as products, locations, and business methods. In
addition, business people also have to understand the market, customer market,
how to manage and operate the store, marketing strategy ... and many other
components. Just missing one of these important factors, shops, restaurants of
businesses and individuals are very easy to close or go bankrupt. The typical story
here is the collapse of the Mon Hue restaurant chain of Huy Vietnam in 2019. The
failure of the Mon Hue restaurant chain has awakened many different
perspectives on this issue.
To better understand, let's find out the issue: "Hue dishes in F&B market
- Microeconomic perspective".
2. Research objectives:
Find out the cause of the failure of Mon Hue chain in the F&B market,
propose solutions on production costs to help businesses re-enter the F&B market
in Ho Chi Minh City.
3. Research subjects:
Cuisine chain of Mon Hue.
4. Practical significance:
Analyze the causes of failure and propose solutions for Mon Hue
businesses to re-enter the Ho Chi Minh City F&B market.
Content
1.Overview:
Mon Hue food chain appeared on the market in 2007, receiving 30 million
USD from foreign investors, Huy Vietnam, the owner of Mon Hue restaurant
chain, was a cult name in the F&B field for a while. American investor Mark
Mobius, who poured 15 million USD into Huy Vietnam, once affirmed: "I will
pour more capital whenever this company needs it".

In the beginning, the business strategy has achieved certain success. After
overcoming the harsh period of the restaurant industry, Mon Hue quickly
expanded its chain. Only in 2014 and 2015, this restaurant chain successfully
raised capital with a total value of 30 million USD from Malaysian, Hong Kong,
Korean and American investors.

Not to mention that before this restaurant chain was injected by many
different investment funds with a total capital of 65 million USD (about 1,500
billion VND). Therefore, the owner of Mon Hue restaurant chain, businessman
Huy Nhat, has set a goal to issue shares to the public to raise capital up to 100
million USD.

In the three years from 2016 to 2018, the Mon Hue restaurant chain has a
revenue of around 200 billion VND. But this source of revenue could not bear the
costs, leading to a loss of 50 billion VND/year in the past two years, but by the
end of 2018, the accumulated loss was 107 billion VND.

By 2019, the food chain was officially closed, leading to bankruptcy, and at
the same time owed wages to employees and companies that provided ingredients.

2. Database
2.1 Production cost

Notion: Production cost is the total waste of materialized labor, living

labor and other costs that an enterprise needs to spend to create products and
services in order to generate profits as expected in a given period of time
determined.

2.2 Organizational behavior

Notion: Organizational behavior is the study of the performance and

functioning of groups and individuals within an organization. This study
examines human behavior in the work environment and determines its impact
on work structure, performance, communication, motivation, leadership, and
more.

2.3 Corresponding graph

Based on the picture above, we see that the selling price (P0) is lower
thantheaverage total cost, leading to a loss

Continuing to prolong the status quo leads to business bankruptcy

 → The reason the Mon Hue restaurant chain went bankrupt in 2019 despite
having a large capital contribution

2.4 The reason Mon Hue went bankrupt

● Restaurant chain expansion too fast, while management capacity can not
keep up:F&B chain owners are willing to pay higher prices than the market to
compete for a beautiful space even though they don't really need it, or hire
dozens of employees for a store that should only need 4 people to operate
smoothly.Increasing costs too quickly, while operating efficiency not
increasing accordingly could be the cause of this restaurant chain's collapse.

●Building the wrong business model : Mon Hue often choose prime
locations, with large premises and many floors. However, the typical dishes on
the menu of this chain are often processed for a long time, the number of guests
entering the time frame is not too much, leading to the waste of ingredients.The
quality of Hue dishes is quite bad, even worse than many popular restaurants, not
commensurate with the price and expectations. The price of food in Mon Hue is
often twice as high as that of popular restaurants ( 70.000 vnd vs 35000
vnd).Moreover, the service quality of Mon Hue is quite poor

●Business channel: Recently, food delivery services such as Grab, Now...

have exploded, changing the competitive landscape. Revenue through food
delivery can be as high as 30% or more for existing restaurants. Many restaurants
do not need premises but compete for "virtual" positions on food delivery
applications. Mon Hue do not catch up with the trend, cannot compete with
thousands of online Hue restaurants.

3.Recommendations on production costs

Getting back to market is a huge challenge, the recommendations for Mon
Hue include:

● Focus on improving the quality of dishes at a price suitable for the

customer segment.

● Adjust the number of personnel accordingly.

● Adjustment of the management system .

● Expand advertising on social media platforms: Facebook, Tiktok,

Instagram,.....

● Optimize production and operation processes.

4.Conclusion
The article analyzes the causes of Mon Hue's failure and gives
recommendations to help Mon Hue re-enter the F&B market in Ho Chi Minh
City.

Founded with large amounts of capital, but because of mistakes stemming

from quality issues, financial resources and organizational behavior during
rapid expansion, Mon Hue fell into a state of closure, bankruptcy and debt.
 The failure of Mon Hue is still an event that everyone mentions. This is also
a great lesson for businesses in the F&B industry.

Reference source
Phương Hà. (2019,25 10). Lí do vì sao Món Huế đóng cửa - câu chuyện quản
lí từ nhà điều hành. Easyedu. From https://easyedu.vn/li-do-vi-sao-mon-hue-
dong-cua-cau-chuyen-quan-li-tu-nha-dieu-hanh/. ( 2022,12 06)

Minh Sơn. (2019,10 26).‘Gót Asin’ của Món Huế. VnExpress .From
https://vnexpress.net/kinh-doanh/got-asin-cua-mon-hue-4002388.htm (2022,12
06)