Been receiving a couple of emails lately (mostly from OFWs but there’s one from a Chinese/Taiwanese company) asking if there’s still some good business to be made with internet cafes in the Philippines. From accounts of friends and people who’ve been into the net cafe business as well as what we’re seeing in every mall and street alley, there’s some mixed reaction.
Five years ago, the prospects were better; way better. I myself was thinking of opening up one back then. My excitement was immediately doused after doing the math.
Just like any other brick and mortar businesses, there are so many extraneous factors that’ll affect your likelihood of success in the internet cafe industry:
- Location. Pick a good spot and you’ll hit a gold mine. Pick the wrong one and kiss your money goodbye.
- Competition. Most business-minded people think of competition as a race to charge the lowest prices in order to win customers. While it’s good for the customers, exceeding the lower boundaries can drive you and your competitors to bankruptcy. One cannot expect to recover a Php500,000 investment if hourly rentals go down to as low as Php10. It goes without saying that in this industry, there are no customer loyalty; just cheaper rentals.
- Quality/Consistency of Broadband Connectivity. For places that don’t have many options for bandwidth providers, this could spell trouble if your only source of connectivity conks out more frequently than you get brown-outs in your area. A backup DSL might be a good solution but many consider the extra cost to be not worth it.
- Software Licensing. Many people who go into the net cafe business don’t factor in the cost of software licensing in their capital. Either they think they can get away with a few pirated copies or go open-source full-time. Still, there’s the class of ever-popular network games like Starcraft, WoW and CS which cost an arm and a leg to get a per-PC license. Maybe that’s why MMPORG pay-to-play model is more popular in this side of the globe.
- Expected ROI. While previous half-decade old records saw a return-of-investment in just over a year, lower rentals due to fierce competition and over-saturation of net cafes have driven the ROI further back to as long as 3 years (that’s if you’re lucky enough). To sustain a business that long and derive your income from that sole business could easily drain you of energy and personal savings.
There’s also the question of how many PC units should a net cafe operate in order to realize profit. A friend, who runs a net cafe for about 3 years now, says you need at least 15 units to survive and get decent income. Does that mean others operating below that number are doomed to fail in the long run?
However, the growth and expansion of Netopia’s franchise around the country says there’s still good money to be made from the internet cafe business. Does that mean people wanting to venture into that industry should look into franchising? What do you think — given the opportunity and capital, do you feel a net cafe business in the Philippines is still a lucrative one?
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I think cafes will go down on their ‘internet’ side of business because internet and computers here in the Philippines are getting cheaper and cheaper, unless you are located near a school, sobrang patok for research, typing and printing, lalo na yung mahileg sa cramming.
I guess there are still growth in the gaming side because I think gamers prefer group playing than playing solo.
IMO, Internet / Small scale BPO - that’s a good combination.
Internet Cafe in the morning then Call center at night.
patok yung 168 and its sister company ihook. i think it’s because of gaming and not internet. abe nagdodota pa rin kami, pero ngayon sa labas na para pwedeng mag-ingay kahit 40 pesos per hour.
@gen, I think meron ng gumagawa ng ganun dito sa Market Market.
@calvin, uy! sama nyo naman ako!
mas magaling pang magblog na lang tungkol sa internet cafe kesa magtayo ng internet cafe, mas malakas ang kita, di ba? hehehe.
on a serious note, plano ko rin yan dati sa barangay namin sa batangas. malapit sa school. kaso, may nauna sa akin, and i don’t want to compete with his price. malulugi lang ako.
I and my barkada used to have an internet cafe back in 1998. It was good in the first few months.
To make it short, i don’t want to have this type of business again. Maybe i will, but just a side income, making money online is much more profitable.
As long as you have a solid business plan and strategy, your internet cafe should boom. With 50 units we were able to gross around 450,000-500,000 monthly.
@wauks, when was this?
Location, location, location.
I live in the Ubelt area of the Philippines, and I see a internet cafes all over the place. They are definitely making money in this section of town.
i agree with Kuya Kevin
It’s about location but as of the moment, the busiest places are also the most hard-fought (too many competitors).
Second criterion for success would be the quality of experience (Gaming Cafes).
Third would be “other services.” I have a friend who only has 8 units but he has 10 printers and offers the sought after “Piso Print” service. His printing earnings far exceeds the PC rentals.
That was in 2006. We sold it na though because of all the internal conflict. Never be business partners with your friends, hehe.
I used to have an internet cafe but gave it up three years ago. Now I hear rentals are at P15/hour ? Don’t see how one can make money at that rate, you have to find ways to supplement it. Rentals alone won’t cut it…
Maganda magtayo ng internet shop sa mga campus kaso pag bakasyon walang kita.
I would say yes! But not in Metro Manila, It will be a great business if you locate it the province where only few can afford DSL connection at home.
Kuya Kevin, Ubelt area: Bill’s Gate used to be swarmed with customers 7 years ago, it’s now almost empty. Or are they still there?
I’m a former net cafe owner and so so so proud quitting the business. It’s so so so so so so horrible experience for me caused by lagggggggggy dsl business plan, stiffffff competition, unfairrrrrrrr competition (for using counterfeit softwares). Blogging is farrrrrrrrrrrrr away better than having a computer shop.
Now I am earning more than before with just 1 pc.
@marghil and orgl - why not combine both? put up a net cafe and hire bloggers?
kuya abe, turuan mo na lang kami mag blog, mas maganda pa siguro income kesa mag invest sa internet cafe…hehe
Hmmm good idea there yuga! and along with it is a coffee and snack bar.
Does station 168 even make money? I mean looking at all its equipment and fast internet, looks like massive investment even beyond Netopia (who is filled with advertisers and banners). OR maybe they are fine as long as a competitor doesnt open up, or noone can probably afford to compete.
Sa area namin d2 sa bulacan, parang mushroom na nagsusulputan ang internet cafe business, gaya-gaya para ding mineral water business bawat kanto may kalaban. Kaya ang rate P15 per hour na lang, at ang iba ay P10 cguro iba gamit ng jumber na lang para makatipid sa electricity which is risky pag nahuli ka ng Meralco! Ang kuryente parang na ring ginto eh sa mahal!
Tapos consider mo pa ang municipal ordinance na bawal magpapasok ng estudyante between 7:00 am to 4:00 pm, goodness ano pa kikitain
jan! Bawat bata hingi ng bonus time eh ano pa sa Meralco na lang lahat punta ng kita!
In short, cut-throat competition talaga! Kailangan mahaba pisi mo to compete with others!
I think it’s still a viable business. With the right content, there will be a demand. I remember writing something in January about how to start your own cafe
Check it out.
Thx,
GM T
saturated business in the metro
maybe if you put up one in the province, i think that would be doable.
wauks, are you waukeen from pRO?
Sorry for the O.T.
I would like to add a factor to consider in putting up this business, that is employee to manage the repairs and customers.
If you’ll be doing it all by yourself, it’s really more a self-employment than a business.
If you can find a decent job, might as well be employed.
This is one of the best posts and by far the best set of comments I’ve seen here in a long time … thanks to those who shared.
This is a perpetual question for me from other expats and from OFW’s who want to help other family members.
I think the idea of combining small-scale BPO and blogging-style work with a cafe is a viable way to give the business a foundation to carry it through lean times.
Another technology which can be done very cheaply these days due to open source is thin client. The idea that each customer station needs an entire PC is very wasteful of both hardware and power.
Sir Abe, we should have more on this subject here!
How much do cafes spend for electricity when they have 10PCs? what about 20 or 30?
Hi pwede niyo ba akong bigyan ng magandang business proposal for an internet cafe.. help me please help.. paki send po sa email ko para po mapag-aralan ko yong business.. Thank you
Hi guys meron kasi akong gustong place dito sa amin, meron 3 schools na malapit and meron din 2 cafe’s na competensya pero as a gamers nakikita kong sobrang naasar yong mga players niya kasi sobrang LAG at yong Dota na nga lang na didisconnect pa.. so gusto ko sanang magtayo ng cafe dito yong medyo malakas na computer para lumipat yong mga student.. pero di ako makagawa ng business proposal kasi di ko alam kong paano gawin at saan magsisimula.. kong meron makakatulong sa akin please send me an email artnorman_gabon@yahoo.com
Thank you
well, as for me it is still a good business. Gaya ng experience ko ngayon on which i’m only having a four computer set but i’m earning a gross sales not less than 1k - 2k daily. At habang nagbabantay ng internet shop eto blogging and keeping my new website alive. visit nyo na rin po pala bago kong website.. http://www.filipinoonline.org .
About sa internet cafe.. i think if you had a “BEST” location. Why not.. it’s still worth a good business. Nasa pakikisama din yan… most of my earning comes from PUPians dito sa Cavite and dahil sa magandang pakikitungo they sticking with our cafe. Actually where already planning for an expansion this month and putting up a ink refiling station…
By the way i’m not more on gamers but rather internet users. Sa internet kc pag nag research may kasamang printing and more. Kaunti lang din games ko kasi nagiging magulo and most of my dedicated customers eh gusto sounds lang.. ayaw ng maingay. Tsaka madaling masira ang keyboard and mouse sa mga gamers hihihihihi(but not all).
hello, I just opened my net cafe 3 weeks ago. Im afraid that it would not click. any advices pls. thanks. email me at kcirtap1027@yahoo.com
Depende siguro sa lugar na pagtatayuan mo, kung saturated na sa area nyo o marami ng internet cafes sa lugar nyo, di humanap ka ng iba lugar na wala pang gaanong competitors!
Well, kung sayo ang place at hindi ka na uupa ng monthly rental pwede yon kahit maraming competitors, daanin mo na lang sa promo! Nasa strategy mo na lang yon on how to beat your competitors!
internet cafe is not a good business anymore. you see, computers are getting cheaper and people today can afford to buy one. if most of us has a computer, why bother going to an internetshop? even students today has their own notebooks. so who’s going to internetshop nowadays? your “yaya”??
Whether it’s good or not depends on your location and your presentation. Besides that, I doubt that even a quarter (perhaps a lot less) of the Filipino population can afford the fees for internet services - let alone a computer (sorry, don’t have the proper percentages, and I don’t have the resources to do a countrywide poll.. but a good guess would be 10%… hehehe).
The cheapest BRAND NEW PC I can get which is compatible with most current popular MMOGs would cost around 8 - 9 thousand pesos - that’s a system with an AMD Sempron and a 780G or 690G motherboard. That’s a lot of money.
The CHEAPEST I can get is probably an old PII or PII for about 2 thousand, and a monitor might be around 1 to 2 thousand - if you know where to look - the problem with this is the warranty; and these systems just won’t cut it - even for Warcraft III with all the eye candy set to the lowest.
Besides that, most used computers have problems and no warranty - you’ll end up spending more on repairs or buying more old ones susceptible to damage, eventually spending more than you would had you bought a brand new one. And there’s the electric bill…
Anyway… electricity… could anyone here please post electricity bills for your net cafes? Number of PCs, monthly electricity charges, hours per month. I’d like to get an idea of approximately how much I’d be spending on that as I’m planning on putting up one in my little town.
Hello, got 10 computers now all PIII for pure internet surfing only, surviving for 1.5 year now, monthly profit of no more than P30K not less than P23K. I’ve got a supplier that offers 1 year warranty to all second hand PCs so dont have any problem with that, i bought this 10 units for P60K. So, i immediately got my ROI for just 3 months! Friendster alone can pay for your rent and earn much more!
X.A., Thanks for an informative comment, with numbers. Interesting and I wish you well.
I just came back from a 4 day road trip up north with my son who is visiting from the states. We used cafe’s at leaast once a day. Major thing I observed as a business man is, most cafes make it too hard on themselves. Way too much labor for a simple task. Sign this, fill up that, etc. Labor costs the owner even if it is his own, and slows down the amount of time a customer is online and thus making the operator money.
There is good cafe management software out there, currently way too much paper and time being used.
I must say though, from personal observation, this is still for sure a viable business if you run it as a business.
Big opportunity I see being missed is monetizing things like advertising and membership deals to the users. Many owners/shop attendants barely acknowledge the presence of customers instead of talking to them, finding out their needs and making them feel welcome … and signing them up to a free monthly newsletter … you are promoting your shop with a monthly newsletter, aren’t you?
Last tip … have change! It is a business’s responsibility to make change for the customer, period. You offera service for a fee, part of the cost of doing business is to be able to make change … fact of life. Making the customer feel guilty for not having change is bad business. It’s like paying your Meralco bill … not always a happy occasion but a necessity for ongoing sales.
im planning to start a net cafe biz but for an roi in 3 years makes me wonder and have to double check on an alternative. would a reloading biz and photocopy biz help together with the net cafe biz?
@ Yuga and in particular your great response to marghil and orgl.
The biggest thing I see standing in anybody’s idea so many people seem to have that a ‘computer shop’ only does this thing or that thing. Time (money) slips away while people don’t come in the shop to do what the owner thinks they should be doing … instead, the owner could be finding things they want to do.
How many ’stories’ fit for a blog post happen everyday, right as people are using the cafe? It doesn’t cost a centavo more to write about them … especially if business is slow anyway.
Thanks for the info X.A… makes me all the more hopeful for my plans to do at least OK. Thanks to Dave too, for the recommendations.
on my opinion, internet cafe business is a dying business nowadays
I used to own and operate an internet cafe here in the province, but having licensed OS per PC really cut down our profits and set back the ROI. During the early 2000s, rates here were at 20-25 pesos and the monthly gross varied from 20k-50k. Electricity was cheap back then. I had 10 units.
Sadly, due to plunging rates and unfair competition (shops with pirated OS being allowed to operate) I had to close it after 2yrs of operation. I wasn’t able to recover 100% of my investment, only around 75% of it.
Here in the provinces viability is determined by location as well as employees willing to work below minimum wage.
With DSL access being more and more affordable for homes, and free wifi access spots ever increasing, internet usage is shifting away from cafes.