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Are Internet Cafes still a Good Business?

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.

Net Cafe

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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Avatar for Abe Olandres

Abe is the founder and Editor-in-Chief of YugaTech with over 20 years of experience in the technology industry. He is one of the pioneers of blogging in the country and considered by many as the Father of Tech Blogging in the Philippines. He is also a technology consultant, a tech columnist with several national publications, resource speaker and mentor/advisor to several start-up companies.

355 Responses

  1. Avatar for Anthony Anthony says:

    Hi menma. Can you please send me also a business plan of this kind of business, hoping for your reply soon thanks in advance more blessing po god bless..

  2. Avatar for Tom Watanabe Tom Watanabe says:

    Please introduce me phone number of Watanabe Internet Cofee shop in Panaque near the manila?

  3. Avatar for James Mills James Mills says:

    Can you email me some information on starting a internet cafe in the Philippines. Perferably Bacolod. Thank you

  4. Avatar for jess jess says:

    Hi menma. Can you please send me a business plan of this kind of business? I’d really appreciate it. Thanks and God bless.

  5. Avatar for Eury Eury says:

    Im selling all my units for 8k each.Complete set (monitor, mouse, KB)Contact me if interested- 093394*****

  6. Avatar for menma menma says:

    i think computer shop is still a good business in the Philippines..

    i have a business plan on this kind of business and you can email me for those who are seeking how to put up a good gaming computer shop..

    • Avatar for marvs marvs says:

      can you send me a copy of your study regarding
      computer shop business?

      please email me @ mar****@****.***

      thanks,
      marvs

    • Avatar for Dave Starr Dave Starr says:

      @ menma

    • Avatar for Dave Starr Dave Starr says:

      @ menma

      I’d really appreciate a copy as well if you could, po. Philly (at) philfaqs(dot) com

      Thanks

    • Avatar for Coleen Coleen says:

      Pwede mo ba ako bigyan ng tips at paano ung gantong business? I’m planning kasi magbusiness ng ganto soon

    • Avatar for menma01 menma01 says:

      Hello Coleen

      its good if you can email me..

      accelerator_vasqu****@****.***

    • Avatar for dud dud says:

      Hello menma! pwede po bang makahingi ng business plan mo para sa internet cafe…my email dudz****@****.***

      Thank you..

    • Avatar for Hyrro Velasquez Hyrro Velasquez says:

      Sir pa email dn po skin.. wala po kasi kme alam sa business na yan pero gusto magbukas ng tatay ko. for intel lang po thanks so much

    • Avatar for Jintan Jintan says:

      Hi Menma, is your internet cafe business plan still available? mind sending it to my email, sjrnepomu****@****.***. thanks!!!

    • Avatar for jasmin jasmin says:

      hi menma, can i have a copy of your business plan? thank you.

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