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March 27, 2008

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?


351 Responses to “Are Internet Cafes still a Good Business?”

  1. jen says:

    nag tayo po akong ng internet cafe pero feeling ko di sya kumikita ang laki kasi ng mga expenses dito. gaya ng monthly bill para sa internet, napakalaking bill ng kuryente. then ang liit pa ng kita per pc. its about to 15pesos per hour minsan wala pang nag lalaro.. mahigit 3yrs din akong nag business pero wala parin nang yayari di kasi ako makaipon ng pera kasi lagi nasisira ung pc. yung kita ko in one month sa pambili lang ng pyesa na pupunta.then everytime na may bagong games kailangan mo ring bumili ng software ng games. kaya laging may gastos.. kaya ngyon luge na ko . wala na rin ung mga computer ko binenta ko na at ang iba nasira na. para sakin ang internet cafe ngayon ang isa sa di magandang business. hindi tayo yayaman sa business na ito.. malaki ang gastos maliit ang savings.

  2. benjun says:

    tama kayo diyan mga mate maganda lang yan sa umpisa pag nag luma na ang cmpters mo then may nag bukas na bagong net hulog ka… sakit sa ulo yan. ang mabuti siguro na negusyo na madaki lang kumita pag kain katulad ng bigas , sibuyas, bawang , yang d ka agag mabulok. ako sa ngayn celphone at bigasan patok nakabili agad ako ng sasakyan sa luob lang ng isang taon.sa net 8 year ako nag net cafe wala ako ipon..hayyyyyyyyyyyy..dahil sa net ang dami mong kalaban,magulang,paaralan,monisipyo…

  3. Marvin Torres Gzone iCafe says:

    my internet cafe has 45 units including 1 Timer PC and 1 Server PC. 2 2-tonner A/C units. and 1 1.5hp aircon. 2 electric fans.

    my average electric bill is 29-33thousand a month.
    and my location is in cagayan de oro city.

  4. helena perez says:

    hello..madami po akong na BASA sa mga internet cafe owner, and it really help the tips..maganda at very helpful sa mga tulad ko na nag start pa lang ng ganitong bizness…well i started 3 mos ago..sarili kopo ang place at ako din po ang tumututok as iN…kace ciempre po dko pwede pabayaan na lang ang ininvest ko dito.. i have 5 client pc and 1 server..di po ako grad. ng comp course or any related course.. ang tech. ko ay niece ko mismo fresh grad.NG IT.. at dito cia una naka pag ojt kcee..MABAIT PO UNG NAG SET UP NA TECH….nitong negaosyo ko lahat ng problem na na encounter ko dito via phone lang po nia tinuturo sa pamangkin ko..well tnx 4 him because he is willing to share his knowledge di katulad ng iba jan (not all)na after the money..masasabi ko na di siya after sa pera..gat maari gusto nia ay ang pamangkin ko ang matuto..god bless him at sana madami pang tech jan na tulad nia…my location is here in bats..sarili ko pwesto (sa garahe ko lang)so far ala ako kalaban (sa bukid pa location ng shop ko)..ang income naka experience ako ng oki at di oki..1st mo grabe ang demand ng mga bata mostly ay mga gamers…aun sobra ingay nakakahiya minsan sa iba na nag reresearch lang..2nd mo..abay auz auz…he.hhe..batang ga? pa 3rd mo..bumigay ang mother board ko…and after a while ang processor naman..hay sakit sa ulo..under warranty pa naman pero nid kopa mag w8 ng 2-3 wiks para mapalitan ng warranty na pyesa…kce sa mla. pa mangagaling ung pyesa kahit dito sa bats lang ang warranty ko..the best way na ginawa ko is bumili ng bago pyesa para magamit ko…nga pala brand new lahat ng 5 pc ko ang server ung dati ko pc.pina upgrade ko lang..ang per hour ko po ay P20.00 plan ko mag add ng unit kcee madami lagi waiting per pc..kaso sakit sa bulsa…ng kapital..based on my exp…minsan may nagwawasang( sorry for the word) na parent sa may pintuan ng shop ko at nagagalit sa mga anak nila..pero feeling ko ay sa akin galit.. deadma na lang ang response at tinataboy ko na ang anak nila..later on njan na ulit at hala laro na ulit..complete po ako ng requierments brgy..municipal at dti..yan ang inuna ko bago ang lahat…para safe pag may nagprotesta…mahirap din sa bukid kacee minsan ang iba ay may halong inggit etc..etc…bukid nga eh…ika nga isang pisa…some are crab mentality…grrrrr….ayaw nila umasenso ang ibang tao…bkit may ganun ano…dapat masaya cila kace nagsisiskap naman na kumita ng marangal…di ko naman nilalahat ung iba lang. na nakaka hurt ng feeling….pacenxiya na po if novela na ito..gusto ko lang mag share ng exp…ko kce kagabi kp lang na open site na ito….god bless po sa lahat hoping magtagal tayo sa ganito klase business…i may add kailangan po nating mag save for maintenance and also wag lahat ng expenses ultimo sa haws and other ay sa shop nio kukunin..nid din nating maging self discipline para magtagal tayo…nga po pala ask ko lang anu pina ka safe na anti-virus…nid ko po ba mag scan ng virus everyday…na ka depreez din po ito…

  5. helena perez says:

    dun nga po pala kay rick nag post ng 3 qualities para tumagal ang ganitong business..medyo pasok ako sa 3 qualities na yan and it really inspire me..kcee naman ala ako idea sa ganitong negosyo..basta na lang naicipan ko magtayo ng ganitong negosyo kcee.. ala me work may sideline one time lang per mo. sec ng board per diem lang ang sakin dun.. kaya tinopak ako nag com.shop at para matulungan ko din ang husband ko sa expenses..kakahiya kcee almost a year nako ala work..plan ko mag work sa abroad kaso ang laki ng gastos at takot ding iwanan ang two lovely kidzzz.. ko..within two wiks naka set nato..isa pa nag guarantee ang pamangkin ko na siya na ang mag ha handle as tech at very willing naman cia mag pay back ng hirap ko sa kanya kacee ako ang nag baby sit sa kanya nung baby pa cia…well nag ha harvest lang ako ciguro ng mga good deed ko at mabait si god sa kin.. kcee good samaritan ang identity ko..jack of all trades at flexible sa kahit sang problems na na eencounter esp. if family..binigyan din po ako ni god ng mabait na tech.( un nag set nito mga pc ko…lahat umayon..mabait na bata kcee ( not all times..maldita din minsan..kahit hindi ko hiningi kay god..basta na lang dumating ang blessing…and i reaally thank god…pag may problem ako dito sa shop..una ang panalangin…
    bye na po sana ma ka inspire din ako sa ibang gusto mag start ng ganito busines….god bless po sa ating lahat…

  6. jam says:

    is there any one in this forum how we can enter into call center or BPO during night time to maximize the space?

  7. John says:

    My GF family runs a cafe. It is a nice side business but they are thinking of giving it up – mainly do to outdated equipments & software.

    I see that they can succeed by upgrading & better planning. I do plan on helping them.

    I am here in the USA and getting software and equipments are no problem for me. I can all the software need as well as a few gaming computers, all-in-one printers & 2 or 3 servers.

    But before I send any equipment to her, I will visit next year to see exactly what their needs are.

    I agree that it is a business that can succeed but you have to plan & change / upgrade when needed.

  8. Exowner says:

    i agree with those who say this is a dying business. lets consider the location BUT having it but not your own means higher rent and higher operational cost. and i agree with the one who mentioned (sorry i can’t backread)about the obsolescence of the units. computer business is not about being “subok at matatag” because it is something like the newer the better. for those who had given nakakalulang figure, do you even have accountants and are your depreciation costs being considered in your calculation? this is just the best business for the new ones but for how long will that last. you may have your ROI after 1-2 years but after that, what’s next? you again have to start over acquiring new units due to the emergence of NEW COMPETITORS with BETTER UNITS to offer.(your old competitors might just have closed and you’ll be considered the oldest very soon). Those views about regular customers (RGs) are taken but how long will they be there for you? Those who are infront of colleges and universities, I hope you won’t wish your RGs not to graduate, hehe.

    I am someone who failed in this kind of business. and i’m bothered by my conscience that aside from using unlicensed hardware and software, i’m causing some students to skip from their classes *sigh*. It is only now that i realize even if ever i earn a lot from it, i’m still not gonna be happy.

    thank GOD i found this site anyway.

  9. evan co says:

    you can succeed if
    1) libre kuryente mo > singil sa internet pababaan ang kuryente tumataas yung iba nag jujumper
    2) di ka gumagamit ng original na license> from win98 to winxp to vista now window7 nakailan palit kana per pc dapat license
    3) squatter ka> di ka nagbabayad ng license di ka nag pay ng rent, di mo sariling pwesto kasi kung sariling pwesto pa rent mo nalang sa iba
    4)location location and kamaganak mo si ampatuan> kung may tatabi sayo dapat papatayin mo
    5) kamag anak mo si alvin flores> tuwing may tatayo ng bagong internet cafe pa boltcutter mo yung shop tapos kunin mo yung pc parating bago and upgraded
    sorry ! Just kidding pero may sense naman ako na mahirap talaga ang ganitong business, so you need to think not only twice but thrice hehe
    good day and god bless

  10. evan co says:

    hehe may dagdag ako
    6) kasing guwapo mo si piolo or kasing sexy mo si maegan fox> no explanation needed
    7) nagpapafranchise ka> tulad ka ni netopia kumikita sa franchising subukan nyo mag inquire million million ang few units hehe

  11. Exowner says:

    LOL AT EVAN CO. but its true, magsu succeed ka, YUN NGA LANG DAPAT MAGING KRIMINAL KA MUNA. gusto ko na nga maging ampatuan, kaya lang dagdag na naman sa konsensya ko yun. parang fall in line lang, ikaw pinakabago ngayon pero pagdating ng panahon ikaw na pinakaluma maliban na lang kung angkinin mo yung isang buong lugar para kahit magkalumaan na, no choice and ibang tao kundi pumunta na lang sa iyo. disappointing talaga ang business na yan, well for experience’s sake na nga lang.

  12. evan co says:

    sir di po ako agree sa sinabi nyo
    “YUN NGA LANG DAPAT MAGING KRIMINAL KA MUNA”,
    kung yun mga bantay mo kasing sexy ng mga dancer sa wowowee or ng eb babes talagang dadami yung mga customer mo na lalake, tapos yung manager mo kahawig ni piolo or dingdong or jericho pwede na. nasa marketing lang yan kanya kanyang diskarte, pero kung kamaganak mo si ampatuan mas ok yun ! sigurado walang mintis, kaso dapat malaki yung vacant lot mo para magkasya lahat ng competitors mo hehe .
    Peace just kidding

  13. ninonez deo olor says:

    pwede magtanung about comp. business? ung malaki na kita ah.. anu poh history ng business niu,, at kumusta na business niu ngayon?
    tnx poh hehehe pls. coment my quest.. heheh

  14. rick says:

    to:ninonez deo olor

    well oks lang kahit papano, for 8units im making a net profit of 16taw a month. ung expenses na kasama lang dun is meralco na 4taw at 500 n maintenance per unit per month. sa akin kc ung place at ako rin nag rerepair at nagbabantay kya khit papano buhay parin. so ung charge ko sa place at pagod ko hindi pa kasama dun, kung isasama ko ala lugi. 2years nako but alive and kicking parin kc my permanent job ako at ung misis ko at kasambahay lang nagbabantay at ako nag rerepair. nung nag start ako 25/hr pa rates ngaun 10/hr na lang dahil sa price war. pag my nagbukas na bago nagbababa price kaya sunuran kmi hanggang umabot 10 pesos na lang. pero ok lang ksi mababa lang naman operational cost ko at 3pesos/hr lang naman break even ko kaya kahit kahit umabot pa 5pesos/hr kaya ko sila tapatan kc my permanent job naman ako at additonal income ko lang to. pero para sa akin ok na rin ung ganun rates(10/hr) para ala na magdagdag kc masyado na marami kaya nasira ng husto and industry na to… dats the sad reality of the internet bisnes kaya sa iba dyan na nagbabalak esep esep esep, but if but you own the place, kaw din ang nag aatend and you know how to troubleshoot a computer pwede!!! para khit mag World War III pa kaya mo lumaban ng patayan dahil mababa operational cost mo, a friendly advise from your nieghborhood spiderman!

  15. ragazza_siete says:

    pasali nmn ako sa business nyo este sa usapang business(^_^)
    ask ko lng kong ano mga requirements pagnagstart ng dormitory o paupahan?may nabili kasi akong b-hauz sa ct at paparenovate ko then paparentahan sa mga students o workers din..thanks!

  16. Zbrez says:

    to: Rick

    pwede mag tanong..mg tayo akko ng internet cafe.. sa baryo namin namin… wala pa kc internet don.. mag start ako ng dalwang pc?…
    ilan ang babayaran ko sa bills?….. tapos ilang ang kitaan.. .. kikita ba pag wala muna internet connection?… gaming muna…. ung mga tao don.. tutruan ko..pa.. tapos elementary lang ang myrun sa skul namin… tnx.. plz.. help me..

  17. kukakk says:

    Zero knowledge ako way back 2006 nang kumagat ako sa promo ng smart bro, hulugan na pc bundled with internet connection.. isa lang ang Pc ko noon pero may tindahan ako.. naging agresibo ko sa pagpapatakbo at optimististic sa pagpaparami ng station at hindi tumigil sa pag-iisip ng mga bagong strategies hanggang ngayon para mapabagsak ang mga nanggaya lang dito sa area naming subdivision. We were 4 internet shops here dati pero yun isa napagsara ko na and the other two are new to the business at nagsisisi na sila ngayon kung bakit nila napasok ang business na ito?… Maliit lang dati ang site ko na yun na rin ang bahay ko at tindahan… ngayon napagpatayo na ko ng bahay at mas malaki na rin ang area and my internet business is fully operational- I mean mamili ka kung ano ang kaya ng pera mo at meron swak na promo para sa iyo o sa buong barkada kahit sampu pa sila may paglalagyan sila para sa 5 on 5 DOTA at take note LCD lahat yan, at samahan mo din ng mga chatters sa hiwalay na room sigurado hindi sila mabibitin at kahit anong oras meron station para sa kanila.
    Yung technician ko noon malaki din ang naitulong sa akin although hindi naman nya itunuro sa akin ang maga nalalaman nya pero along the way nalaman ko na rin ang mga basics at hindi narin kami nagkikita ngayon. Importante yan dahil kailangan ikaw na ang technician sa sarili mong shop bawas din sa gastos yun at mas maganda kung sa iyo na ang area para maisabay mo na rin ang PC repairs… as of now I have 30 PC at parang gusto ko pang dagdagan kahit hanggang 50 para d2 na lang ako sa Pilipinas, masarap kasi ang walang amo kahit hindi ganoon kalaki ang kinikita mo, atleast walang nag-uutos a iyo.

  18. rick says:

    to:Zbrez

    yap try mo, start k muna 2PC at pkiramdaman mo kng ok tska ka magdagdag unti unti. bili ka rin printer kc kung ala ka intenet, income mo dyan aside from gaming is ung typing at printing.ung printer na bilhin mo is 3 in 1(print-copy-scan). khit Pentium 4 na muna bilhin mo na 2nd hand para mura. mas maganda kung malapit ksa skul.

    average power consumption per day per PC(formula) estimate lang to:

    electric cost per day per PC= 0.13 x no. of hours use x rates

    legend:
    *0.13-pag browsing lang, pag gaming kc is about
    0.18 sa pentium 4. pag dual core kc mas
    malaki
    *no. of hours use-kung ilan hours ginamit PC
    *rates-here in manila is P9.5/kw-hr(as of this date nagtaas na kc bago lang), to compute in ur area, just tsek ur electric bill and divide total amount for the month(pesos) to the total Kw-hr consumed

    ung income mo of course:
    income=rates/hour x no. of hours use x no. of PC

    hopes this helps……

  19. alvin says:

    i see that the continuing trend well here in my grandmas building here in paranaque.. maraming nag rerent na pc shop sa kanya.. mostly they come and go pero meron nmn ibang nag tatagal..

    ang gimik nila is have fast pcs for games kasi likuran lng namin ay national highschool.. so thats their number 1 source of income.. mga bata.. kahit sabihin mong mura ang mga pc balang araw.. ndi sa lahat ng oras nakakalaro sila sa bahay nila kasi xmpre… and public school sila (no pun intended) pero the shops here charge a minimum of 17 pesos ung iba 20 pero ung mga nag chacharge ng 20 they are the first ones to leave after a few months..

    im thinking of a way na kung pano ako makakapag tau ng successful na shop.. kasi sa taas may datamex college and accross nmn ung olivarez college tapos sa tabi premiere college nmn so angdami tlgang mga students..

    well im only 22 kaya wla nmn masama kung mangarap ako db..

    and tanong lang.. ilan minimum of years na ma outdate ang pcs.. kunwari bumili ako ngaun ng average rig..

    mga around 9-10k tingin nio ba abot un ng 2years.. at 15hrs a day usage?

  20. karl says:

    well i own an internet cafe beside my house so no rent i only pay for the dsl and electricity, i have 10 units (+1 for the server) i dont have printing only games and net but im planning for the printing its additional earnings, but most of my players/customers only play and use social networking only a few ask for printing, basta pag kumita ka beyond your daily profit eh magpainum ka haha pra ung players maging loyal sau, btw ako rin lahat sa shop ko i mean ako nag aayos ako nagpupurchase ng parts ako bantay ako cashier ako rin technician haha

  21. ninonez deo olor says:

    to kuya rick:
    sori ngayon reply kc umuwiaq sa leyte eh,, tnx poh sa info kuya, malaking tolong yun samin, hehe nag survey aq sa comp, shop sa lugar nmn tlgang mai nag magdagan sa ka2laro ng comp. sai think ok plano q na mag 10 kc ung 15 nga dami naglalaro panu pa kaya pag 10? tama ba kuya rick? hehe ingatz,, ahm pd poh bah hingi contact number mo? tnx poh,, geh2 hipi new year….

  22. Gudday pwede niyo ba akong bigyan ng magandang business proposal for an internet cafe.. paki send po sa email ko ang balak ko po 5pc.. Thank you

  23. reality says:

    the fact is internet cafe will last until students and pc gamers exist…the question is will the i-cafe last .the profitable rate at this point is 25 per hour , i own 3 cafes, below 25 RATE will be very risky , to mention software and hardware upgrades THE BANTAY SALARY , lets face it ,not all cafe owners have the the know how ability with computers,and not all cafe owners have accountants that records every bit of expenses to the last centavo..A 2K A DAY GROSS SEEMS VERY GOOD , BUT DO THEY REALLY KNOW THE NET INCOME? PROMO, A TREND ON CAFE THAT PULLS THE BUSINESS DOWN…15 PER HOUR ,IF THE STANDARD IS 20 PER HOUR…MATHEMATICS MY FRIENDS , YOU ARE THROWING 25% OF YOUR POFIT…250 PER DAY IF YOU SELL 1k A DAY, THATS 7500 A MONTH. 15K IF YOU SELL 2K A DAY….AT WHAT 10-15 PC A DAY WITH 15-20K ELECTRICITY BILL.. PLAIN STUPID. USE THAT PROMO LOSS ON INTERNET UPGRADE AND PC HARDWARE UPGRADE , PEOPLE WILL WAIT ON YOU , KAHIT PUNO KAYO…BEEN THERE AND STILL IS …AT 15 PER HOUR YOU’LL ONLY LAST TILL YOUR HARDWARE GETS BUSTED…WHY ASK FOR 15 PER HOUR IF YOU CAN GET AWAY WITH 25 PER HOUR…THINK MY FRIEND…YOUR LOSS NOT MINE….

  24. mameha says:

    My question is, whether or not the prepaid globe tattoo and smart bro usb internet will eventually mean the decline of the internet cafe as a viable and thriving business?

  25. rick says:

    nop, at 10/hr internet cafe is still viable(customer side) compared to smart and sun even at their 50/day unlimited promo, and beside majority of the citizen still dont have PC and even if they have could not run the latest games(pang net browsing lang kaya PC nila, he he he)

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