Foreign F&B chains flourish amid changing tastes

Ary Hermawan, The Jakarta Post, Jakarta

Doni Danika Putera was eager to open a Starbucks coffee shop in Balikpapan, East Kalimantan. "The number of expats working for foreign companies in Balikpapan has increased significantly. It is definitely a promising market," the sales manager of a car leasing company told The Jakarta Post on the sidelines of a seminar on the food and beverage (F&B) industry here recently.

That day, Doni, whose father and brothers have long been working in the car sales business, finally had the chance to talk with Anthony Cottan, the director of PT Sari Kopi, the franchisee for Starbucks Coffee in the country.

But before he was able to to into detail on how to make a nice and cozy coffee shop, Cottan gave him a disappointing answer.

"I was just told that the London-based coffee shop did not sub-franchise," he told the Post. "It's OK, I think I'll open a modern bread store, perhaps BreadTalk," he said, considering the current trend toward globalization.

Globalization -- no matter how cliche the word is today -- has changed everything in people's lives, including in taste in food and drink.

As Indonesian traditional warteg (Tegal food stalls) and warkop (coffee shops) become more and more marginalized and pejoratively identified as "proletarian" bistros, global brands in the F&B industry such as Pizza Hut, Hard Rock Cafe, McDonald's, BreadTalk and Starbucks are rapidly growing in urban areas and their surroundings.

Foreign -- or shall we call them modern -- F&B outlets have become more accepted and are now mushrooming in every corner in major cities.

Starbucks is currently seeking new locations outside Java for its new coffee shops, while BreadTalk is set to open 10 more stores in Jakarta and Manado this year.

"We just opened a new store in Makassar (South Sulawesi) two weeks ago," PT Talkindo Salaksa Anugrah managing director Johnny Andrean told the Post.

Talkindo, the franchisee for BreadTalk and J.Co. Donut & Cofee in the country, has opened 18 BreadTalk stores in Jakarta, Bandung, Surabaya and Bali.

Johnny, a successful hair stylist before entering the franchise business, admitted that competition in the F&B industry was extremely fierce today not only for local players but also for international brands such as BreadTalk.

According to the Forum of License Holders of Franchisors, there are currently more than 100 foreign F&B companies that have franchised their businesses in Indonesia. Meanwhile, the number of local F&B franchisors has now reached 70.

The forum said the total sales in the country's franchise F&B business last year reached more Rp 15 trillion (US$1.6 billion).

"We have to be smart in looking at all the opportunities," Johnny said.

F&B is a lucrative business and offers higher profits with lower capital in spite of higher risks. As people spend most of their time outside their home, the competition in the F&B industry is getting tougher than ever.

F&B companies, of course, are trying to attract customers here in many ways, including offering dishes to suit local tastes. Branding does matter but taste never lies.

Many foreign restaurants have modified their products to better suit the local taste. Hard Rock Cafe, for instance, has substituted barbecued pork ribs to beef ribs.

"It's impossible to sell pork ribs here," said Yoris Sebastian, head of F&B division MRA Group, which holds the franchise for Hard Rock Cafe. "You may think globally, but you must act locally."

It's been a different case for Starbucks.

"Starbucks has been fortunate that the concept of drinking coffee and the whole experience of it is universally accepted," Cottan said.

People from Indonesia, Taiwan, China, Japan, and Switzerland say that the experience of enjoying high quality coffee in good surroundings with good service is universally accepted. Everybody deserves it."

He said that Jakarta is no different from other cities in the world. "People here work very hard. They are facing difficult conditions such as traffic jams every day. They need relaxation; they need a reward," he said.

That's why, when the first Starbucks outlet opened in 2002, Anthony had no worries at all. "We're glad that we have done a great job in Indonesia," he said. PT Sari Kopi currently manages and operates 38 coffee shops in Jakarta, Bandung, Medan, Surabaya and Bali.

When asked if he had any plan to localize his products, Cottan said it was unlikely. "For beverages, we don't usually localize, but sometimes in the region it could be a good idea. Like green tea cappuccino; green tea is very Asian," he said.

After all, he added, "we're just a big warung kopi."

"It's the same thing. You have a man who makes the coffee for you, (whether it is) kopi tubruk or cappuccino. Kopi tubruk (unfiltered coffee), Cottan said, was another way of saying Turkish coffee.

For Yoris, who has worked at Hard Rock Cafe for more than 10 years, good marketing is the key to success in the F&B business.

"You just have to be unique; you have to be different." he said, adding that good location might be less important if "you have a good marketing strategy."

"Many food stalls are crowded with customers though they don't have a parking lot," he said.

He added that new players in the F&B business should spend at least 15 percent of their budget on marketing. "We usually spare 2.5 to 7 percent of our budget to maintain the brand," he said.

Hard Rock Cafes in Jakarta and Bali have become the icon of a modern food stall that offers not only food and beverages but throws in the added attraction of celebrities and music.

Meanwhile, Cottan said that good location was an important aspect in the F&B business.

"You have to do a study first before deciding to open a restaurant," he said. Starbucks coffee shops are mostly located in high traffic areas such as office buildings and malls.

"You can't simply open a restaurant in Bumi Serpong Damai (Tangerang, Banten) where people are in Jakarta by day and too tired to hang out at night when they get home," he said.
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