At a time when the COVID-19 crisis is looming large over the F&B sector, Indonesia’s grab-and-go coffee chain Kopi Kenangan’s shift in strategy to tap street-side locations has helped it stay afloat and cater to its consumers.
The company recently made headlines for raising $109 million in a fresh funding round led by existing investor Sequoia Capital, with the participation of new investors including B Capital, Horizons Ventures, Verlinvest, Kunlun and Sofina, besides existing backer Alpha JWC Ventures.
“Obviously not every F&B chain, small or big, will survive this crisis, that’s just the reality. So, whoever comes out of this, will come out of this stronger,” said Kopi Kenangan co-founder and CEO Edward Tirtanata in an interview with DealStreetAsia.
According to Tirtanata, things could have been worse for the company, had it not been for a slight adjustment in its expansion strategy that was made just a few months prior to the COVID-19 outbreak.
By the end of 2019, Kopi Kenangan started opening stores in gas stations and shophouses. “During corona, those locations have seen revenue increase by more than 50 per cent, because people are still drinking coffee even in the pandemic,” said Tirtanata.
“In the last week of March revenue dropped 25 per cent, while in April 2020 the revenue dropped further totalling to around 40 per cent drop due to COVID-19,” he explained.
“However, the revenue from those delivery-heavy location has actually spiked up, which compensates the loss of the walk-in revenue.”
Kopi Kenangan’s decision to expand to street-side locations has turned out to be an inspired move, as not only does it generate more revenue, it has also proven to be less costly for the company. At the moment, the company says street-side outlets make up less than 20 per cent of its total of 324 stores.
And, going forward, the company plans to ramp up its focus on opening more of such stores as the pandemic has put a halt to its international expansion plans. “In Jabodetabek alone, we have identified around 21 subdistricts where Kopi Kenangan has little or no presence at all…we realized that there are lots of market share that we have not been able to capture because of a lack of presence in that area,” said Tirtanata.
“That is why we decided to open, even during corona, one store per day. We were initially planning to open 50 per month, but we decided to moderate our expansion strategy to 30 per month,” he added.
According to recent research by mPos startup Moka, F&B has been one of the worst affected sectors in the COVID-19 pandemic, with businesses across numerous cities witnessing a plunge in their earnings. About three weeks, Indonesia had witnessed the shutting down of an F&B supply chain startup, STOQO, which had been in the market to raise its Series B funding.
Edited excerpts of the interview:-