Fresh funding will help us survive crippling corona crisis, says Kopi Kenangan CEO Tirtanata

Kopi Kenangan co-founder and CEO Edward Tirtanata

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:-

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.