Global franchising in the works for Kenangan Coffee after Singapore debut
A GLOBAL franchising programme is in the pipeline for Indonesian coffee chain Kenangan Coffee, driven by the success of its outlets in Singapore, the chain’s group chief executive officer (CEO) Edward Tirtanata told The Business Times.
Kenangan entered the Singapore market in September this year, marking its second overseas venture after it debuted in Malaysia in October 2022. The company said its first two outlets here have performed “better than expected”, selling up to 600 cups per store per day.
Global franchising plans could start as early as this quarter for the chain, which directly owns all of its current outlets. Kenangan hopes to have at least five franchisees by next year, said Tirtanata.
The focus will be on emerging markets such as India and other countries in South-east Asia, but the chain will be “opportunistic” about the countries it goes to – seeking reputable partners that can also help it to understand local markets.
“It is a key strategy for us, because our vision is not just in five to six countries,” said Tirtanata. “We cannot open them on our own, (so) we need to leverage a franchising strategy.”
Founded in 2017 by Tirtanata and co-CEO James Prananto, Kenangan attained unicorn status in 2021 following a US$96 million Series C funding round.
Its investors include American rapper Jay-Z’s venture firm Arrive, and former tennis player Serena Williams’ venture capital fund Serena Ventures.
Prananto and Tirtanata, who met in high school, established Kenangan to fill a gap in the Indonesian coffee market between expensive coffee from global coffee chains and cheap instant coffee sold at convenience stores.
Its first store was in an office lobby in South Jakarta alongside both a big brand and a convenience store that sold cheap coffee. “Everyone was telling us we were crazy because we were going against these guys,” he said.
“What we had in mind was: If we are able to succeed in that location, it means that we have a proven model that can be replicated in other locations,” said Prananto.
Kenangan has close to 870 outlets in 67 cities in Indonesia. It has 20 stores in Malaysia, including in Kuala Lumpur; and is aiming to have a total of 40 in the country by end-2023, and between 90 and 100 by end-2024.
In Indonesia, new locations are decided based on data analysis of almost 20 variables, said Tirtanata.
The brand’s grab-and-go concept allows for small store formats, enabling rapid expansion, said Prananto.
Kenangan faces stiff competition in Singapore, though. Competitors include Luckin Coffee from China, and fellow Indonesian brand Fore Coffee.
The recent closure of Flash Coffee highlights the ongoing challenges in the business of operating tech-enabled coffee joints.
However, Tirtanata is unfazed: “Every country that we enter is always so crowded (with coffee brands). In any good business, there will always be competition. If you don’t have any competitors, most probably it’s not a good business.”
Singapore’s popularity with tourists can help Kenangan build a global brand, said Tirtanata, who aims to open 30 outlets here by end-2024.
Prananto added: “People see Singapore as the hub of Asia; and having a brand in Singapore, in a way, legitimises the brand on an international scene.”
