JAKARTA: On its first day of business, Kopi Kenangan sold 700 cups of coffee. Within three months, it broke even.
Two years later, it has 230 outlets across Indonesia, from Medan in North Sumatra to Makassar in South Sulawesi.
Mr Edward Tirtanata, CEO of this fast-growing coffee chain, decided right at the start that its coffee has to be affordable in order to survive in the competitive market.
At an average of 18,000 rupiah (US$1.30) a cup, the pricing of Kopi Kenangan is between the street stalls’ coffee of about 3,000 rupiah and international chains’ 50,000 rupiah.
“I used a simple logic in my pricing strategy when we first started three years ago.
“A nice cup of coffee cost between 35,000 and 40,000 rupiah. If you bought one cup a day, that’s 1.2 million rupiah a month, which came up to 30 per cent of minimum wage in Jakarta.
“However, a cup of Starbucks in the United States for a month is just 6 per cent of its minimum wage. There’s a big difference. That’s why I decided to price my coffee in a way that a month of consumption will only cost less than 10 per cent of our minimum wage,” he explained.
The initial success has given the entrepreneur and his business partners courage to dream big. They want to grow both in Indonesia, which has a robust coffee culture as the world’s fourth largest coffee producer, and elsewhere in Asia.
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To realise their expansion dream, they raised US$8 million in seed funding and another US$20 million in Series A funding.
But more impressive than that was getting Jay-Z and Serena Williams’ venture companies on board as their investors.
With their funding, Kopi Kenangan is on the right track to achieve its ambition – 1,500 stores in Indonesia and abroad by 2021.