Cafe king Wiyogo talks of business strategies

Cafe king Wiyogo talks of business strategies

By Prapti Widinugraheni and I. Christianto

JAKARTA (JP): Bambang Atmanto Wiyogo, the son of former
Jakarta governor Wiyogo Atmodarminto, currently controls seven
cafe-restaurants, almost all of which offer live music.

He started doing business when he was a student of Gadjah Mada
University's school of economics in Yogyakarta in 1979. His first
business had nothing to do with cafes.

In the early 1980s he became an agent for state oil company
Pertamina, selling the firm's products to various markets. After
that, he went into the fuel station business and built fuel
stations all over Jakarta. Later he took orders from the State
Logistics Agency to transport goods from one point of town to the
others.

He then entered the property sector, which is still his core
business. Although his involvement in the cafe-restaurant
businesses is practically a pastime, almost all his outlets have
been well received by the people of Jakarta.

Bambang, together with several friends, established Cafe
Jimbani in Kemang, South Jakarta, two years ago. It became one of
the first cafes in the area and one of the most popular until it
was razed by fire not long after its opening. It was then
expanded and Jimbani's success quickly led to new cafes sprouting
up in the area. At the same time, Bambang, with different HIPMI
member-partners, started opening other outlets.

He now owns, or shares ownership of, Jimbani, Balemang, JJ
Duit, Jalan-Jalan, Asmat, B-One, Empire Grille and Quantum, all
of which target Jakarta's upper-middle class.

Apart from being in charge of many businesses, the 39-year-old
also chairs the Association of Young Indonesian Businesspeople
(HIPMI). Bambang, who has a wife and two kids, says he and his
friends will continue opening cafe-restaurants that have an
Indonesian atmosphere. In the middle of this year, he plans to
open a cafe with a Javanese atmosphere in Menteng, Central
Jakarta.

The Jakarta Post recently asked Bambang about his experience
in the cafe business and his opinion on the rapid growth of the
hospitality business in Indonesia.

Question: What made you enter the cafe-restaurant business?

Answer: At first I wanted to provide business opportunities to
my friends at HIPMI. I saw that the increasing number of young
executives needed a place to sit and relax.

So my friends and I decided to make cafe-restaurants -- a
combination of a family restaurant with a cafe atmosphere and
live music. This is different from the ambience you find in many
other cafes or discotheques.

We want people to be able to see each other and be seen by
others at our places, so we make the place bright and not dimly-
lit. Almost all of our outlets, which are located in strategic,
prestigious areas, have an Indonesian atmosphere.

It is easier for us to design the place if we make it
Indonesian.

What is your concept of a cafe?

We established JJ Duit about one year ago to serve tourists
and expats. We created a similar atmosphere to the one in Jimbani
but with a different concept and target market by making the
place more casual. Then we established Balemang, Jalan-Jalan and
Asmat, each of which differs widely in design and layout, but has
a touch of Indonesian ambience in common.

Isn't the concept of making a cafe with an Indonesian
atmosphere more complicated than buying a foreign franchise, or
designing a Western-style cafe-restaurant?

I see so many foreign franchises operating in Jakarta. If we
allow this to continue, I am afraid more and more will come in.
So I felt I had to come up with a national theme. I have tried
and people have given a positive response. Why spend money buying
a foreign franchise when you can make an original one and survive
from this business?

Our group consists of people with expertise, ideas and
marketing skills. We have interior designers who know what the
owners want and we have people who can make the place come alive.

I think it would be more difficult for us to create a foreign
ambience. In the end, it would turn out the same as all the other
cafes in town.

What did you have in mind when you built all these cafes? Do
you have a certain target?

We have no target. Yes, it is possible that the market will
get saturated because there are so many similar places at the
moment. But I think the demands of Jakartans give us (cafe-
restaurant owners) a chance to do business. It gives us a chance
to try and meet the tastes of Jakartans.

Frequent customers of Balemang, for example, may get tired of
it at some point. Now they can choose other places that have
different atmospheres to freshen up. Whatever the concept, as
long as it meets the taste of Jakartans, I'm sure it will sell.

But I would like to see a regulation that prohibits the
construction of cafes which can accommodate a large number of
customers. If a place can accommodate more than 1,000 people, for
example, it's unfair to other outlets because their large scale
helps them keep down their food and beverage prices.

How much do you invest to set up one outlet?

Between Rp 2 billion (US$869,565) and Rp 3 billion. This
includes working capital and marketing.

As the son of a former high-ranking official, do you find it
easier to do business? Does this status have anything to do with
the growth of your businesses?

Our cafes are operated based on pure business strategies and
connections. The opportunities we find and take advantage of and
the way we market the outlets do not depend on who I am.

For issues that do not concern the government, it is purely a
business matter. Anyone can do it. But who I am is clearly
helpful when it comes to gaining access to banks and building
lobbies, for example. I must admit that easy access and good
relations help in many things I do. This also has to do with
being the chairman of HIPMI.

Does it also help with your property business?

Yes, in the property business, having easy access to financing
institutions is very favorable. People can be more easily
convinced because they know me. Building relationships with
important businessmen also makes things easier.

The bottom line is that I will use all that I have as a weapon
to do business. Of course, all of this must be used for positive
causes. And it must be followed by hard work and a strong
commitment.

How do you, and your outlets, deal with the competition?

Of course there is a feeling of anxiety because we want to
give better service and cheaper prices. We do not underestimate
our competitors and we are planning to create a more professional
marketing system.

What's the problem with the current system?

Right now we rely more on individual strength for promotion,
instead of using the media for advertisement, for instance. But
now with competition getting stronger, we may consider placing a
single ad for the whole group to save money or have group
discount packages and things like that.

We realize that maintaining the cafes and their reputation is
much harder than building them. But we will continue opening new
outlets, maybe two or three each year.

Several cafes and restaurants have failed in the last few
years. To what would attribute their failure?

I think it's a matter of a bad location, applying the wrong
strategy and being inflexible in designing and providing service.
It is also likely that franchisers impose strict rulings which
local franchisees may not be able to meet. In the end, they
provide entertainment which Jakartans don't really like and at
prices which Jakartans can't afford.