Local restaurant franchises make big success

Local restaurant franchises make big success

T. Sima Gunawan, Contributor, Jakarta

Everybody enjoys good food, which explains why the restaurant
business continues to thrive, even during the economic crisis.

This was also what Erliza Hambali, a researcher at the Bogor
Institute of Agriculture, had in mind when she decided to get
into the restaurant business.

Along with two other women, Fatmawati and Ratna Permanik, she
set up PT Ayam Goreng Fatmawati Indonesia in 2000 to manage Ayam
Goreng Fatmawati (Fatmawati Fried Chicken) restaurants and sell
franchise rights. The business has been successful and there are
now 43 outlets with some 500 employees in Jakarta and several
other cities, including Bandung and Batam.

"We will open another restaurant in Johor, Malaysia, in the
middle of this year," Erliza said, adding that there were also
plans to open an outlet in Brunei.

The first restaurant was opened in Bogor in 1990, but it was
not until the past few years, when it began to be managed
professionally, that the business really began to develop.

The franchising business is indeed enjoying good times.
Reports say that from 1997 to 2003, local franchises saw an
average annual growth of 17.13 percent. This is higher than the
growth of foreign franchises, which was 9.7 percent a year from
2000 to 2003.

The Indonesian Franchise Association recorded that as of
August 2003 there were 250 foreign franchisors and 47 local
franchisors in the country, mostly in restaurants, cafes,
bakeries, education, retailing, laundry and dry cleaning
services, hair and beauty salons, health and fitness centers,
entertainment, consultancy, photography, real estate and car
rentals.

However, the real number of local franchisors could be double
as many are not registered with the association.

Among the franchisors are Es Teler -- a pioneer in the local
restaurant franchising business, Ayam Goreng Fatmawati,
Restaurant Sederhana, Bebek Bali, Wong Solo and Bakmi Japos.

H. Bustaman, the owner of Restaurant Sederhana, which serves
traditional food from Padang, West Sumatra, started his business
in 1972.

"At that time, I ran a food stall on the side of the road in
Benhil (Bendungan Hilir, Central Jakarta)," H. Bustaman, 62, the
owner, said.

After five years, he opened a small restaurant in the area.
His customers enjoyed the hot, tasty, spicy food, and Restaurant
Sederhana (which literally means modest) became quite well-known.
Some people then showed their interest in the business and asked
Bustaman to jointly open more branches.

Bustaman, who prefers to use the term "cooperation" instead of
"franchise", started to open restaurant branches in 1995 and
today there are more than 20 outlets in Jakarta, Manado, Batam
and other cities.

However, he complained that there were between 15 and 20 other
restaurants illegally using the name Sederhana. "I am thinking of
taking a legal action against them."

The illegal use of the brand name could tarnish the image of
Restaurant Sederhana because the food and service at these
impostors might not be up to the restaurant's standards.

Bakmi Japos, which serves noodles and Chinese food, has 23
outlets, mostly in Greater Jakarta. And requests to buy the
franchise kept coming in.

"I don't know why there are so many people who want to sell
noodles," said Hengky Tjoa, 46, the owner of Bakmi Japos.

Hengky worked hard before finally tasting success. He earlier
sold clothes, but failed. He also could not make money selling
ornamental fish. Later, he ran a video compact disc rental shop
that went out of business. He did not give up and sold grilled
fish on the side of the road. Again, it was a total failure.

In 1992, with capital of Rp 750,000, he started to sell
noodles from a cart in front of the marketing office of the Vila
Japos housing estate. And that was the beginning of his success
story.

Starting a business is never easy. But once it begins to run
well and is managed professionally, it could become a gold mine.
That's why many people are interested in becoming a franchisee.
They do not have to start from the very beginning, with the
franchisor teaching them the keys of success.

Franchise operators are expected to transfer knowledge, train
human resources, ensure the quality of the food and assist in
developing the business.

However, there is no guarantee that the franchisee will
experience the same success as the franchisor.

Erliza said that at least two outlets of Ayam Goreng
Fatmawati, one in Bekasi and the other in Bandung, went out of
business.

The one in Bekasi used to attract many guests, but the owner
moved to Yogyakarta and asked an employee to handle everything.
The restaurant was not properly managed and soon went bankrupt.

One of its outlets in Bandung suffered because the owner had a
problem with the neighbors regarding parking, according to
Erliza.

Unlike Sederhana and Bakmi Japos, which require capital of
hundreds of millions of rupiah or even more than Rp 1 billion,
Ayam Goreng Fatmawati does not require that much money. With Rp
15 million, you can have a simple kitchen and all the necessary
equipment. The annual franchise fee is Rp 12 million for first
three years and the franchisee should pay 5 percent of the
turnover to the franchise operator.

Erliza said the turnover for a restaurant measuring about 70
square meters, like the one in Cilandak Town Square, could reach
more than Rp 100 million a day. Due to the bird flu scare, sales
dropped by some 30 percent last week. It is still suffering a
drop-off of about 10 percent. Besides serving fried chicken, Ayam
Goreng Fatmawati also offers traditional food from West Java like
pepes (fish roasted in banana leaf) and sayur asam (vegetable
soup).