Restaurant business in Jakarta has promising future
Restaurant business in Jakarta has promising future
JAKARTA (JP): Restaurants are big business in Jakarta. As long as people have an appetite for delicious food, the restaurant business will likely survive here.
There are about 3,000 restaurants and entertainment centers in Jakarta which contribute more than Rp 200 billion in taxes every year to the city administration.
It is easy to find good restaurants in the capital. People may choose restaurants or food stalls serving local cuisine such as the Javanese style fried chicken found at Ayam Mbok Berek, Sundanese food or Padang (West Sumatra) dishes. If you want to try Chinese, Japanese, Korean, Thai or other Asian food, a large number of restaurants are available in food centers, malls, hotels and office buildings.
The globalization era has provided Indonesians access to international restaurant chains such as Planet Hollywood, Tony Roma's, Chicago Ribs, Pizza Hut, Sizzler and McDonald's, not to mention a series of international cafe chains such as the Hard Rock Cafe and Fashion Cafe.
Small to large-scale businessmen, including the families of Sudwikatmono and Sudono Salim, have tried their luck in this lucrative business. Some have been incredibly successful, while others have failed.
I Nyoman S. Pendit, executive secretary of the Indonesian Hotel and Restaurant Association's Jakarta branch, said the restaurant business is unique and requires special skills.
Nowadays, he said, the growth of the restaurant business in Jakarta is closely linked to the increasing purchasing power of middle to upper-income groups in society.
"Every day, people flock to restaurants and food stalls in Jakarta and other big cities to dine. This activity has become part of their daily lives. Therefore, they are potential clients for the restaurant businesses," said Pendit.
But before opening a new restaurant, a thorough market study should be completed first, he said. "Many businessmen fail to properly manage their restaurants because they did not understand the market."
Each restaurant should determine its market segment. Restaurants located adjacent to office blocks or business centers may target a different market than those located in housing and recreational complexes, he said.
"Money is important to run a restaurant, but it is not a key factor to a successful business. Determining appropriate target markets, locations, services and menus are also significant."
Many restaurants become popular through word of mouth, he said.
Citing an example, a local restqurant serving Manado (North Sulawesi) food in Central Jakarta is famous among restaurant patrons because of its excellent food.
"During meal time, this restaurant is full and a lot of people would be willing to wait their turn to taste its delicious food. I know this restaurant from my old friend, not from an advertisement" Pendit said. This is proof that a restaurant must have its specialty to attract people, he said. "I always encourage owners of local restaurants to improve their services and serve unique food if they want to compete with international franchise restaurants," he said.
This is not denying that foreign franchises have begun to dominate the local restaurant business. It seems that bigger enterprises prefer to tie up with international chains, rather than make a name for themselves.
Anugrah Pekerti, a management consultant from the LPPM business school, said many businessmen choose to join international chains because the chance of succeeding is almost 80 percent.
The number of foreign franchises operating in Indonesia increased in 1996 by 18.5 percent, to 141 from 119 in 1995, while the number of local franchises increased by 13 percent in the same year, rising only to 26 from 23 in the same period.
It is no secret that a franchisee should pay quite a lot of money as the license holder.
Martina Sudwikatmono, holder of Planet Hollywood's restaurant chain, must pay an initial fee of US$2 million to open Planet Hollywood restaurants in the Asian and Australian regions.
"Franchise rights are expensive. But we don't need to create a new image. Besides, we can learn their management systems," admitted Martina, who also holds franchise rights for the Italian-based Alessandro Nanini and the Belgian restaurant chain Fabrice's.
American-based Texas Fried Chicken (TFC) of the United States charged $25,000 to open a TFC branch and pays 5 percent in royalties from its gross profits.
Bambang T. Rachmadi, president of PT Ramako Gerbang Mas which owns the McDonald's franchise, earlier said that joining an international foreign chain is beneficial. "It is a labor- intensive business and I see it as a training ground for local employees," he said.
Pendit added that the operation of foreign restaurant chains should not discourage local restaurant owners. "We should be proud of our own cuisines, but they should improve their service and management systems before they become hosts in their own country," Pendit said. (raw)