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)