In my opinion, there is something strange about Tomoro Coffee. A coffee brand that suddenly proliferates in Jakarta. You all must have seen it. They can sell at a very cheap price, have around 200 branches in less than a year, and the founder has no F&B background. Previously, they had never ventured into the food business. But here, I say it's strange not in a bad way actually. If you look at it from an outsider's perspective, when you are starting another coffee business in Indonesia, there are already many. You already have Kopi Kenangan, Janji Jiwa, Starbucks, Maxx—everyone going to coffee. Why would someone in their right mind—having a sane mind, start another coffee business in Indonesia? Investing that big. And as it turns out, upon closer inspection, the first thing that I found strange actually makes sense. There is a reason why Tomoro can suddenly proliferate, be crowded, and you can buy their coffee starting from 9,000 rupiahs with their promotions. When you buy it, you also wonder, where do they make their profits from? And how come they can keep burning money? The brand that I believe originally comes from China. They use the same principles as their competitors there, who are currently very popular, like Luckin' Coffee. But why did they choose to open first in Indonesia? Where, notably, there are already many competitors. What's interesting is this—this

For friends who might be just starting in the FnB business or are thinking of starting a coffee chain, cafe, and the like. Because there is a strategy—this is what I think makes sense. And some perspectives can be taken and studied for Indonesian food MSMEs. Mostly, I will explain later in chapter 1. But I want to dissect some of its claims first. Tomoro's growth is very fast. They have a plan to open two outlets per day until they reach the long-term target of having 2000 branches in Indonesia. Compared to Kopi Kenangan, which has around 900 branches—imagine Kopi Kenangan having that many outlets. Why does Tomoro want to compete and have the determination to surpass its competitors' targets? Actually, the background is even more unique, in my opinion, this is no longer a coffee business competition. It is a technological business competition. From the founder's interview, he compares Tomoro to, in the next 5 years—hoping it can be as big as Oppo or J&T. Essentially, technology and logistics companies with a valuation above Rp100 trillion. Can a coffee business really have that scale? Maybe I need to clarify this in chapter 1. What I see actually—consistently from many other food businesses—is that they are funded by investors. Patience, we will discuss Tomoro in chapter 2 later. The first thing you need to know is that Coffee Business is not just

Because most people think like this, F&B or businesses that want to grow in the F&B world need to focus on the product—product-centric, that's what it's called. So, if you want to start a coffee business, you need to focus on the coffee. Whether it's the beans, the way it's processed, the procedures, the taste, acidity, and so on. Hey! This is a wake-up call for you guys. What investors actually look at in coffee chain businesses is not just the coffee itself. But when you imagine an F&B business, there are steps to follow. If the steps are done foolishly— for laypeople, it might be like this, 'Okay, I have a place, I buy coffee beans from the store, I teach the barista how to process the coffee using the machine, then I sell it to the customers, done'. The reality is that many businesses in this sector are no longer competing there. We're talking about scrutinizing the language. How do we dissect the entire business, the whole business process end-to-end— from start to finish, upstream to downstream— to solve this one code; economics. Or more precisely, in a chain business like this, it is store economics. Beginner coffee chain business owners— from the beginning, surely they think, 'How should we market it? How can we make it delicious?' But businesses like Tomoro must really be able to calculate accurately.

Each store generates revenue, has an occupancy or utilization rate, to achieve a certain income. Every sale from that income has unit economics or sales details. For example, from coffee sales, machine installment, and electricity costs. The aim is to minimize costs to ensure a healthy margin, turn all of that into a system, and replicate that process to other branches. For startup founders like this— from the supply chain, where they source the beans, food waste, delivery costs to branches, machine prices, machine capacities. So, you will see the business as a representation of these numbers. Until you find a healthy bottom line or profit. If it's healthy in one branch and has been maximized to the point where there are no gaps— if every store has waste or downtime, then it is repeated continuously. And that's the reality of FnB business. All the marketing you receive from these coffee brands is related to the product. And that immediately creates a stigma for us, 'Oh, so they must focus on the product, namely on the coffee'. In reality, more than 90% of the work is very behind the scenes. That is, each process must be as optimal and efficient as possible. Making each branch profitable, making expansion easier, until it eventually flourishes. The question is, is that really what is being done?

Some actual brands that were born in China are Luckin'. After this in Indonesia, there's Kopi Kenangan, Fore. Then what's different about what Tomoro is doing? Where they will be confident in being able to dominate the Indonesian market. Let's move on to Chapter 2 Not Coffee But Tech. But before we start, please comment below on the most crowded coffee chain in Indonesia—whether it's Starbucks, Kopi Kenangan, Janji Jiwa, Tomoro, whatever it is—what is your favorite up to now? And why? Before we delve deeper. Because Tomoro coffee's strategy, in my opinion, is quite unique. Let's continue. First, every business we must look at it from the founder's background. Because it can be said that the soul of this brand comes from there. CEO of Tomoro Coffee, Xing Wei Yuan. But his nickname is Star. Now his background is not at all in FnB. And actually, he has admitted—he's not a pro, he's not an expert in FnB. But many of his experiences are from the technology sector—previously he was a co-founder of J&T and he was a director at Oppo. The previous startup he built was Imoo, a smartwatch for kids like this. And if we trace back, actually Tomoro can be said to be like a sibling to some of these brands. Now the background story is like this—from Oppo, to J

Because he had no experience there at all. But after meeting his friends, colleagues, he said something like this - FnB is easy to get into, the barrier of entry is low. Especially if it's from China - soft drinks, milk tea, boba, milk tea - already have a market and are relatively easy to replicate. Why not just try that? But in the end, his counter was this, customer loyalty is more present in the coffee business. Then after meeting his co-founder, Fish, who is now the VP of Product & Supply Chain, they decided to just start a coffee business. Using all the technological experience he has. In the sense that he already understands from the previous chapter. The coffee business is not just a coffee business. But how to make the process efficient and make the entire process effective to keep all costs as low as possible and revenue as high as possible? Finally, Fish and Star went to Jakarta on April 11, 2022. They worked on it for several months and launched their first store on August 9, 2022. But don't be mistaken, because every founder who has successfully co-founded and run startups before usually finds it easier to access funding. The case is the same here. When Tomoro Coffee was built, they already got commitment or direct funding from something called ATM Capital. In my opinion, that's a VC from China or China-funded. Their focus is on Southeast Asian markets.

In Indonesia, their portfolio is like J&T, Jump/Start Coffee, Kitabisa, and a few others. And that actually became their basis for being able to expand this fast. Again, many people think they expand because they have money. True, but the reality is before they entered the Indonesian market, they were observing a lot and getting the data. They studied the behavior from previous startups—J&T, Oppo—that had already gained a market in Indonesia and had learned a bit from their portfolio in Jump/Start Coffee. Fast forward after they successfully entered the Indonesian market, they finally opened their first outlet in Shanghai on November 20, 2023. This is smart in my opinion, the strategy is to start in Indonesia first. Because in Indonesia, most of the outlets are usually in the city center. That's what they wanted to validate. If you didn't know, in China, the situation is that coffee shops like Starbucks actually lose to local coffee shops. The one dominating is Luckin' Coffee. But Luckin' Coffee in China focuses on tech hub areas. Whereas Tomoro operates in a different market, in industrial parks. Now, the next strategy. which I think makes Tomoro quite smart. Besides executing their menus with super cheap prices—how do they do it? Let me explain. Their Unique Selling Proposition (USP) or uniqueness is actually in their espresso base. According to their CEO, that is crucial and very important. And again, in

It's all about efficiency. The advantage of being a latecomer in Indonesia, they have studied everything. From Kopi Kenangan, Janji Jiwa, and their friends. Mostly, they use coffee machines that are slightly more manual. Like this one, you still have to grind it into powder first, then the powder goes into the espresso machine. Now, Tomoro changed one quite significant process, which is they use a machine called Eversys. It can be said that it's a truly automated coffee machine. Put in the coffee beans, and coffee comes out immediately. And the hope is—like I mentioned earlier, this business is actually about efficiency. So, with one machine and a barista who isn't necessarily very skilled and doesn't need to be too many, they can still serve the same number of customers as their competitors. As a result, the cost is lower. In the end, that's it. That's why when you look at Tomoro's branches, you will see consistency. The store format is relatively small, with few baristas—what's important is they understand how to press the coffee buttons. I'm sorry, I'm not trying to criticize, but that's their strategy to make everything automated using technology. The operational costs are lower, but the product remains high quality. And again, this is different from other competitors. Why doesn't Kopi Kenangan just stay like that too?

Just replace all branches with a more automated machine, then make the cost more efficient. The problem is not as easy as that. Once you have expanded branches that much, the cost needed to replace everything will be more expensive. Whereas Tomoro, after learning what already works and doesn't work in the market, just need to click on a few points that can be improved, and they can package it into a more efficient system or process. Starting from scratch without having to waste—discard any machines. And simply, that's actually the strategy. Even though it can be broken down further, for example, from sourcing coffee beans—they really get very close to the local farmer community down to the source. Creating an application to establish their CRM system. They touch every point of their business processes to make everything more efficient and lighter in operations. That's the key. After identifying the process, package it into one system, replicate it to other branches, and they also have an application, which in my opinion is also one of the keys. Besides reducing operational costs and facilitating marketing—claiming that cheap coffee should be from their application, they also directly obtain data and how to build a relationship with their customers even from their first coffee purchase. But after all these strategies are broken down— which you are starting to understand—one big question is,

Can Tomoro Coffee enter with a more efficient process, cheaper price, and ultimately become the number one brand in Indonesia? Can it beat Kopi Kenangan and its friends? Let's move on to Chapter 3 of the Indonesia Coffee Landscape. For anyone who wants to start a coffee business, opening one in Indonesia actually makes the most sense. Why? Because our country falls into the market validator category. With over 10,000 coffee shops and domestic consumption reaching hundreds of thousands of tons, Indonesia ranks as the number one coffee consumer in Southeast Asia. In terms of consumer behavior and culture— I don't know, please comment below— 80% of Indonesians drink almost a cup of coffee every day. However, the issue is— if this is a statement from the CEO— 90% of the market is for instant coffee sachets. Why? Because they are cheaper.
90% of the market is for instant coffee sachets. Why? Because they are cheaper. So, when Tomoro enters Indonesia, somehow it aims to slowly take over the market share of instant coffee sachets, which are perceived as cheap and lower in quality. If Tomoro's price is quite affordable, it can convert and enter the grab-and-go market. People buy sachets, for example, as a morning habit. So, why not just buy Tomoro Coffee? After all, it can be priced at 10-15 thousand. And if you buy it from their outlet, the coffee beans

And it is true, based on research, the majority of Indonesians are willing to spend between 11 to 30 thousand for their coffee. That's the most massive. And this is actually how they penetrate the market. Through their application and referral program, anyone who was previously used to instant coffee sachets can buy Tomoro coffee for 9 thousand. Now, if we compare it in Indonesia, the coffee industry is already well-established. In fact, we are the 3rd largest coffee producer in the world. The question goes back to the competitors. Where does Tomoro coffee stand? And are they in the right position to outperform other competitors? Personally, I see Fore entering a more premium market. Kopi Kenangan, Jaji Jiwa, are more in the middle market. Actually, this is quite similar to other Chinese brand strategies. Press the price as low as possible to enter the more massive market. Because in reality, Indonesia still has the largest market, which is the mass market. And that's where Tomoro's positioning is. Efficient, grab and go, and affordable. Looking at their long-term goal, they only have one goal. How to become the largest coffee chain brand in Southeast Asia. That is, reaching 4,000 branches throughout Southeast Asia. Now, this rate of expansion is not the first we've seen. Luckin' Coffee really broke through at that time. Despite all the controversies outside,

They once received funding of up to $400 million. They are more focused on making the whole process efficient. Because they are betting in a market that is still considered primitive. Even though we are big, we are still not considered as mature as European or American countries - which is judged by coffee consumption per capita. At least now, Tomoro - claimed by the CEO - is already number 1 in the greater Jakarta area and by the end of 2024, they target to be number 1 in Indonesia. From the number of their stores - which in 5 years they aim for success comparable to J&T and Oppo. Do you think it's possible? Because in the end, when we talk about the market in Indonesia, especially in FnB, buying once with a promo for 9 thousand and so on - that might be doable, as long as we get enough investment, we can plan the marketing. What is not visible or predictable in the long run, is the behavior of repeat purchases. It could be like Mixue which was very popular at the beginning, but now it's a bit more widespread. Will it happen again in Tomoro? That is something that in my opinion, I still cannot predict. Some say that the taste of Tomoro's coffee is not that good. Some say it's okay, as long as it's cheap and I get the caffeine. Most of the time, we just have to wait and see. And see if this brand

Or the entire team of founders and management can learn and adapt that quickly. Because the target is very ambitious. Going back, a coffee business is not just a coffee business. Good coffee is great. But the biggest challenge is how to replicate good coffee with the most efficient process possible to keep the price as low as possible. Because the game is already there now. What do you think? Can Tomoro become the number 1 brand in Indonesia, surpassing those that may have been considered giants here? I guess I'll see you guys in the next video. Bye-bye!

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