Kinian Culinary Business Negative Trends: Skyrocketing Quickly, Disappearing In A Row

Warunk Upnormal, a contemporary culinary business that already has 85 branches in several cities in Indonesia but is now experiencing a negative trend. (Special)

JAKARTA Culinary business growth is very fast but rarely is able to last long. Statistics state that more than 70 percent of culinary businesses have to go out of business in just 1-3 years.

It's in normal conditions. Another thing during the pandemic, let alone the new brands, which have been well-known for more than 5 years, is difficult to survive. Look at Upnormal Warunk. The culinary brand run by the CRP Group must close a number of its outlets in several cities, such as in Bali, Palembang, and Depok.

In fact, Upnormal Warung had experienced a rapid increase. If only within five years from 2014-2019, the company managed to penetrate the market by presenting 85 Upnormal Warunk outlets throughout Indonesia.

The rhythm of the culinary business trend, according to the Director of the Center of Economic and Law Studies (Celios) Bhima Yudhistira, is always changing. That's why culinary entrepreneurs should be able to innovate. Rebranding various things related to menus and products.

For example, regarding prices. Upnormal Warunk, said Bhima, lacks attractive pricing strategy. The Warunk Upnormal market target is generation Z, so that price determination must also be adjusted to the character and ability of the market.

Then, promotion. The use of social media for promotion is very effective for Generation Z because they are very technology literate and are quick to try new things.

"So, if you want to rebrand, promote a new menu, and other things, take advantage of social media, hang out. Look at the Mixue phenomenon, for example, which has succeeded in disrupting the Joba beverage market," Bhima told VOI on February 28, 2023.

"Jadi jangan dilihat karena masyarakat Indonesia mengurangi makanan di restoran atau jajan di luar rumah. Justru, setelah PPKM dicabut, keinginan masyarakat untuk makan di luar rumah sangat besar," tambahnya.

The CEO & Founder of Koolva, Benny Batara also has a record of why many Upnormal Warunk outlets are closed. The main thing is of course the price. The first time it opened, according to Benny, the price was still competitive, Rp. 50,000 was able to eat more than one person.

"But at this time, IDR 50,000 doesn't feel enough for one person anymore, I haven't taken it yet," said Benny on Bennix's YouTube account on January 31, 2023.

Thus, the market segment is starting to think about trying other places that are more affordable.

The physical factor of outlets is also an obstacle. Upnormal Warunk is always in a strategic location with a luxurious architectural design. Having wifi facilities and many electrical plugs, it is suitable for studying and working orhangout.

But for partners, the costs required to present are very high. The investment value is only for one Upnormal Warunk outlet of at least IDR 1 billion, much more expensive than Mixue.

"When a new business is born, immediately exit the inbudget for interior designs is so expensive, the gadget for renting a place is so expensive, while the foods sold are indomie, eggs, cornets, when will it return on investment? That's very irrational. So don't be surprised if there are many partners from Upnormal who are not happy, "said Benny.

Not to mention the attitude of the Warunk Upnormal internal management which is considered too top down, does not want to listen to the problems that occur on the ground and the problems that occur with their partners.

One of the easiest things is the application of the menu. If the data shows one of the products is bad and has to be taken out, it will be immediately withdrawn nationally. In fact, the product is still selling well in certain cities," said Benny.

An example of KFC can grow so large because they always listen to input from their partners. So, they can innovate in terms of the food menu following the development of the market in their area.

Professor of the Faculty of Economics and Business, University of Indonesia, Rhenald Kasali also noted that it was not much different. The problems that occur in Upnormal Warunk are no longer about operational aspects.

The segmentation, branding, pricing, what kind of product has been completed. Moreover, since 2-3 years ago, Salim Group has been there. If the problem is just prioring it easily, they can buy products from Salim Group such as instant noodles at a much cheaper price. Salim certainly looks at the strategic aspect," said Rhenald as quoted from YouTube CNBC on February 8, 2023.

Thus, the problems that occur are more important to internal management. Many young people are indeed good at marketing, communication, are good at making products, but when it comes to matters related to business governance with partners, not all of them are capable.

"If it's alone, we can easily arrange it. However, when we partner later, remember that there is management, there is accounting, there is administrative recording. We can no longer mix personal expenses and company expenses. For example, Kaskus with strong entrepreneurial. However, when Djarum Group enters the feel is different," he said.

So, efforts need to be adjusted to various conditions, including market conditions that continue to change after the pandemic.

"I confirmed earlier, the (Warunk Upnormal) outlets were not closed all but they made it healthier," added Rhenald Kasali.