Indonesian coffee chain Kopi Kenangan to expand across SEA

Indonesian coffee chain Kopi Kenangan has closed a US$20 million growth funding deal with Sequoia India.

The firm, which secured an $8 million investment from local group Alpha JWC Ventures last October, plans to use the capital to open 150 outlets within this year, expanding to 1000 stores throughout the territory by 2021. The chain will also consider regional expansion across Southeast Asia.

Kopi Kenangan currently operates 80 stores in eight cities, which sell around a million cups of coffee per month – predominantly traditional Indonesian iced coffee with organic palm sugar.

“Our mission is to bring high-quality coffee, made with the freshest local ingredients to consumers across Indonesia – and the rest of Southeast Asia, too,” said Kopi Kenangan co-founder and CEO Edward Tirtanata.

Sequoia expressed admiration for the firm’s achieving profitability in its second year of business.

“Most food-retail businesses struggle despite high gross margins due to operating costs like rent, manpower and wastage,” wrote Sequoia Capital investment advisor Rohit Agarwal. “Kopi Kenangan has implemented robust backend systems to track inventory in real-time and moves excess items across stores, cutting wastage to almost zero. Its stores are 10–20 per cent of the size of a normal cafe, significantly cutting cost per store”.

One of the chain’s core strengths is its app, launched in April, which allows customers to order their coffee for pick up and avoid queues, or have their purchase delivered by food delivery partners.