All About the Numbers i

By : rudi_pandjaitan | on 1:23 PM February 12, 2018
Category : Technology, NEED TO KNOW

Andy Fajar Handika hopes to move to the next level in digital business, creating an increasing number of customers to scale up his business and boost the startup’s value. But he’s also aware that obstacles stand in the way. By Albert W Nonto

Andy Fajar Handika, founder and CEO of Kulina.id, a virtual resto startup, like other new entrepreneurs understands that the value of his business depends on the number of customers who come together to create an ecosystem essential to increase the value of the company in the eyes of investors.

To his advantage, there are no geographical boundaries to the numbers he can serve but issues such as customer satisfaction are critical to success.

Other online companies have blazed a trail. Bukalapak has become a leading marketplace, with 35 million customers each month visiting and conducting transactions over its site. But despite the good news for startups now rated as unicorns such as Bukalapak, Tokopedia, Grab and Go-Jek, there are plenty of sad stories.

Fortunately, Andy understands what he has to do to make a difference. Instead of doing business in IT, which he studied at Gadjah Mada University, he opted to set up his own restaurant because he loved cooking. One of the best times of his day is serving up good food for his family.

The restaurant he founded performed well for 12 years, but in the end he ended up with the headache of managing capacity and other factors that made him think of different ways to run a restaurant business.

It occurred to him that cooking good food was only a small part of the battle. Many other factors were outside his control. Big money is needed to get started, and it’s essential to have the right location that appeals to customers. Then there’s the furniture, high-quality equipment and computer software to record sales and financial flows.

If a new restaurant owner doesn’t own his own property, the rent has to be covered and money put aside for renovation, which requires the services of an interior designer. That’s without calculating the staff required to serve and to cook food in the kitchen. Once they’ve been hired and the renovation has been completed, then there’s the daily chore of purchasing, buying the vegetables, meat, fish and every other item, as well as somewhere to keep them all fresh.

As opening day approaches, it’s essential to think about marketing, so that people actually come through the doors, sit down and taste the food. Last but not least, decisions need to be made about the price the food will be sold to customers.

 

Andy Fajar Handika, founder and CEO of Kulina.id

 

The key competitive factor of a startup compared to a bricks and mortar company lies in its limitless room for growth. Scalability - the capacity to grow - of online business is very big as it is not limited by physical space.

 

Andy realized that some of the work could be done by other parties. That, after all, is the sharing economy. The restaurateur or culinary artist has space to work, but it’s a highly competitive business, with new restaurants opening every day and plenty closing their doors because the numbers just don’t add up.

Andy saw the opportunity to move up to a higher level. According to his theory, the best people in the food business should be able to keep working and doing what they love, while sharing their work without needing a huge investment for property and all the rest.

Food lovers could also benefit, he believed, able to enjoy good food without the headache of queuing in the parking lot and in the restaurant itself to buy just one box of food to take home. All they need to do is click on an online kitchen app and wait for it to arrive at the door.  “As a former resto businessman I see big lines of demarcation between the customers and the cook,” says Andy.

An online restaurant is a medium-term solution to tackling the many aspects of the business, but it doesn’t solve all the problems. Simply by opening an e-commerce business or selling through social media still leaves plenty of work to do such as responding to customer questions - which sometimes companies are lazy to do – as well as paying all the bills and looking after the banking.

Kulina.id was his answer to all the problems. “We want to make customers, office workers, families able to order food from an online caterer or their favorite chef,” says Andy, adding that people making good food can then focus on their work of producing delicious food and leave all the work related to management, payments and delivery to Kulina.

As a result, each party in the business can create optimum value out of their business. Caterers can make their best food, with high quality at affordable prices, and be fairly reviewed by customers.

Number of Customers Counts

No matter how attractive your website, the number of customers and transactions is the absolute parameter to measure a startup’s strengths and prospects. “Customers are an indication of the level of acceptance of our product. The value of Kulina will be determined by so many factors and the number of customers will be among them,” he says.

In 2016, the company invited investors to join Kulina. Monk’s Hill Ventures became the lead investor, with that round of funding valuing the company at about $4 million. “As customer numbers get bigger, we are sure that the value of the company will also grow,” states Andy.

Day by day, demand for Kulina’s service continues to grow. Since he serves only 0.1% of the 10 to 12 million people in Jakarta, his business has great growth potential. At the moment, some 100,000 people, mainly professionals and office workers, use the service.  “We are in intensive discussion with some investors involved in our seed stage, and are looking forward to pre- and A-series financing,” Andy adds.

The key competitive factor of a startup compared to a bricks and mortar company lies in its limitless room for growth. Scalability - the capacity to grow - of online business is very big as it is not limited by physical space.

OVO director Johnny Widodo agrees. “The sky is the limit for growth for startups,” he said. With no geographical boundaries and a network of kitchens, he adds, Kulina and other startups in catering services can produce an unlimited number of catering package each day, even double output if word of mouth provides a rush of new customers every day. “Just imagine if you have a brick and mortar resto, you have to build a new outlet if the capacity is already full,” he says.

 

But Kulina’s success is not guaranteed. Some startups fail to grow because of many reasons. FoodPanda.com, a startup with a similar operation, closed its operation in Indonesia. There are plenty of other examples, such as personal assistant services YessBoss and HaloDiana, that have been forced to fold.

Online shopping outlet Rakuten failed to grow due to a failure of strategy. FoodPanda is said to have closed its operation because of local ‘disrupters’ like Go-Jek and Grab squeezing them out of the market.

Andy believes that compared to his competitors like FoodPanda or Go-Food, Kulina’s business is distinct. “Some of the several key differences are that we control the menu design and quality - even though we don’t operate our own kitchen - and we use artificial intelligence to distribute and match orders between customers and kitchens. We are not just delivering food.”

This, says Andy, enables Kulina to set a very affordable price from Rp20,000 for a box of good quality, restaurant-grade food. That includes the delivery cost for all regions of Jakarta. “Currently, we’re delivering some thousands of meals daily and growing quite fast. And we’re doing this with a positive healthy margin,” he states.

At the moment 50% of new customers come from referrals from existing customers. There is good retention of customers, indicating their level of satisfaction. “Those are the factors that contribute to our growth, so numbers and transactions are essential for us.” Caterers, customers and suppliers form an ecosystem that Andy believes will drive the company to the next level.

He also understands the factors unique to Jakarta that could slow growth, not least traffic problems. In some cases, lack of training for suppliers has led to missed orders and sub-standard food, making customers unhappy.

Last year Kulina raised its horizons to form deals with caterers including the late Bondan Winarno’s Menu Nusantara. The experiment didn’t work too well. “We weren’t focused on one product and the quality of food suffered with some delays in delivery,” adds Andy. So now Kulina is back to basics with standard dishes and prices. It’s the mass market that works, he has discovered.

 
MORE STORIES