Retail in Asia

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Indonesian beverage upstart Hey!Kafe eyes 300 store openings by 2022

Hey! Kafe, the Indonesia-based digitally-native beverage upstart, has successfully opened 60 stores in Indonesia since its inception in June 2020 and is set to expand to 300 stores by the end of 2022.

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Hey! Kafe is the brainchild of Edward Djaja, the founder of Seven Retail, which houses several retail brands such as Golden Lamian, Indonesia’s Chinese Fast-Casual Chain with over 70 stores in Indonesia since its inception in 2017.

“Here in Hey! Kafe, our north star metric is same-store sales growth, which enables the brand to achieve stellar unit economics. We are proud to say that our strategy has resulted in a payback period of under 12 months, which is a key milestone for us to scale rapidly in a sustainable manner in the coming years,” said Edward.

To achieve this north star metric, Hey! Kafe continuously invests in branding and new product development. By using an iterative and scientific product development process, Hey! Kafe is able to test over 20 product concepts each month. This has led to a slew of unique and best-selling menu items, such as the Hey-Shake Series!, which includes Strawberry Heaven Hey-Shake and Choco-Cashew Hey-Shake, among others.

With its unique design and positioning, Hey! Kafe is targeting young and hip millennials, the largest population by age in Indonesia, as the main market. Offering the wide range of beverages with an affordable price range, Hey! Kafe is popular among millennials, with over 12,000 cups of beverages sold every day.

The brand’s rapid expansion is supported by an asset-light model. Majority of the brand’s outlets comprise of compact booths that minimise capital expenditure and facilitate Grab & Go delivery service. Around 70 percent of the brand sales comprise online delivery orders. The brand also offers a partnership model, akin to the likes of leading convenience store chains in Indonesia.

The company’s business model has caught the eye of venture investors, such as Trihill Capital, who has backed the company in the seed round. By maintaining an asset-light model, the company hopes to focus resources on increasing the value of the brand and further investments in technology.

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Plans are underway to launch an in-house mobile application by beginning 2022, in order to provide their 350,000 monthly customers with a more personalised and seamless experience.