Venturing Abroad, Moving Upscale
Born in Taiwan as a low-cost alternative, Dante Coffee has become a lavish indulgence in Indonesia and is taking on high-tech style in Kuwait. Dante is stepping out into the world.
Venturing Abroad, Moving UpscaleBy Yueh-lin Ma
From CommonWealth Magazine (vol. 510 )
Imad Alzahabe is a Kuwaiti businessman who runs a trading company dealing in information technology products. Every June he finds himself in Taiwan for Computex Taipei, Asia's biggest information technology exhibition. In the summer of 2010, however, he scored an unexpected bonus.
Strolling the streets of Taipei, Alzahabe found a profusion of coffee shops throughout the city. In addition to the American chain Starbucks, he found the name of another chain consistently popping up: Dante Coffee.
That got him thinking.
"A lot of foreign food and beverage brands have moved into Kuwait's shopping malls," he says. "Middle Easterners are not favorably disposed toward American brands, and European brands seemed just too far out of reach. Maybe this Asian brand could be a good avenue for business."
During 18 months of negotiations, Alzahabe visited Indonesia to inspect the business operations of the Dante chain in that country, which now numbers 18 outlets.
In March of this year, Alzahabe signed a franchise agreement with Dante to operate coffee shops in Kuwait and Turkey. He then sent his 26 year-old son, a four-year veteran of the U.S. food and beverage industry, to Taiwan for a two-week training course.
At year's end, Alzahabe will open his first two Dante outlets in Kuwait.
"The ambiance and design of the coffee shops will come from Taipei," Alzahabe says. "But in terms of the furnishings, I'll also add some decorations with LED lights, to make them high-tech, fashionable coffee shops," he continues, in a nod to his primary IT products business.
Founded 19 years ago, Dante now boasts 126 outlets islandwide and expects operating revenue in excess of NT$1 billion this year. The Kuwaiti incarnation of the local coffee shop chain will add a touch of high-tech flavor. In Indonesia, the chain has shed its low-cost image and made the leap to refined indulgence.
At the main entrance to one of Jakarta's high-end shopping malls, an 800 square meter Dante outlet sits directly across from a tiny Starbucks storefront.
Indonesian schoolkids line up with their parents' debit cards to order things like a cup of the locally popular, deep green chocolate-avocado juice, which will set you back 35,000 rupiah (about NT$120). In a country where the per capita income is less than one-third of Taiwan's, it is something of an extravagance.
Hengky Wijaya, Dante's agent in Indonesia, was originally a trading company dealing in foodstuffs, condiments and spices.
He traveled across Asia, delving into the region's retail consumer food and beverage market in search of a marketable brand. In 2005, he came across the coffee flavors developed by Dante and decided to secure a franchise agreement to bring the raw materials for the Taiwanese beverages to Indonesia while locally developing food items himself.
Taking Orders in 10 Seconds
Wijaya goes on annual inspection tours of Taiwan, and this year's was particularly exciting. That's because he found that Dante had sunk NT$7 million into upgrading their electronic point of sale management system to offer customers a smartphone app ordering service.
Combined with a stored-value payment mechanism, the smartphone ordering system means customers need only take their smartphone to the express checkout line and have their QR code scanned. An ordering process that once took an average of 70 seconds can now be completed in less than 10.
"This will definitely come as a surprise to middle-class and younger customers in Jakarta," Wijaya says with delight.
What's more, last year Dante invested over NT$100 million in a 2,640 square meter commercial bakery facility that began operations this past May, a move that also caught Wijaya's eye. He hopes to secure the recipes and authorization for the Taiwan-developed French-style desserts in Jakarta.
Dante's dedication to development and investment in providing innovative new services is a big reason why Wijaya is willing to sink big bucks into crafting a high-end image for Dante in Jakarta.
"Our international chain strategy has been a gradual one. We're selecting partners carefully. The pace has been unhurried," says Roger Hsu, Dante's vice president for overseas markets. "Right now the ratio of our overseas revenue is not too high, but what's most important are the effects of brand extension."
Now the number two coffee shop chain in Taiwan, Dante has mastered the secrets of not only retail outlet operations, but also franchising.
"Dante has now entered a new developmental phase, presiding over a chain of more than 100 outlets and its 'brand building' endeavors have also been comprehensive," observes Lee Pei-fen, secretary general of the Association of Service Industries, Taiwan.
While Dante has three or four different shop layouts to match different kinds of commercial districts, it keeps a tight rein on everything related to brand image, from the smallest promotional materials to the large issues of exterior look and interior design. Outlets are stylistically consistent, while flavors are localized.
"They've already taken the first steady steps toward going global," Lee says.
In September, Dante VP Roger Hsu traveled to Turkey to take part in a franchising exhibition there, where he discovered a new franchising model.
"The franchisee operates only the external sales area while the parent company retains control of the internals like raw materials provision and kitchen staff," Hsu says. "This greatly reduces the burden on franchisees."
Hsu is constantly thinking of ways to achieve standardization of various operations while giving franchisees greater flexibility and operating room.
What seemed at first blush to be the gradual overseas expansion of a low-cost local Taiwanese coffee shop brand is in fact the manifestation of a long held ambition – to take the example of Starbucks and run with it.
Translated from the Chinese by Brian Kennedy