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Friday, 21 April 2017

Brewing a strong business model

Ng says The Morning After Espresso Bar cart (in the background) is a proven model that is in operation at Mercu Summer Suites, KL.

Ng says The Morning After Espresso Bar cart (in the background) is a proven model that is in operation at Mercu Summer Suites, KL.

STARTING up and maintaining a retail business in a competitive industry is not easy, and even harder if it is a brick-and-mortar trade, considering the high costs involved.

Yet, there are still ways to be your own boss in a profitable business, provided you work hard enough, of course.

One such opportunity is by purchasing brand licences, which allows you to instantly tap into the company’s existing production and distribution channels.

One segment which you can venture into is the gourmet coffee industry, seeing how cafes appear to be the boon of the millennial generation, not only for a good cup of coffee, but also to catch up and have social media-worthy moments.

Cafe The Morning After, established in 2014 with seven outlets and counting, is extending its cafe doors and offering its business licensing model for a licensing fee of RM120,000.

The Morning After is part of Rhombus Connexion, a visionary platform and sustainable ecosystem for F&B entrepreneurs that nurtures growth and accelerates business expansion. It owns over 19 brands and more than 40 outlets across four countries.

Dr Darren Ng is the co-founder and lead partner for Rhombus Connexion Restaurants and Cafes (Western) division, and founder of The Morning After chain.

In case you were wondering, The Morning After was not named after the pill; but rather, a metaphor to symbolise a new beginning as each day arrives.

The licensing is a three-plus-two-year agreement whereby RM120,000 is paid for the first three years, with additional RM20,000 to extend for two years.

There are two ways of running the business; either be an operator licensee which you invest and operate the business yourself, or as an investor licensee where you employ someone else to work for you.

Through this licensing model, the licensee will be operating from a cart called Espresso Bar, instead of the cafe itself.

The idea is to provide an avenue for young entrepreneurs to invest and start their own business, says Ng.

“They may have limited budget and opening an outlet would mean spending about RM500,000.

“With the Espresso Bar, it is worth a gamble as everything is provided to you.

“It’s also based on a proven model that’s in operation at Mercu Summer Suites, KL.

“It’s a relatively small investment, but you will reap returns in a short period of time – an average of 14 months,” he explains, saying entrepreneurs should first start small.

The licensing model does not come empty-handed as licensees will be equipped with the entire set-up of the cart, from equipment, tables and chairs to opening stock, food and beverages.

A five-day training on how to brew coffee, decorate pastries, check inventory, gauge orders for the next day as well as connect with customers will also be conducted by the brand’s in-house academy.

“Licensees will need to manage their own finances, but we will help them track their cost of goods sold and correct any irregularities,” Ng reveals.

The cart is proprietary-owned, designed by Ng and his team to provide customers the feeling similar to buying pastries off the streets of London.

The beauty of it, he highlights, is that it does not require a water inlet or outlet, and it works on a single plug point so it can be installed anywhere.

Its three panels, when open, measure 2.13m in the middle, and 1.07m on each side, which takes up about 100sq ft of space comfortably.

“The business model is to keep the rental cost low because it occupies a small space, and there is no provision needed for the landlord to charge a high rent.

“To close the cart, you just need one padlock. At the end of the day, if your business doesn’t work out, you can pack up and wheel it away. There is no relocation, reinstating or reinstalling costs,” he points out.

It is also convenient since this is a one-man operative cart whereby everything sold is grab-and-go; cleaning is minimised.

And if it really gets busy, you can always get someone to help you out, he adds.

Additionally, The Morning After will help entrepreneurs with the marketing and advertising solutions without compromising the guidelines of the corporate identity.

“It’s hard starting a business, especially without experience.

“This is a small business, so we want to make it as simple as possible for them,” explains Ng, on the business format.

On the subject of quality control, he stresses that they have high standards when it comes to roasting the coffee beans and preparing pastries.

The pastries are made and delivered daily from their centralised kitchen in Sungai Buloh, while the coffee beans are roasted at the central kitchen and delivered to the outlets.

Ng says he has very high expectations of the design and concept of the food.

“The pastries were inspired by the French, who are known for their bread and pastries.

“I want to maintain the same quality of look, feel and taste, and will not allow it to drop.

“Also, there will be strict regulations as our licensees are not allowed to sell anything else except our food,” he adds.

Interestingly, what sets The Morning After apart is that it does not specialise in coffee.

“The coffee market here is fragmented. We have gourmet coffee, three-in-one, and then, there’s the local kopitiam. In other parts of the world, there’s only one type of coffee.

“This becomes an obstacle when you make yourself a specialised coffee cafe.

“To sustain the business, the emphasis is on food. One cannot drink that much coffee in a day anyway.

“With pastries, customers can grab a few at one go. We try to make ours a type of comfort food, the kind that’s a convenient choice for people,” he shares.

Having experience in the F&B or retail industry is a plus point, as well as being financially steady.

From the sales that the licensee generates every month, Ng says 6% will be channelled to the licensor as royalty.

The success of a licensee is very important to us as they are the best form of advertisement, he opines.

“They are the testament of our success.

“We may not make money from one licensee, but if we have 100 carts out there, there’s where our money will come from.

“All we want to do is provide the cart operators with the support they need in order for them to grow. They flourish, we flourish too,” he concludes.

There are seven Espresso Bars that are due to open in the coming months.

Tags / Keywords: Central Region , The Morning After , coffee business , licensing , young entrepreneurs

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