CHAPTER I BACKGROUND

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1 CHAPTER I BACKGROUND 1.1. Problem Definition Indonesia is one of the developing countries that already officially open its economy market into global. This could be seen as a challenge for Indonesian local business or could also be an opportunity for Indonesian economy to grow. In 2008, when the recession affected almost all of the world economy including the United State, Indonesia as the emerging country stood still with its stable economic condition. This was because Indonesia has a very consumptive market in daily need and lifestyle segment. Indonesian economy condition grows stable as the consumption still in high state. (Strategic Asian, 2009) Based on McKinsey reported in 2012, Indonesia as the 16th largest economy in the world has currently 45 million members of the consuming class, with 53% from the population in the cities producing 74% of its GDP. It include its 55 millions skilled workers contribute to Indonesia economy grow. Thus produce USD 0.5 trillion markets opportunity in consumer services, agriculture and fisheries, resources and education. The demand in consuming creates the increasing in business field and opportunity in job. 1

2 2 Figure 1.1. Indonesia GDP Contribution And Inflation Rate (Mckinsey, 2012) McKinsey 2012 predicted, in 2030, Indonesia would grow to become the 7th largest economy in the world. This record is followed by its growth of 135 million members of the consuming class, 113 million skilled workers, and producing USD 1.8 trillion market opportunity. In the natural resources section, Indonesia has the highest stock of raw materials. These raw materials are the supplies for the industry, such as agriculture, livestock, minerals, and other non-food supplies. The highest supply in Indonesia is the agricultures section, as the main ingredient for food and beverages. (BPS, 2013)

3 3 Based on the BPS (Badan Pusat Statistik) 2013 or Statistic Center of Indonesia data, the demand for food consumption is in the highest rather than the non-food demand. The average expenditure for food is 50.66% alone and the other expenditure including place to stay, clothes and leisure is 49.34%. This record is excluded for the spending for saving and investment. Figure 1.2. Average Indonesia Expenditure Per Capita Percentage (BPS, 2013) Indonesian food and beverage sector is expected to grow larger. McKinsey forecast food and beverage spending would grow from USD 73 billion to almost triple to USD 194 billion in by With compounded annual growth 5.2%, food and beverage in Indonesia become the second largest expenditure after saving and investment.

4 4 The data of consuming preferences by BPS shows that in 2013 the average percentage of Indonesian people s household expend for food is 50.66%, also higher than non-food expenditure. The consuming for processed food is 54% in calories and protein consumption, a little bit higher than spending in non-processed food. The higher consumption preference in processed food is also indicated that people Indonesia also prefer to eat in the restaurant rather than cooking at home and also the need of take-away snack restaurant and efficient way to eat. (BPS, 2013) Figure 1.3. Indonesia Consuming Preference (BPS, 2013) In the job statistic data by BPS, restaurant with trade and accommodation section hire 24.8 million employees, 21.75% from total work age employee contribution and growing CAGR 3.9% from This is the indication of the

5 5 growing sector of restaurant business in Indonesia. The sector is contributing 14.33% from total GDP of Indonesia. Figure 1.4. Indonesia Employment Number (BPS, 2013) Figure 1.5. GDP Structure Based on Business Field (BPS, 2014) Regarding in McKinsey 2012, Indonesia has a very great potential for food and beverage business. It is a challenge for Indonesian people not to lose in the competition especially with the foreign market players. Indonesian people have more

6 6 benefit of knowing what the market insight and demand. Many take-away snack restaurants are offering their own special culinary taste and authentic to gain customer interest. Some of take-away snack restaurant has concept of traditional, modern, cultural, or even innovation to create attract the consumers. Figure 1.6. Indonesia s Food Services Sector (Euromonitor, 2013) Based on Euromonitor (2013), Indonesia the Indonesian Food Services Sector in Kiosk predicts to be growing with CAGR 1. 1%. In addition, Indonesia food services classified in competitive landscape as 4 types, which are Full Service Restaurant, Quick Service Restaurants, Street Stall or Kiosk and Café or bar. Therefore, the potential in developing kiosk of take-away snack restaurant services market will be generating. According to Euromonitor 2013, the cuisine that familiar with Indonesian people is Chinese Asian cuisine. Wonton originated from Northern China, made from flour with stuffing the ingredients, and serves as fry or soup. In several state, wonton

7 7 serves with different ingredients, taste, shape, and cooking styles. Wonton was recorded in Compendium of Materia Medica as the medicinal dish because the ingredients inside wonton are from the medicine herb. (Cultural China, 2014) Therefore, wonton can be exercises as customized snack with different ingredients, spice, sauce, taste, shape and cooking styles in Indonesia Urgency According to the background and opportunity described, Indonesia has a very large potential market in food & beverage industry, especially in restaurant business. Therefore, in this fast growing economy, it is needed to develop new business model innovation especially in the take-away snack restaurant. This opportunity has to be taken first by Indonesian businessman in order to compete by the upcoming globalization. Kiosk mall and customized business model products are the main concept to create impact for the consumer need. Creating a new innovative take-away snack restaurant could become the competitive advantage to compete in Indonesia or to expand globally and increase Indonesian economic condition. Why is it urgent? According to Mckinsey 2012, the restaurant business growth keeps accumulative, and the demand of consuming increase, stated that the customized product in take-away snack restaurant concept is required to develop, in order to gain customer.

8 Benefits This Thesis will bring benefits and giving information for the new opportunity in creating new business model using the customized take-away snack and sharing concept of Business Model Canvas framework. Binus Business School can become the institute that introduce and developing new concept of Business Model Canvas framework by the authors of thesis. Binus Business School can evaluate and exercise the thesis as the potential journal and academy case. In addition, it can support the students in study and can be as the indicator of developing and generating Business Model Canvas framework. This thesis assess in developing and creating the new company with new business model canvas to create a sustainable and profitable in food business by finding the most effective & efficient form of business strategy in Indonesia on the recent time and situation. For the Authors, the thesis is learning purposes to augment entrepreneurs knowledge in creating a business model, functioning as a referral for other business model, and as one of Magister Management s graduation requirement For the society, the business model can create opportunities in business field, career, economic growth, fulfilling need and potential chance candidates to develop and to create this business.

9 Scope of the Study The thesis shall only designing and planning the best business model strategy suitable for starting up Wonton snack in Indonesia. The business model will set up operational planning, management planning, financial planning and marketing planning for starting up the company. Develop the effective and efficient business model that can be implement and bring benefits to community. Wonton is known, as the snack that can fulfill one of the food demands in community, especially can be implement as eat-going or dine-in style. Customized wonton product is giving the new experiences for customer to eat with their own choice. Therefore, the main actor in this study is to create customized wonton with self-services and fast serving services concept business Business idea Start-up the new system of specialize wonton take-away snack restaurant that provide the customize product of wonton with the fresh and fast system to the customer who have a tight schedule but want to try the new and innovation flavors and taste of wonton in food lifestyle. Wonton Snack providing the customization in content of meat, the taste, and the various sauce, combine with the fastest system to make the Wonton can be easily consume and take-away.

10 10 While other than customize food product, creating the plan and strategy operation system with analyzing the flow of mechanisms can develop the efficient and effective way in delivering the demand into the fulfilling the need of customer Overview of the Thesis The thesis is about how to setting up a food business industry of wonton dumpling as a customized snack. What is the best formula & strategy suitable for starting up a business model for take away snack business in Indonesia. The thesis consist in define the background, problem definitions, the opportunity in food industry business, the business ideas. In developing the business ideas, analyze market and industry support the problem and generate market strategy and trends. By having the market analyze, in order to develop the business idea, Wantton, the value proposition is required to construct and support the uniqueness to enter the food industry of take-away snack restaurant services. After gaining the value proposition, this thesis develops the elaboration of Business Model Canvas. The elaboration of Business Model Canvas contains the customer segments, customer relationship, channels, key partnership, key activity, key sources, cost structure, and revenue stream.

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