Indonesia duo takes 80-unit Texas Chicken deal
Texas Chicken will get a big push in Indonesia from franchise group PT QSR and its CEO Kamal Y.P. Tan.
More of the same. It’s a phrase that often carries negative connotations, but for Kamal Y.P. Tan and Jaya J.B. Tan that’s exactly what they’re planning as they expand Texas Chicken in an Indonesia market that already has a long history with the brand.
Indonesia has the highest number of Texas Chicken locations in the Asian market—60, with the first restaurants opening in 1985—and that established presence is exactly what Y.P. Tan expects to capitalize on.
“Texas Chicken, it’s been there for awhile,” says Y.P. Tan from his office in the Malaysian city of Petaling Jaya. “It’s something that’s very easy for people to recognize, so that’s an opportunity for us.”
As president and CEO of PT Quick Service Restaurant, Y.P. Tan is leading the Texas Chicken initiative in Indonesia, where the group inked a deal to develop 80 restaurants. It’s slated to open stores in Jakarta, South Sumatra, Bengkulu, Banten, West Java and Lampung provinces in the next 10 years.
While Y.P. Tan expects to leverage Texas Chicken’s already strong brand reputation, he acknowledges they’ll also have to contend with “the main rival,” KFC, which has more than 600 outlets across the major cities of Indonesia. Product quality is the differentiator, Y.P. Tan believes, and it’s what he and PT QSR will continue to highlight in their marketing efforts.
“It’s crunchier, juicier than other competitors,” says Y.P. Tan. “Our product comes from a fresh chicken, it’s not from the freezer to the fryer. We always advertise fresh chicken.”
PT QSR also benefits from the experience of its corporate parent, Envictus International Holdings Limited, a Malaysian company with several food-focused subsidiaries, including a foodservice division that’s a franchisee of Texas Chicken in Malaysia. It also has a coffeehouse chain, San Francisco Coffee, along with several cafes under its Delicious Group brand.
“They’re already a formidable competitor of KFC in Malaysia,” notes Tony Moralejo, executive vice president of international business for Texas Chicken, of Envictus. “We’re very impressed with their ability to grow the brand.
CEO Kamal Y.P. Tan
“Their standards are top notch, their commitment to excellence is unbelievable,” continues Moralejo, adding the rate of expansion PT QSR has planned for Indonesia is “unprecedented.”
PT QSR also has the advantage of tapping into Envictus’ existing Trading and Frozen Food Division, which through food wholesaler Pok Brothers has supply chains already in place. That relationship is in line with an adjustment to Texas Chicken’s overall international strategy that minimizes the number of goods its franchisees import from the U.S. in favor of regional suppliers, a move aimed at improving profitability for those ‘zees.
The team in Indonesia will have to contend with a tight, ultra competitive real estate market, particularly in densely populated Jakarta, where Y.P. Tan says it’s “very difficult” to secure a tier one site.
“We are still the new kid on the block, so to speak, so to find the best location is difficult because McDonald’s, Burger King, KFC, all have so many stores,” says Y.P. Tan.
His solution: “Pay a higher rental price and be very patient because the best choice has to come with time.”
Menu adjustments are minimal, with the major difference being rice served with the fried chicken instead of French fries. Moralejo also notes the spicy profile “has a higher heat index than what you’d find in the U.S.”
The agreement with PT QSR is part of an effort to reignite growth in Indonesia, where Moralejo says there’s exponential opportunities. The group joins PT Quick Serve Indonesia, which earlier this year signed its own franchise agreement to develop locations of the quick-service chicken chain, and longtime franchisee PT Cipta Selera Murni, which has those 60 existing restaurants.
“It was in the best interest of the brand” to bring in additional franchisees, explains Moralejo. “PT Cipta did a great job but had slowed development, so we wanted to bring in new franchisees to tap into the potential we see in Indonesia.”
Texas Chicken, the sister brand to Church’s Chicken outside the Americas, has retooled its international strategy over the past five years to focus on “high return, low risk market entries,” using its current markets as “beach heads” for future expansion. “Otherwise it’s like trying to hit a bull’s-eye without being able to see the dart board,” says Moralejo.
Franchisee candidates need to check the standard boxes but, points out Moralejo, the biggest indicator of a successful franchisee is “their commitment and passion for the brand.
“In the U.S. there’s a predictability that just isn’t the same in most global markets, so the franchisees has to be able to navigate roadblocks,” he continues. “It takes a lot more than money.”