We recently sat down with Julian Koh, owner of J&D Espresso Café, to share his personal experiences of running a successful café business. Here’s a short transcript of how our interview went.
N.E.W.: First of all, thanks again for agreeing to do this interview. Let’s start with short introduction of yourself and your background. How did J&D Espresso begin?
Julian: I started J&D Espresso in 2010, under a different name in Mont Kiara. It was called Ristretto. It was a new unit under a condo. The business idea was to feed off the condo residents. It was not obvious to other foot traffic, not like a shopping mall.
How did that decision work out for J&D?
It was good in a sense that rental was cheap. When you start-up, you would want to have cheap rental. And I thought that Mont Kiara, being an expat area, should buy into my products, because at that time in 2010, there were very few independent cafés. It was all Starbucks, Coffee Bean, Gloria Jeans, all the franchise cafés. Not many locals knew all the different types of coffee. So, yeah, decided to start off with the expats.
However, business was… not too good. I mean, business was just so-so. We spent very little, so I don’t think we lost too much. After our two-year tenancy had ended, we decided to move to the current location in Bandar Utama.
What was the key lesson that you took away from Mont Kiara?
I think my first judgement call was wrong. I thought that expats would buy into it. Malaysian expats have a good package, in terms of their accommodation, their children’s schooling, but they don’t really have that much disposable income. I think a lot of people still think that they do, but they don’t. (Laughs.)
(Laughs) I’m one of those people.
Yeah, you might think that because for us to pay for similar accommodations, it would be a lot of money. But they (the expats) don’t pay for the accommodation, their companies pay on their behalf. It’s already paid for, before they step foot into Malaysia.
What was the process like looking for a new location, and how did you decide on your current location?
Again, I won’t say that I’m too smart in this or whatever, it’s just that I always happen to drive past there, and I felt that a lot of traffic goes through there. You know, Malaysians don’t like to walk.
So parking is very important.
Yes, and the current location is just by the main road, so it’s easy for Malaysians to stop the car and stay for as short or as long as they want to.
Great. I’m going to backtrack a little bit. What inspired you to start a café business?
Like everyone else, it was the so-called “passion”. I studied and worked in Australia. I studied hospitality and worked in hotels, and I found that my interest was in coffee. So I went to work in cafés instead, to follow my interest. I like the vibe of cafés. They are more casual compared to hotels, which are more professional. Just a different market.
And I think the café market and coffee culture in Australia are huge. Do you see Malaysians trending towards this culture?
Yeah, I think we are trending very quickly, or even almost there. Malaysia has so many cafés now. I’m surprised that when I drive out to non-city areas like Balakong or Port Dickson I can find a neighbourhood café there. So I think at least in this aspect we are quite close to Australia, where there is a neighbourhood café in every so-called “suburb”. To touch on that point of success, I won’t call it the only success factor, but it’s just about getting that neighbourhood community to pick your café as their favorite. And that is your base customer that pays your expenses and keeps you sustainable.
Taking J&D as an example, your neighbourhood would be the Bandar Utama, Tropicana, Ara Damansara community. What were some of the things you did to attract those people?
I was a bit old school. I printed out cards and went house-to-house to put them in the letterboxes. I’m not sure how much that worked, but those were the early days in 2012. That was before you could sponsor a post on Facebook, or at least before sponsoring on Facebook sort of took off in Malaysia. We built our customer base slowly.
Like our first menu wasn’t too successful as well. It was too Asian. We had rice and noodles, again thinking that that’s what Malaysians want. But actually, they didn’t. Because if they wanted that they could easily go to a coffee shop, so I decided to get back to where we’re supposed to be, which is the coffee, and the food has to match the coffee. For example you can’t be eating super spicy food like Tom Yum, or the coffee will taste funny, but nothing too complicated as well. Something like simple casual Western food that can match with the coffee.
So around 2013 when we released the new menu, business started to really pick up.
Besides the menu, what other challenges did you face setting up the business?
Human resource for small business in Malaysia is always a problem. We definitely lost some money there. There are many agencies out there who claim to be able to supply you with workers, so this is something that new business owners have to be careful of.
Over the years, we have employed both local and foreign workers. At one point, we employed 10 to 15 local workers, so Malaysians made up half our team. But the turnover for Malaysians is high. I mean I’m exaggerating this, but Malaysians will go with anyone who offers them RM50 more or promises slightly better conditions. So retaining Malaysian workers is tough. Hiring foreign workers is getting more expensive as well with the foreign worker levies, so these are the associated business costs.
What unexpected challenges did you encounter running your café?
Oh, we’re learning everyday. For example, we buy good equipment to cook our food, to do it professionally. But maintaining them properly was something we had to learn the hard way. I’m not a chef myself, so I didn’t know that ovens had to be cleaned a certain way, like something silly such as taking out the filter and cleaning it every day. Maybe a lot of chefs won’t know this either (laughs), because we’re talking about a RM50,000 oven and not all kitchens have a RM50,000 oven. Everything is imported right, so the parts have to be imported. When they add up they will cost you.
How much capital do you need to start a café business?
Well if you want to start cheap, like how I started in Mont Kiara, RM100,000 will do. But if you want to renovate it decently, with equipment and other items, then you’ll need about RM500,000.
Investing in the right equipment is important. We did buy a lot of unreliable equipment that gave up along the way, which caused us more problems. They will hit you during the public holidays when you need them the most, and this leads to losses as well. So you will need decent equipment, or they will let you down at the worst possible time.
What advice would you give to other young entrepreneurs who are thinking of starting their own café business one day?
Firstly, they should try working in the industry (to get to know it). It doesn’t have to be a café, because the coffee business is very diverse. For example, they don’t necessarily have to open a shop. They can work as a coffee supplier, or even start a farm.
Right, working in different parts of the chain.
Yeah, different parts of the chain, and that could be so much better for them based on the financial amount they would want to invest or maybe closer to their expertise. I worked for 3 years before starting my café, but that’s why I made a lot of mistakes! (Both laughs.) Let your bosses make the mistakes and you can learn from them.
Timing is also very important. When I started with J&D in Bandar Utama, I believed it was a good time to start because it was just before all the cafés started popping up.
So in your opinion, is it easier or more difficult to start a café business now?
I think the challenges are different now (not necessarily easier or more difficult). When I started, people didn’t even know what was a flat white, so I had to educate them. That was the challenge back then. The challenge now is saturation. Even though everyone knows about cafés and is willing to try one as soon as a new café opens, you really have to be top-notch. You have to impress immediately, in terms of your food, environment, service, everything. You have to go in totally ready. If you let them down, they will take their money elsewhere because there are so many competitors.
If you let them down at the beginning, will they likely come back?
No. Not at this time, because we are compressed. I mean, GDP looks good but on the ground, small businesses are complaining that business is slow. So, you only have one chance.
In terms of marketing, social media is very effective, but again, everyone is on social media. So you just have to innovate. You have to come up with something new. For new businesses, ROI from social media is high because 10 new customers are 10 new customers, whereas for us, 10 new customers may be just 1% of our total customers.
Thanks Julian. Any final advice you would like to share with other young entrepreneurs before we end the interview?
Come to the workshop! (Laughs.)
(Laughs.) Thanks for that, appreciate it.
Learn more from café owners in person at the New Entrepreneurs Workshop: Café, Kuala Lumpur, 12—13 May 2018. Register before 9 April 2018 for early-bird rates, limited seats available.
The Café: www.jnd.com.my
Map Link: goo.gl/maps/jetkVQusXcv
Opeining Hours: Monday to Sunday, 9am to 6pm
Address: Lebuh Bandar Utama, Bandar Utama, 47800 Petaling Jaya, Selangor