Kopi Kenangan’s return to profits after a year in the red

Kopi Kenangan, the Indonesian coffee tech startup, is profitable again on an operating level at the end of 2021 after its earnings slipped in the red in 2020. In Tech in Asia’s previous coverage of its 2019 financials, the company said that it was likely to swing into losses in 2020 after two years of operating in the black.

“As of Q4 2021, we are already EBITDA profitable again. We do expect to maintain this trend. But we need to get our EBITDA to where it was before [Covid-19] in the next one or two quarters [in 2022],” Edward Tirtanata, CEO and co-founder of Kopi Kenangan, tells Tech in Asia without disclosing the details.

Kopi Kenangan outlet at Padang Merdeka BEZ Gading Serpong in Indonesia / Photo credit: Kopi Kenangan

As the country opens up, he expects the company to go back to a higher profitability level in the next one or two quarters, similar to its figures prior to the pandemic.

The coffee chain says its shift in strategy to open more stores in residential areas during the pandemic has worked. These stores have helped it climb back to operating profitability, while its locations in the country’s central business districts (CBDs) have been a bit “erratic” in terms of revenue due to companies making a shift toward working from home.

Kopi Kenangan now plans to continue its expansion to become the largest coffee chain in Indonesia within the year. It also aims to bring the business to other countries in Southeast Asia in 2022. The company also plans to go public, but couldn’t disclose the exact timeline for the IPO.

A caffeine booster for revenue

Tirtanata says that the company has been recording monthly revenues for the year that are even higher than its pre-pandemic numbers. It is currently on track to record a 2x growth in monthly revenue in comparison to 2019. In fact, it expects to see a 3x monthly revenue growth for the month of May compared to the same period two years prior.

The company forecasts a sales growth of 360% between Q4 2020 and Q4 2022. However, it didn’t disclose the details.

Even in 2020, despite the impact of Covid-19, Kopi Kenangan managed to post an over 70% growth in its net revenue to 536.7 billion rupiah (US$36.5 million), according to its filings. However, the company swung to an operating loss of 232.3 billion rupiah (about US$15.8 million) for that year.

The company attributes the rise in revenue growth in 2021 and 2022 to the expansion of its stores. The company grew its store count by 2.5x to 566 outlets across 46 cities in 2021 from 226 stores in 2019. However, this is over 40% lower than the 800 stores it had initially planned to hit by the end of 2021, as its expansion was slowed down in the wake of the pandemic.

The coffee startup is now looking to double its network to over 1,000 branches by 2022 to become the largest coffee chain in Indonesia. It has already grown its store count to 642 as of February. Currently, it is second to Janji Jiwa, which has over 1,000 stores.

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