This article was originally published in Chinese on Momentum Works’s WeChat account, translated into English by the Momentum Works team. The author from the FoodBud team, whom have extensive experience on new age f&b franchises. 

There have speculations about this Jet Li-incubated new coffee chain for more than a year – and finally Tomoro coffee in unveiled to the public.

Jet Li, the J&T Founder, and his J&T / Oppo & Vivo ecosystem, have strong offline operations capabilities. We discussed about this in our Who is J&T report last yer. The supply chain of coffee is relatively straight forward compared to many other consumer goods, and Indonesia is a large coffee market.

You can also refer to our recently released Bubble Tea in Southeast Asia report as the two industries have a lot in common.

A slight disclaimer though – we do not agree with the author’s notion that all three existing major venture-backed chains (Kopi Kenangan, Fore Coffee, Flash Coffee) are doing well.

On 9 August, coffee chain Tomoro Coffee opened their first store in Jakarta, Indonesia. It has been much speculated that the brand is incubated by J&T ecosystem, and aimed at giving more business opportunities to old friends in J&T and Oppo/Vivo franchise ecosystem.

As of now, Tomoro Coffee has opened shops in Landmark Pluit and Pik Avenue in north Jakarta. (Worth noting that Landmark Pluit is where J&T, Oppo and Vivo offices are located). Another store, in the neighbouring Bekasi city, will open soon.

Jet Li’s team in the past has incubated a cosmetics and skincare brand – Y.O.U. – in Southeast Asia. J&T Express has clarified that Tomoro Coffee is not linked to it.

However, on the first day of opening, J&T Express founder, former Oppo Indonesia CEO Jet Li sent a personal congratulatory message, in which he announced the opening promotions – limited redemption of free coffee daily from 9 to 15 August.

On Tomoro Coffee’s app, we can see that each cup of Latte is sold at Rp22k (or US$1.5), Americano at Rp15k (US$1). Non-coffee drinks and snacks are on sale as well.

Industry experts told us that if Tomoro Coffee uses coffee beans sourced in Indonesia, this pricing might be a problem. The reason is that Tomoro Coffee might need to build its own coffee bean standard, integrate with the coffee roasters in the country to achieve stable supply chain. This is especially when Tomoro wants to expand fast through franchise.

Aggressive expansion targets

Although it has just opened (perhaps behind schedule), Tomoro has a big dream – to become Southeast Asia’s largest coffee chain.

They plan to have, by 1 October 2023, 500 stores each in Vietnam, Malaysia, Thailand and the Philippines, 100 in Cambodia, 2000 in Indonesia, and 50 in Singapore – or a total of 4150.

This is a scarily aggressive expansion target. Mixue (a brand featured as case study in Momentum Works’s Bubble Tea in Southeast Asia report) has more than 20,000 stores in China, and Xinyunka, another major chain in China, will have about 5000 stores by next year. Tomoro, which really starts from zero, will need a solid foundation to achieve its aggressive target, and make sustainable cashflow to its franchisees.

More Chinese players entering Southeast Asia

There are currently three major venture backed coffee chains doing well in Indonesia: Kopi Kenangan, Fore Coffee and Flash Coffee. Currently, Tomoro Coffee is aggressively hiring, especially those with years of F&B experiences.

Almost all these venture backed coffee chains in Southeast Asia have to a certain extent borrowed Luck Coffee’s model, although they differ in aspects such as online ordering and digital payment, due to infrastructure issues. Tomoro will need to secure the strategic heights at this early stage of market development in order to flourish.

Not only coffee, the tea market in Southeast Asia is heating up as well. Mixue (mentioned above) already has more than 1000 stores across Southeast Asia. Many other chains, when achieving a certain level of density and scale, will probably want to expand into Southeast Asia soon as well. The franchise and supply chain ecosystems pioneered by the likes of Mixue will be borrowed, or at least studied, during this process.

The competition is only going to further intensify.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].