Taste of Passion

1 month ago . 6 min read
MP
Marella Putri
Writer at Forbes Indonesia
Taste of Passion
Donny Pramono, founder and CEO of Sour Sally Group. Photograph courtesy of Sour Sally Group.

When founder and CEO of Sour Sally Group (SSG) Donny Pramono was told that his frozen yogurt business couldn’t be helped because its hype had faded, Donny didn’t want to accept that reason blindly. Instead, he tried to refine his understanding of the food and beverages (F&B) business to determine the underlying cause. His passion and persistence led his company to head multiple brands popular among young consumers today, with over 250 outlets and counting spread across the country.

Donny was pursuing his MBA in marketing at the University of La Verne in Los Angeles when he began to grow his love of frozen yogurt. The idea of starting its business in Indonesia crossed his mind, so after his graduation in summer 2007, he worked at a favorite frozen yogurt store for three months to learn the operations. He then went to Jakarta to build his own frozen yogurt brand.

Being his first business, Donny faced many challenges in the beginning. Aside from the fact that he had a lot to learn, Donny wasn’t familiar with Jakarta. His parents came from Sulawesi while Donny spent his time growing up in Surabaya, East Java. At the time, he hadn’t visited the capital city in the last nine years. Moreover, frozen yogurt wasn’t popular in Indonesia back then, so as the pioneer, he had to break through the market. Finally, in May 2008, Donny opened his first frozen yogurt store at Senayan City, named Sour Sally (PT Berjaya Sally Ceria).

Sour Sally quickly became popular. Donny says that one outlet could sell 700–1,000 cups a day back then, and it took only six months for the first store to reach its breakeven point. However, the hype didn’t last forever. Sales began to drop two years into the business, and by 2011 it had debt accumulated up to Rp 7 billion. Facing his first crisis, he started to question why his business had been going downhill.

“I discussed it with a lot of people, and they told me that that’s just how F&B business is once the trend dies down. Many of them said that, but I still don’t believe it,” says Donny.

He looked at other F&B businesses that have stayed for decades, such as McDonald’s, KFC, Starbucks, and local brands that sell fried rice and noodle. So he tried to gain a deeper understanding of the F&B business by attending seminars, reading books, and case studies, which eventually led him to learn three phases in it.

“The first phase is the trend or hype, which happened to Sour Sally in 2008. We had long queues and high sales, but once the hype faded, so did our sales. The second phase is the lifestyle or habit. F&B players will have a longer life-span when they reach this phase because their products are consumed as part of a lifestyle. We had our hard times for Sour Sally, but we managed to get on our feet again and reach the lifestyle phase. Nowadays, if people go to the mall and want to eat ice cream but healthier, they’ll go for frozen yogurt. We present benefits in our products,” Donny explains. Meanwhile, the third phase refers to the product becoming part of a culture.

Understanding these phases, Donny realized that he needed to give people a strong reason to consume Sour Sally continuously. He revitalized the brand and launched a new flavor called black sakura—the world’s first black-colored frozen yogurt from charcoal with cherry blossom-induced flavor. It also promotes the benefits of detoxification and skin health. Sour Sally gained its traction back again among its target market—middle to high-income young consumers who follow a healthy lifestyle. Today, Sour Sally has 66 outlets in Indonesia, each selling 200–500 cups per day, depending on the location and the day.

Since then, Donny’s vision for Sour Sally became clearer: to be Indonesia’s largest F&B quick service retail (QSR) company. QSR is an F&B business concept that requires only a small space to operate and prioritizes takeouts instead of dine-in meals. Aiming to be ‘the largest’ in terms of the number of brands and outlets, Donny created more brands under the wings of SSG: cheese tea Gulu Gulu in 2017 and the first on-demand integrated technology coffee fi:ka Kedai Kafi in 2018. He also launched a joint-venture brand Wowteg in 2019. Every brand is available for franchises with a price tag ranging from Rp 100 million–Rp 1 billion, including for outlet investment, with 3%–6% of royalty fees depending on the brand.

By August, SSG had 250 outlets in total—60% are franchised, and the rest is the group’s own. The number still excludes 200 sold franchise licenses that have yet to open. Donny claims that last year SSG sold nearly 10 million cups worth hundreds of billions of Rupiah, and the revenue grew by 2.5 times year-on-year. More than half of the total revenue came from Gulu Gulu, whose number of outlets has doubled that of Sour Sally.

Like many other retail outlets, SSG couldn’t deny the impact of the COVID-19 pandemic. Donny says that in April, only 100 outlets were able to operate, causing SSG’s sales to drop by 50%-70% depending on the cities. The group put everything into survival mode, maximized operational efficiency, and delayed projects. Donny himself didn’t take his pay for three months. Although the condition improved following easing restrictions, Donny says that the sales were still 50% off from normal conditions. On the other hand, as online delivery became the alternative to shop, he saw orders tripled, now contributing up to 90% to the revenue.

Donny is taking SSG to turn into a more digitalized business. The group is creating an app for customers to do transactions, access loyalty programs, and apply as a franchisee. Soon, it is launching an online franchise business model. Upon signing up with less than Rp 2 million application fee, people can act as SSG online marketer and get a 10% of revenue sharing.

Donny also met many F&B entrepreneurs who face difficulties in scaling their business up and ask to collaborate with him. Aligning their request with SSG’s vision, Donny created a subsidiary called Selera Kapital in October 2019. Selera Kapital focuses on building joint ventures (JV) to help entrepreneurs scale up their brands to 50 outlets. One of the already established JVs is Wowteg, which had sold 60 licenses when its launched in November 2019 and had eight outlets opened by August.

As an investment arm, Selera Kapital also makes strategic investments into tech startups that can be integrated to support the F&B business ecosystem. So far, it has funded several startups, namely cloud kitchen Yummy-Corp, ERP system ESB, food stall online platform Wahyoo, and esports management team EVOS Esports. Donny says that the investment ticket size ranges between $100,000 to $200,000.

“We plan to grow SSG bigger with a number of brands and stores, and through Selera Kapital. We want to be the largest F&B QSR in Indonesia by the time we file for IPO—where we target to have 15–20 brands under our wings. That would be three to five years from now,” says Donny.

MP
Written By
Marella Putri
Writer at Forbes Indonesia
Topics
Entrepreneurs