Would you spend 30 minutes or even two hours to be able to buy a piece of donut or even a dozen donuts, each with the starting price of about 95 US cents (P42)?
The answer, one will blurt out without thinking is—No.
Queuing is exactly what people are doing to buy and to munch the latest craze in town, J.Co donuts.
The Indon phenomenon of long lines and crowds was brought in 2012 to the Philippines when the Indonesian donut brand J.Co opened its first local outlet March 15 at the ground floor SM Megamall in Ortigas, Mandaluyong.
Since then, J.Co has opened a dozen branches in the Philippines, part of about a 150-store (and growing) chain that began as an experimental coffee shop eight years ago in Jakarta, Indonesia.
J.Co is actually the name of the founder, Johnny Andrean, 52, a gutsy but immensely likeable and warm Indonesian entrepreneur. He started in business as a young man 35 years ago, building first a chain of hair salons, Andrean, with some 130 shops today, the biggest in Indonesia.
Andrean then shifted to designer breads, becoming the franchisee of the Singaporean bakeshop BreadTalk, which by March this year had at least 101 branches in Indonesia alone.
It is in donut and coffee shop business that Andrean is making his mark and building a business empire with his innovative, award-winning designer donuts J.Co.
The caviar of donuts, J.Co commands the highest prices compared with its older and new rivals. “It’s everything you ever wanted in donuts,” says the company’s website. With unique flavors and delicacy, it slowly melts in your mouth. That unbridled selfie is, of course, advertising blurb. But crowds in many J.Co outlets in the region are a veritable testimonial that the claim is not a lie.
Johnny got the idea of a donut and coffee shop from his travels abroad. After the 1997 Asian Crisis in Indonesia, he left for the United States with his wife and four children (three girls and a son). While abroad, he observed the operations of the Krispy Kreme donut network, the restaurant chain Cheesecake Factory, and the ubiquitous Starbucks coffeehouse.
“These are mainly fast food chains,” notes Andrean. “But I didn’t want to do fast food. I wanted to do something dine-in, with a better experience (for the customer) and with a nice ambience.”
The first J.Co opened on June 26, 2005. In just four months, the outlet made money. Now on its eighth year, J.Co currently has 120 outlets in Indonesia, 12 in Malaysia and the Philippines, four in Singapore, and two in China.
Carlos Chan and Injap Sia
The Philippine franchise for the Indonesia donut and coffee chain is owned by a company called Contemporain Foods Inc., which has among its major investors Carlos Chan of Liwayway-Oishi fame and Edgar “Injap” Sia, the founder of Mang Inasal, chicken chain bought by Jollibee Foods Corp. The two have also been franchised by giant hotel group Jin Jiang Inn Co. Ltd. of China to build up to 30 budget hotels in the Philippines.
The 12 J.Co outlets in the Philippines are in: SM Megamall, SM Mall of Asia, Greenbelt 3, TriNoma, SM Fairview, Alabang Town Center, Eastwood, The District Cavite (Imus, Cavite), Centrio Mall (Cagayan de Oro City), SM North EDSA, SM Pampanga, and Glorietta 2.
“We’re looking at 10-12 more for next year,” says Arlene Ngo, J.Co’s marketing manager.
The next six stores will be in Araneta Center, UP Town Center (new Ayala Mall at Katipunan Ave.), Greenhills Promenade (new Promenade building), SM Southmall, Veranza (KCC mall in General Santos City), and Lucky Chinatown.
Noting the crowds in his outlets and the huge demand for high-quality donuts, Carlos Chan has promised to have 100 stores in the Philippines eventually. He is no stranger to the food business.
Chan’s Shanghai-based Liwayway group owns 18 Oishi potato chip and drinks factories in Asia: China 11, Philippines four, Vietnam two, and one each in Thailand, Cambodia, India, Indonesia, and Myanmar.
On the other hand, Sia’s Mang Inasal chicken chain now has 465 stores, 22% of the total Jollibee fast food stores in the Philippines.
After a year, J.Co has already implemented a 20% price increase. Its donuts used to retail for only P35 apiece. Now these are priced at P42 per piece and are still selling like hotcakes. A half dozen retails for P230, one dozen P350 and two dozen P550. The donuts also come in smaller versions, the J.Pops or baby donuts in a dozen bundle.
In contrast, Krispy Kreme sells for P35 apiece, Dunkin Donut P20 and Mister Donut P15.
The top-selling J.Co donuts come with fancy names like Alcapone, Oreology, Tiramisu, Avocado Di Caprio, Mr. Green Tea, Why Nut, Blue Berrymore, Don Mochino, Choco Caviar Chocolate, Crunchy Crunchy, and Crème La Fame.
Alcapone, the best-selling donut, has white Belgian chocolate and roasted California almond slices on top of J.CO’s trademark soft-bite donut.
On the other hand, the company’s J.Coffee, from the simple espresso to iced hazelnut latte, is claimed to be “the unique flavor of Italian blends”. The coffees come in at least a dozen flavors and concoctions. It also has Cafe Avocado where “rich Italian coffee meets smooth avocado”. J.Co’s unique version of the cappuccino is called Jcoccino.
J.Co’s yogurt, meanwhile, “has toppings made from the freshest fruits”.
J.Co also carries sandwiches – club sandwiches.
Why it’s successful
Andrean explains the factors behind the success of J.Co: The best flour, from soft wheat. The best ingredients like the best chocolate specially designed by Andrean himself, the best nuts like California almonds, and the best fruits.
Then there is the coffee— 100% Arabica coffee blended with the Indonesian coffee— Sumatra, Sulawesi, Toraja. “We are very good in coffee,” gloats Andrean.
Add in-store baking and remarkable orange-motif ambience, and you have J.Co.
Analysts estimate each J.Co store makes about 40% margin, with the remaining 60% going to food, equipment and rental.
The success of J.Co has attracted copycats. A Malaysian entrepreneur has started Big Apple using exactly the same concepts of J.Co.
But one Malaysian blogger, Christopher, a businessman, finds J.Co much better for the following reasons:
Variety, better ingredients (“their dough is tastier and softer. Plus their toppings are really good especially those chocolaty and fruity ones. Not to forget, they are also pretty generous with their fillings”), better coffee (“They use Italian blend” “and the chocolate gives me the kick I needed”), and the ambience (“The first thing that came to my mind when I stepped into J.Co is that their sofa is really classy and comfortable”).