Driven by a passion for innovation and a commitment to addressing challenges in the F&B market, Alvin Arief, co-founder and CEO of UENA, is leading a new venture that aims to revolutionize daily food offerings.
Recognizing a prevalent issue in Indonesia’s daily food landscape, where 98% of players are independent or Mom-and-Pop establishments, he co-founded UENA with a clear mission—to enhance the quality of life by providing daily food that is hygienic, consistent, and affordable.
Prior to UENA, Alvin co-founded Passion Food, an enterprise dedicated to developing restaurant brands. The flagship brand, Mujigae, emerged as the leading Korean food brand in Indonesia and stands out as one of the most successful cloud kitchen brands with over 70 outlets, serving more than 500,000 portions per month.
With UENA, Alvin envisions a future where UENA becomes the catalyst for improving the quality of life for millions of people. The North Star goal of delivering 1,000,000 portions per day by 2027 reflects his ambitious and forward-thinking approach to making a lasting impact in the industry.
Q1: What inspired you to start an affordable food startup in Indonesia, and how did you identify the market need for affordable food options?
We have been in the FnB industry since late 2013, spanning over a decade, we’ve operated as brand builders ourselves. Over this period, we observed a paradox within the industry.
Despite being the largest market, the daily food market appeared significantly underserved. On the other hand, smaller markets, such as upscale and non-daily food options like desserts, grains, bubble tea, and coffee, were flooded with new players. Recognizing that the basic daily food market was predominantly served by neglected and fragmented street vendors, we identified a compelling market need that wasn’t resolving itself naturally.
We believed that a player with significant scale could address this issue effectively, drawing inspiration from successful models in other countries like McDonald’s handling burgers in the US and Yoshinoya managing beef bowls in Japan. Therefore, starting a budget-friendly food startup seemed like a natural progression, aiming to fill a gap that had persisted in Indonesia for many years.
Q2: What are some aspects of the Indonesian market that made it conducive for your budget-friendly food concept?
Indonesia’s vast population presents a tremendous opportunity. The key lies in understanding how Indonesians eat and their spending power. The average Indonesian worker earns between USD 300 and USD 350 per month, with Jabodetabek potentially reaching USD 400 to USD 600. This highlights the need for budget-conscious meal options.
For most Indonesians, daily meals are a high-volume but low-variety affair. People gravitate towards familiar, quick, and affordable options like “warungs”, small traditional eateries but quality is a concern. On the other hand, Quick Service Restaurants (QSR) and food delivery services, while convenient, are often considered too expensive for everyday meals.
The nature of daily food consumption in Indonesia aligns well with our concept. Daily food represents a high volume, low SKU (Stock Keeping Unit) usage category. Unlike upscale or fancy foods that require constant innovation to attract customers, daily food, especially in Indonesia, tends to have low SKU usage because people consistently return to their favorite options. UENA focuses on perfecting customer favorites, ensuring affordability and repeat business. This creates favorable unit economics and economies of scale for our solution.
Lastly, the advent of the online model has been a crucial factor in our ability to address this market gap. The high penetration of online food delivery in Indonesia, ranking as the second most utilized digital product after e-commerce, adds to the readiness of the market for our budget-friendly food concept.
Q3: What are some of the most critical challenges you’ve encountered? How has Trihill Capital been contributing in your journey?
One common observation is that many FnB players, not due to a lack of intelligence or capability, lack a deep understanding of the fundamentals of the business.
For instance, concepts like multi-brand startups, which may sound appealing from an outsider’s perspective, can become intricate and less advantageous in practice. While the idea of combining various brands under one roof seems cost-effective, the complexities multiply, and the benefits, such as saving on rent, are outweighed by the increased intricacies. Also, due to the nature of the budget friendly space, margin tends to be thinner than the usual F&B businesses thus quantity is a priority to achieve the required economics.
Our experience in the industry has allowed us to foresee and develop solutions early. Changing consumer behavior and habits proved to be a unique obstacle. Encouraging customers to embrace a better, more affordable, and higher-quality option requires overcoming ingrained habits and sometimes illogical decision-making.
Trihill Capital has played a crucial role in addressing these challenges. Firstly, they have served as valuable thinking partners, helping us maintain a holistic view and realign to our primary goals. Secondly, the shared experiences and knowledge transfer in the retail and franchise space, specifically in their involvement in hyperlocal gym operations have brought valuable insights that benefit our venture. Lastly, they have been instrumental in advancing our strategic initiatives, including performance metric development, key hires, and fundraising.
Q4: How do you approach innovation in your business model to maintain both affordability and quality in your food offerings?
Our approach to innovation is rooted in the concept of economies of scale. I often emphasize to my team that if global giants like McDonald’s can successfully sell 99-cent double cheeseburgers in the US, where costs such as labor and rentals are notably higher, there’s no reason why we can’t offer budget-friendly options. The principle here is that Asian, particularly Indonesian, food is generally lower in value compared to Western counterparts, and successful examples exist globally.
The key lies in optimizing economies of scale. Our strategy is centered on achieving high volumes with minimal Stock Keeping Units (SKU). This involves a continuous process of streamlining our menus, refining successful items, and eliminating those that don’t resonate with our customers. Our goal is to achieve a very efficient economy of scale for each SKU and ingredient. This, we believe, is the foundation for delivering both high quality and affordability simultaneously.
Q5: What role does sustainability play in your budget-friendly food startup, and how do you navigate the balance between cost-effectiveness and environmentally conscious practices?
As we continue to grow, we’ve identified opportunities to integrate more sustainable practices without significantly impacting our costs. Initially, due to lower volumes, our packaging was primarily plastic for its cost-effectiveness. However, as our service has expanded to over 100,000 portions monthly, we’ve reached a point where the costs between plastic and biodegradable paper packaging are comparable. This has led us to make the switch in both box and bowl forms.
While sustainability is important to us, we are mindful of our primary mission, which revolves around enhancing the quality, hygiene, and nutrition of food for the people of Indonesia at an affordable price. Our priority is to fulfill this mission without incurring additional costs. Nevertheless, we’ve observed that as our volume increases, we can gradually transition to more environmentally conscious practices without compromising our core affordability goals.
Q6: How do you adapt your offerings to meet the diverse tastes and preferences of the Indonesian market while keeping prices affordable?
While our experience hasn’t yet explored the full diversity of regional specialties across Indonesia (from delicious Padang rendang to flavorful Manadonese rica-rica), we recognize the strength of a national cuisine. Indonesia is famous for its comforting and widely-loved dishes like Nasi Goreng (fried rice), Sate (skewers), and Gado-Gado (vegetable salad), highlighting a shared culinary foundation across the country.
This national familiarity allows us to leverage a mono-offering focused on familiar favorites, with the key ingredients like chicken and rice remaining consistent. However, the beauty lies in the adaptability. By understanding taste preferences, we can adjust seasonings and preparations to cater to regional variations, ensuring our offering remains relevant and delicious across Indonesia.
As we expand, volume allows for efficient adjustments to cater to these diverse preferences. The core challenges and solutions remain similar – providing high-quality, affordable meals. This versatile model positions us perfectly to adapt and thrive within Indonesia’s rich culinary landscape.
Q7: What are the key milestones and expansion plans for UENA in the future?
Previously, our growth trajectory was robust, with double-digit month-on-month growth and positive adoption of our app. However, given the current climate, the focus has shifted towards prioritizing unit economics, to eventually reach profitability sooner. This means a change in the sequence of priorities, with an emphasis on securing solid unit economics before prioritizing growth
Fortunately, our experience as a profitable academic company for the past 14 years has equipped us to navigate this shift effectively. We are close to completing the necessary adjustments in unit economics, which we can showcase and prove to investors. Following this, our plan is to re-enter the growth phase, making our solutions more accessible to customers through hyperlocal delivery.
Looking ahead, our vision for the next five years is to establish UENA as the go-to destination, akin to Alfamart and Indomaret, for ready-to-eat meals. We envision creating a seamless and convenient experience where each neighborhood has easy access to hassle-free, value-for-money, ready-to-eat meals. While there was a temporary shift in priorities to address unit economics, our long-term dream remains focused on serving communities with accessible, high-quality meal solutions.
Edited by: Daryl Lim, Oliver
