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Gloria Jean's Coffee in Malaysia PDF
Gloria Jean's Coffee in Malaysia PDF
Gloria Jean's Coffee in Malaysia PDF
(2017),"Gender effects on impulse buying behavior", Emerald Emerging Markets Case Studies, Vol. 7 Iss 4 pp. 1-12 <a href="https://
doi.org/10.1108/EEMCS-05-2016-0075">https://doi.org/10.1108/EEMCS-05-2016-0075</a>
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a Lecturer and
Samshul-Amry Abdul-Latif It was in the year 1979, Ed and Gloria Jean Kvetko first started Gloria Jean’s Coffee (GJC) in
is a Student, both at the Chicago, the USA. A total of 25 years and 316 outlets worldwide later, Diedrich Coffee, the
College of Business, owner of GJC decided to sell the GJC franchise. Many offers were made, but the deal went
University Utara of to Nabi Saleh, GJC’s Master Franchisee in Australia. For a cool $16 million, Saleh managed
Malaysia, Sintok, Malaysia. to own the rights to all GJC worldwide minus 146 outlets in the USA and Puerto Rico. Where
Norhayati Zakaria is an Dierich Coffee owns the rights to operate free of franchise royalty. In 2010, Dierich sold all of
Assistant Professor at the its rights and remaining 102 franchised outlets across 24 states in the USA to Saleh for
Faculty of Business and additional $3.1 million, making Saleh as the owner of GJC franchise worldwide.
Management, University of
Wollongong, Dubai, United
GJC ranks third globally among premium coffee brands. Saleh had to look into many issues
Arab Emirates and at the after taking over the GJC franchise. But he loved every second of it. He had to make sure all of
College of Business, the operations worldwide were within his view and was all right. Among many other important
University Utara of matters that he had to look into was the renewing of Malaysia’s Master Franchisee Agreement.
Malaysia, Sintok, Malaysia.
DOI 10.1108/20450621111128574 VOL. 1 NO. 1 2011, pp. 1-7, Q Emerald Group Publishing Limited, ISSN 2045-0621 j EMERALD EMERGING MARKETS CASE STUDIES j PAGE 1
Malaysian average income earners, the market soared. A name was labeled to the group of
people frequently patronizing these outlets – Kippies – a word combination of Kiasu[1] and
Yuppies[2] which were young (20-40 years old), mostly single, executives with high
disposable incomes (Singh, 2000).
Some may see it as a classic mismanagement which led to the downfall and non-performance
of GJC under TTG, but that was not the only problem faced by GJC. Many may think that
GJC could no longer sustain countless attacks from its competitors and had suffered
wounding damages and extreme losses. Many may also think that coupled with the impact of
the early 2000 economic recession in Malaysia, GJC had lost many of its customers to more
affordable alternatives. Home-grown copycat brands such as the Coffeehouse and the
Coffee Shack in Damansara Utama (a very uptown and upscale location within the Klang
Valley) offered similar products with less hefty price tags. Nevertheless, these copycats never
lasted long anyway.
Many may think that as a result from these detrimental factors, many of GJC outlets had to be
closed down. Business seems to be so bad that TTG was left with only , 3 GJC outlets by the
end of 2005. Perhaps, there was the beginning of an end. Saleh had to doubly rethink about
renewing the master franchise agreement with TTG, but he was almost certain that the
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PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011
Meticulous planning of skills and resources led to the opening of a total of five outlets in , 6
months in 2007. The table on the next page shows the outlet locations, its outlet opening date
and the date variation between each opening of outlets (Table I).
KL Plaza Mall right in the heart of the Golden Triangle of Kuala Lumpur.
TTG, a subsidiary of Tai Thong Resources Berhad, also a huge conglomerate similar to
Berjaya Group is owned by Tan Sri Dato’ Danny Tan Chee Sing. Also as the Executive
Chairman of TTG, Danny Tan also held a critical position in his brother’s Berjaya Group as the
Deputy Chairman.
One may wonder how GJC under the management of Saleh’s predecessor overlooked this
detrimental factor on GJC’s overall position in Malaysia. How healthy would it be for GJC, if
TTG’s Danny Tan simultaneously held indirect rights to operate Starbuck Coffee through
Berjaya Group? If Danny Tan decided to resign from his post in Berjaya Group, would he
compete head to head with Vincent Tan, his brother?
Considering the background and strong financial position of both companies, would it be
reasonable to assume that TTG can sustain and afford GJC’s losses (if they did at all) and still
be a player in the gourmet coffee market in Malaysia?
Competitions
In Malaysia, GJC has less number of outlets compared to its direct competitors – Starbucks
Coffee and Coffee Bean. Table II demonstrates the comparison.
Table II
No. Company Number of outlets in Malaysia
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VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3
Efforts by GJC to capture more shares from the market can be seen through its various
strategies implemented. According to Suhaimi Bakar of MyFranchise, there are no differences
in the beans between all three major players except for the aroma and flavor. For GJC, these two
factors can only be obtained through the bean roasting process in Australia, its trade secret.
The localization strategies demonstrated in some of the outlets in Kuala Lumpur were as a
result from GJC responding to customers’ suggestion. After obtaining approval from their
Australian franchisor, GJC offered local delights and food: Nasi Lemak Bungkus, Nasi Briyani
with Chicken and even Murtabak at a slightly elevated price. Though still at market-testing
phase, the positive response from the GJC customers were very encouraging. ‘‘Blanket
application on all outlets will be in due course once we have established the supply chain’’,
said Suhaimi. ‘‘However, there is no new product introduction on local drinks and beverages
like ‘cendol’ or ‘sugarcane juice’ for the time being’’, he added.
Drinking coffee is a long-term growing trend that is becoming more and more popular
among adults, especially the younger adults who make up the largest percentage of the
market. By catering to young educated adults, GJC will see increased profit levels now as
well as in the future as the generation ages.
Attempts to attract more young college students and young adults were done in 2009. Trying
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to relate to them, GJC hosted a talent show contest and got local music acts to perform at
their Sunway Pyramid outlet, where there is a high concentration of college students from
nearby colleges like Taylor’s College, INTI College, Sunway College, Metropolitan College
and many more. But the impact on the sales was not too significant and MyFranchise
decided that the strategy should be shelved. Instead, a GJC student club was introduced,
where students can get 30 per cent discounts on F&B items.
Similar to its competitors, GJC provides WIFI connection which appeals to young adults and
the working group. By doing that, customers feel more comfortable, allowing them to sit back
and enjoy their coffee while being virtually connected to the world. By keeping customers in
the outlets longer, there are greater opportunities for more purchases, whether they are more
cups of coffee, food items or other products. Merchandise such as thermal mugs does
appeal to this segment as customers love to be associated with brands.
Another strategy adopted by GJC is by introducing the ‘‘Running Baristas’’ or in plain words,
it refers to the ‘‘Delivery boys’’. This strategy is adopted mostly by outlets located within
office buildings or within the reach of nearby offices such as near the IBM Plaza, Kenanga
Plaza, Midvalley Megamall (all of which are located in the heart of the Kuala Lumpur city
centre) and proved to be very effective since it caters and appeals to many working people.
Challenges ahead
‘‘It is quite challenging to find the right franchisee’’, a fact stated by Shahrul. Most potential
franchisee candidates who approached MyFranchise usually lack the sense of business and
clear absence in financial commitment.
Aspiring Bumiputera entrepreneurs can obtain their loans from PNS or any other supporting
financial institutions like SME Bank to take up GJC franchises. But prior to that, candidates
will go though a compulsory behavioral interview for screening purposes. Upon succeeding
the interview, candidates will have to go through in-house training at the Coffee Academy.
MyFranchise’s approach on GJC’s market expansion is rather different compared to its
competitor Starbucks who do not franchise its outlet. Of the 13 outlets, four are
owner-operated by franchisees and the remaining balances are corporate owned by
MyFranchise. MyFranchise hopes to identify more dynamic entrepreneur to take over their
corporate outlets. Through this approach the franchisees’ failure rate will be decreased as
MyFranchise proves that the business can actually work and selected location is premium.
Another challenge for GJC is to secure choice business premise. Most premise will either be
taken up by GJC’s competitor long before the actual construction actually started, or the
premises are being offered to them directly. This may be the works of the ‘‘unseen hand’’ as
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PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011
explained earlier since GJC’s competitors are owned and operated by companies with very
large network and deep pocket. Good for GJC, they managed to win the heart of Chris Bush,
then CEO of Tesco Malaysia. From then onwards, Tesco has been offering excellent
premises to GJC in all of its upcoming stores which includes Tesco Kepong and the
upcoming Tesco Seremban.
When asked about the changing trend or rather the rise of the Kopitiam in Malaysia, Shahrul
replied that GJC is not worried too much on that matter, as GJC caters to a different segment
of the market. He continued explaining the differences between GJC and Kopitiam
customers in general. But can GJC remain and stay competitive when Kopitiam offers similar
products, i.e. good mixture of localized and international food plus coffee that cost so much
lesser yet tasty in a very (sometimes) up-scaled environment?
GJC has yet to obtain Halal certification from JAKIM (a government body which issues
certification on products that are safe and according to Islamic dietary law), unlike
Starbucks. ‘‘We are preparing ourselves for the JAKIM certification; it takes a little bit more
time as it is a lengthy and meticulous process, yet necessary’’, explained Suhaimi.
MyFranchise strived hard to reach its goal to open its targeted number of outlets of 30 within
the next few years. Though the torch has been passed on a few months ago to their new
CEO, Fauzi Awang, their mission to excel had never change. Fauzi hopes to achieve more
than 30 outlets in Malaysia, he told us. More ambitious, Fauzi did not cross-out the hope to
control GJC in the South East Asia region or even worldwide.
Notes
1. Kiasu is a Hokkien word that literally means ‘‘fear of losing’’. Its widespread use is often because
these attitudes are common – to not lose out in a highly competitive society).
2. Yuppie (short for ‘‘young urban professional’’ or ‘‘young upwardly-mobile professional’’) is a term
Keywords: that refers to a member of the upper middle class in their 20s or 30s. Yuppies are made fun of for
Franchising, their conspicuous personal consumption and obsession over social status among their peers, which
Strategic management, is seen as vain and materialistic.
Food and drink products, 3. At present, PNS is under the Ministry of Domestic Trade, Cooperative and Consumerism following
Malaysia the disolvement of the former Ministry.
Further reading
Answers.com (n.d.), ‘‘Diedrich coffee’’, available at: www.answers.com/topic/diedrich-coffee-inc
(accessed 20 August 2010).
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VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5
Berjaya Corporation Berhad (n.d.), ‘‘Directors of Berjaya Corporation’’, available at: www.berjaya.com/
directors.htm# (accessed 20 August 2010).
Berjaya Corporation Berhad (n.d.), ‘‘Ernst and young: audited financial statements year end 30 April
2009’’, available at: www.berjaya.com/images/bcorp2009.pdf (accessed 20 August 2010).
Berjaya Corporation Berhad, F&B overview (n.d.), available at: www.berjaya.com/overview_food.htm
(accessed 20 August 2010).
Business Times.com.my (2010), ‘‘Tesco Malaysia gets new CEO’’, available at: www.btimes.com.my/
Current_News/BTIMES/articles/20100513001604/Article/print_html (accessed 20 August 2010).
Coffee Bean and Tea Leaf Sdn Bhd (n.d.), ‘‘About us’’, available at: http://coffeebean.com.my/aboutus
(accessed 20 August 2010).
Coffee Bean and Tea Leaf Sdn Bhd (n.d.), ‘‘Stores’’, available at: http://coffeebean.com.my/stores
(accessed 20 August 2010).
Cris (2009), ‘‘Diedrich coffee agrees to sell US Gloria Jean’s coffees franchisee operations’’, available at:
http://franchise.business-opportunities.biz/2009/03/30/diedrich-coffee-agrees-to-sell-us-gloria-jeans-
coffees-franchisee-operations/ (accessed 20 August 2010).
Di Mora, S., Lewis, K. and Lind, S. ‘‘Starbucks company market analysis’’, unpublished.
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Findarticles.com (2004), ‘‘Diedrich Coffee selling Gloria Jean’s for $16m’’, Nation’s Restaurant News,
available at: http://findarticles.com/p/articles/mi_m3190/is_51_38/ai_n8586407/?tag¼ rel.res4
(accessed 20 August 2010).
Gloriajeanscoffees.com (n.d.), ‘‘Our global brand’’, available at: www.gloriajeanscoffees.com/
ourGlobalBrand/default.php (accessed 20 August 2010).
Gloriajeanscoffees.my (n.d.), ‘‘About us’’, available at: www.gloriajeanscoffees.my/about.php
(accessed 20 August 2010).
Hamid, H. (2009), ‘‘Looking ahead to 2010: players have high hopes for govt support’’, available at:
www.btimes.com.my/articles/30SABREE/Article/ (accessed 20 August 2010).
Hamid, H. (2010), ‘‘Academy to groom franchise entreprenuers’’, available at: www.btimes.com.my/
articles/30SABREE/Article/ (accessed 20 August 2010).
Hamid, H. (2010), ‘‘Franchise players given clear sense of direction’’, available at: www.btimes.com.my/
articles/30SABREE/Article/ (accessed 20 August 2010).
Hamid, H. (2010), ‘‘More Franchise forays planned’’, available at: www.btimes.com.my/articles/
30SABREE/Article/ (accessed 20 August 2010).
Hamid, H. (2010), ‘‘New franchise businesses set to hit 100 this year’’, available at: www.btimes.com.
my/articles/30SABREE/Article/ (accessed 20 August 2010).
Mark, Weblog Network (2009), ‘‘Diedrich coffee completes sale of Gloria Jean’s coffees domestic
franchise operations’’, available at: http://franchise.business-opportunities.biz/2009/06/17/diedrich-
coffee-completes-sale-of-gloria-jeans-coffees-domestic-franchise-operations/, Published: 17 June
2009 (accessed 20 August 2010).
Myfranchise.com.my (n.d.), ‘‘Franchise opportunity’’, available at: www.myfranchise.com.my/franchise/
franchise-opportunities.html (accessed 20 August 2010).
Singh, B. (n.d.), ‘‘Going gourmet’’, Malaysian Business, available at: http://findarticles.com/p/articles/
mi_qn6207/is_20001116/ai_n24903679/ (accessed 20 August 2010).
Pinijparakarn, S. (2010), ‘‘Primo to invest heavily in Gloria Jean’s’’, The Nation, available at: www.
nationmultimedia.com/home/2010/03/10/business/Primo-to-invest-heavily-in-Gloria-Jeans-30124325.
html (accessed 20 August 2010).
Starbucks Corporation (n.d.), ‘‘Starbucks in Malaysia’’, available at: http://starbucks.com.my/
en-US/_Aboutþ Starbucks/Starbucksþinþ %28yourþcountry%29.htm (accessed 20 August 2010).
Starbucks Corporation (n.d.), ‘‘Starbucks is Halal certified’’, available at: http://starbucks.com.my/
en-US/_FavoriteþBeverages/ (accessed 20 August 2010).
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PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 1 NO. 1 2011
Statistics.gov.my (n.d.), ‘‘Key statistics’’, available at: www.statistics.gov.my/portal/index.php?option ¼
com_content&view¼category&id¼35&Itemid¼53&lang¼ en (accessed 20 August 2010).
Toh, T., ‘‘The cup that cheers’’, Malaysian Business, FindArticles.com, available at: http://findarticles.
com/p/articles/mi_qn6207/is_20000716/ai_n24903533/ (accessed 20 August 2010).
TTRB (n.d.), ‘‘Information on Tai Thong resources Berhad’’, available at: www.ttrb.com.my/content.
asp?root¼ 0&id¼ 100001&parent¼100001&bdrcolor¼ %23990000&loc¼100001 (accessed 20 August
2010).
20 August 2010).
Wikipedia (n.d.), ‘‘Definition of Kiasu’’, available at: http://en.wikipedia.org/wiki/Kiasu (accessed
20 August 2010).
Wikipedia (n.d.), ‘‘Definition of Yuppie’’, available at: http://en.wikipedia.org/wiki/Yuppie (accessed
20 August 2010).
Wikipedia (n.d.), ‘‘Economy of Malaysia’’, available at: http://en.wikipedia.org/wiki/Economy_of_
Malaysia
Wikipedia (n.d.), ‘‘Gloria Jean’s coffees’’, available at: http://en.wikipedia.org/wiki/Gloria_Jean%27s_
Coffees (accessed 20 August 2010).
Wikipedia (n.d.), ‘‘Malaysia’’, available at: http://en.wikipedia.org/wiki/Malaysia (accessed 20 August
2010).
Corresponding author
Asmat-Nizam Abdul-Talib can be contacted at: asmat@uum.edu.my
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VOL. 1 NO. 1 2011 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7