Introduction to Quality Management SQB4004

Assignment Case Study

Topic: Old Town White Coffee

Lecturer: Prof Dr. Khairul Baharein Mohd Noor

Group members’ names:

Gevana Rao a/l Maraiah KJC1050037

V.Kalaaimohan KJC1080413

Nanthakumar a/l Poapalan KJC1080409

Thanash a/l Ravindran KJC1080094

Table of Contents

No Contents Page No.

1. Company Profile 1

2. Company History 3

3. Milestones 5

4. Industry Analysis 6

5. Supply Chain Mapping 8

6. Organization Structure 9

7. Facilities and Equipment 12

8. Food & Beverages 13

9. Service Personnel 15

10. Best Practices 17

11. The Biggest Challenge 18

12. Solutions 19

13. Process Flow for Distribution Activities 20

14. Conclusions 22

15. Appendix 23

Company Profile

Oldtown is a regional café chain operator and an established beverages manufacturer in

Malaysia. As at 31 Dec 2011, the group operates 196 café outlets in the Asia region, of which

183 in Malaysia, 8 in Singapore, 4 in Indonesia, and 1 in China. These comprise of 96

franchised outlets, 79 fully-owned outlets, 18 partially-owned outlets and 3 licensed outlets.

All of the group’s café outlets are supported by 3 centralised food processing centres, which

located in Ipoh (2) and Subang (1), Malaysia. In Financial Year 2011, the group generates

68% and 32% of its revenue from food and beverages (F&B) segment and fast moving

consumable goods (FMCG) segment respectively.

Sources: Company data, Alliance Research

The history of Old Town White Coffee begins with the incorporation of White Cafe in the

year 1999 by initial co-founders and Executive Directors i.e. Mr. Goh Ching Mun and Mr.

Tan Say Yap. The intention is simple and very basic which stands for providing quality white

coffee for Malaysians households and food service industry. OldTown is the proprietary

owner of the special formulation of 3-in-1 white coffee blend, which has been permeating

Malaysian households and food service industry since 1999.

The company been operating closely for 13 years in which it have experience in the coffee

beverage industry in which both the co-founders strive hard to the growth of Old Town

Group of Companies. This was made only possible by the help of Old Town Group 1 | P a g e

Managing Director i.e. Mr. Lee Siew Heng who played significant role in implementing

overall strategy, and development of the group.

In the year 2005 and 2006, Old Town have established their subsidiaries which is known by

the name of Old Town Kopitiam, Old Town Kopitiam Butterworth, Old Town Kopitiam

Kuala Lumpur, Old Town Kopitiam Cheras, Conneczone to focus on operating café outlets in

different areas and states in Malaysia.

In order to support the business operations more efficiently, Old Town have initiated the

following subsidiaries as central food processing centers between 2005 and 2007:

Emperor’s Kitchen commenced operations in 2005;

Esquire Chef commenced operations in 2007;

Dynasty’s Confectionery commenced operations in 2007.

Company History 2 | P a g e

White Coffee has successfully commercialized their bread and butter product i.e. the instant

3-in-1 coffee mix under the ‘OLDTOWN’ brand name for the retail sector in the year 1999.

As per date 31 October 2009, the OLDTOWN 3-in-1 instant coffee mix was sold in

approximately 1,348 retails nationwide in Malaysia, approximately 550 retail outlets in

Singapore and approximately 2,100 retail outlets in Hong Kong.

While in 2000, White Coffee commenced the first export of the ‘OLDTOWN’ brand of 3-in-

1 instant coffee mix to Singapore.

Next in 2001, Old Town subsidiary which is known as White Café Marketing commenced

operations as the marketing arm for the group’s beverages. During this time also, the group

have seen mass expansion of their different variations of coffee mix and also ventured to

overseas market particularly Hong Kong in the export of the famed instant coffee mix.

In 2002, White Café managed to obtain a Halal certification from the Islamic Religious

Department of Perak for the Group’s beverages. All this were being done in order to produce

the beverages according to Islamic law. Soon, they also managed to expand their nationwide

retail distribution of 3-in-1 instant coffee mix to cover East and West Malaysia through

hypermarkets and supermarkets.

In 2003, the company successfully formulated their original blend of 3-in-1 instant milk tea

for the retail market under the ‘OLDTOWN’ brand name. Besides, they also incorporated

Gongga Food and commenced operations in 2004 manufacturing the roasted coffee powder

for the food service industry using their Group’s proprietary bean roasting process.

Major changes took place in the year 2005 as White Café officially open a chain of cafe

outlets based on the traditional Ipoh coffee shop setting and atmosphere under the ‘OLD

TOWN WHITE COFFEE’ brand name. This works as part of group’s strategy of capitalising

and reinforcing the ‘OLD TOWN WHITE COFFEE’ brand in Malaysian food industry. The

same year also witness that Kopitiam Asia Pacific commenced operations in the licensing,

supply of food, beverages and other items and provision of management services to ‘OLD

TOWN WHITE COFFEE’ café outlets.

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Besides that, Gongga Food’s business activity was expanded to cover the procurement of

food items for ‘OLD TOWN WHITE COFFEE’ café outlets. It also successfully secured the

HALAL certification from the Islamic Religious Department of Perak for its production of

roasted coffee powder. Furthermore, in the same year, White Café also obtained a HCCAP

certification from BM TRADA Certification Ltd for the processing and manufacturing of

beverage products.

In year 2006, the company expanded their export markets to Japan and China. It was also

during this time that they incorporated Dynasty’s Kitchen as a distribution centre which

comfortably commenced operations in 2007. At the same time, the incorporation of Oldtown

Berhad took place with the motive of focusing on investment holding and provision of

management services in accordance to its listing on the Main Market of Bursa Securities.

Plus, they also started exporting to Asian countries such as Thailand and Philippines.

In 2007, the incorporation of OldTown Singapore took place to provide management

services, supply of food and beverages items to café outlets in Singapore.

While in 2008, OTK Singapore started operations with the launch of the group’s first OLD

TOWN WHITE COFFEE café outlet in Singapore. This amazingly continues the group’s

initiatives as their subsidiaries, Dynasty Confectionary and Esquire Chef obtained HALAL

certification from the Islamic Religious Department of Perak for the processing of various

foods. The other food processing centre, Emperor’s Kitchen also managed to secured

HALAL certification from the IFRC Asia. Amazingly, within the same year, the company

expanded their product line to include 3-in-1 instant coffee mix with sugar cane.

In 2009, Gongga Food obtained a HACCP certification from BM TRADA Certification Ltd

for the production of roasted coffee powder.

In year 2010, OLDTOWN Singapore started operation of café outlets. Plus, Esquire Chef

obtained a HACCP certification and GMP certification for the preparation of food

seasonings, condiments for restaurant outlets from Moody International Certification

(Malaysia) Sdn. Bhd. Furthermore, Gongga Food obtained a GMP certification from Food

Safety and Quality Division under the Department of Public Health of the Ministry of Health

Malaysia for our roasted ground coffee mixture.

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Milestones

Oldtown Group has won numerous awards through their subsidiaries and substantial

shareholder, Old Town International. These awards are listed below:

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Industry Analysis

Malaysian F&B industry is a growing but competitive industry. According to 2010

Population and Housing Census of Malaysia (Census 2010), Malaysia has a young population

with a median age of 27.6 years or 57.2% of the population is younger than 30 years old. This

so-called Generation Y (Gen-Y) population is considered the fastest growing segment of the

country workforce and the majority of them are deemed to have a high propensity to spend,

including F&B expenditure as compared to previous generations. As such, we believe the

F&B industry could be one of the biggest beneficiaries of the country’s young population.

On the other hand, we view the bargaining power of suppliers in the F&B industry as

moderate due to the trading nature of its commoditized raw materials such as flour, coffee

bean and sugar, which depend on global supply and demand dynamics. Oldtown sources 80%

of its coffee requirement from overseas, such as Brazil and Indonesia on a 6-12 months

contract basis. Together with its typical inventory level of 6-9 months, this enables the group

to plan its costs pass through more efficiently.

Coffee industry is a growing industry in Asia. The primary substitute products posing a

potential threat to coffee are caffeinated soft drinks produced by Pepsi and Coca-Cola.

However, there exist significant difference in tastes, hence, consumers were unlikely to

directly substitute coffee for caffeinated soft drinks or vice versa. As a result, it actually

presented the industry with little threat of substitution.

Presently, Malaysia has about 14 café chain operators with the top five making up 78% of the

total number of café outlets in the country. While on the Fast Moving Consumer Goods

(FCMG) segment, Oldtown is the third largest coffee retailer with 9.5% market share in

2011. Within the white coffee segment, Oldtown is the clear market leader with 42.3%

market share, leading the second and third largest player, Super Group and Chek Hup who

are estimated to have about 20% and less than 10% market share respectively, based on

management guidance. As for the Hong Kong and Singapore coffee mix markets, Oldtown

ranked is number 2 with increasing market share over the past 3 years, challenging the market

leader, Nescafe which has about 29% market share in Hong Kong. Going forward, we expect

the rivalry competition within the café/coffee industry to increase as we anticipate the major

players strive to capture larger market share.

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Café chain operators in Malaysia

# no of outlets %Secret Recipe 212 24.2%Old Town White Coffee 183 20.9%Starbucks Coffee 125 14.3%Subway Sandwiches 95 10.9%Pappa Rich 63 7.2%Coffee Bean & Tea Leaf 52 5.9%Station 1 Leisure Café 41 4.7%Hailam Kopitiam 27 3.1%San Francisco Coffee 23 2.6%Dome Café 16 1.8%Gloria Jean's Coffee 13 1.5%Killiney Kopitiam 10 1.1%Kluang Station 8 0.9%Georgetown White Coffee 7 0.8%Total 875 100.0%

Sources: Company Data

Oldtown’s FMCG market share breakdown by country

Sources: Company Data

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Supply Chain Mapping

Inherently, Oldtown cafes have been strategically placed themselves as retailer position in

supply chain mapping of F&B industry. Raw materials such as roasted coffee beans, curry

paste and sambal are internally produced and processed for the consumption of Oldtown café

outlets and end users. While, other supplier mainly provides carbonat drinks, ice-creams and

yogurt that are vital for Oldtown signature dishes and beverages.

Raw Materials Retailer Finished product

Note: The main suppliers listed above are only pertaining to Oldtown Alpha Angle branch

only.

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Supplier Oldtown Cafe

End Customer

Main Suppliers

1. Gongga Food Sdn. Bhd.(fully –owned subsidiary) Supplies dry & frozen coffee beans, curry

paste and sambal products.

2. Nestle Products Sdn. Bhd. Supplies ice-cream and yogurt products.

3. Permanis Sandilands Sdn. Bhd. Supplies carbonat drinks

Organization Structure

Board of directors

OLDTOWN has a strong and experienced management team. The group practices good

corporate governance by splitting the roles of the chairman of the board and managing

director. The board consists of eight members, of which three are independent directors.

1) Datuk Dr Ahmed Tasir bin Lope Pihie, 60Independent non-executive chairman, since 2009

Qualification > Bachelor in Agriculture Science (University Malaya), MSc in Seed

Technology (University of Edinburgh, Scotland), PhD in Science and Technology Policy

(University of Manchester, UK)

Experience > He was the CEO of Malaysia Industry-Government Group for high

technology from 1993-2008. He presently serves as the Chairman of Nagaya Global Bhd

and Strand Aerospace Malaysia Sdn Bhd.

2) Lee Siew Heng, 45Group Managing Director, since 2007

Qualification > Completion of secondary education

Experience > He had accumulated more than 20 years of experience in the manufacturing

and retailing industry with 9 years in the coffee beverage industry.

3) Goh Chin Mun, 40Executive Director, since 2007

Qualification > Completion of secondary education

Experience > He started his career in 1983 with Nam Heong Coffee Shop in Ipoh.

Subsequently, he co-founded White Café (WC) where he was appointed the Product

Research and Development Director and was then responsible for the formulation of the

blend of white coffee that is produced by the group.

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4) Tan Say Yap, 36Executive Director, since 2009

Qualification > Diploma in Hotel Business Management (Syuen Hotel and Catering

Management Institute)

Experience > He co-founded and established WC in 1999. From 2005 to 2009, he was

appointed the Business Development Director of Kopitiam Asia Pacific as is responsible

for the café outlet operation during that period.

5) Clarence D’Silva A/L Leon D’Silva, 50Executive Director & COO of F&B segment, since 2009

Qualification > Bachelor in Business Administration (California Technical College, US)

Experience > He started his career in 1983 with Kentucky Fried Chicken as a

management trainee. In 1989, he left to take up employment with Carl’s Jr. Asia

Development Corporation and was eventually promoted to the position of General

Manager of the brand in Thailand. In 2003, he joined Yoshinoya Food System as the Chief

Operating Officer (COO). Clarence joined Oldtown in 2009 as the COO of Oldtown’s

F&B segment.

6) Chuah Seong Meng, 36Executive Director and COO of FMCG segment, since 2009

Qualification > BBus. majoring in Marketing (University of Tasmania, Australia),

Certified Marketer (Chartered Institute of Marketing, UK)

Experience > He joined WCM as a Marketing Manager in 1999 and was eventually

promoted to Group Marketing Manager in 2007. He currently oversees the business

operations of the group’s FMCG business.

7) Chin Lai Yong, 43Non-independent non-executive director, since 2009

Qualification > Diploma in Cost Accounting (London Chamber of Commerce and

Industry)

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Experience > In 1998, she participated as an investor in the fashion retailing business

before joining WCM as an administration officer from 2003 to July 2009.

8) Mark Wing Kong, 52Independent non-executive director, since 2009

Qualification > CA with Malaysian Institute of Certified Public Accountant (MICPA)

Experience > He was general manager of Corporate Finance department in Arab-

Malaysian Merchant Bank Bhd. He left the company to join LB Aluminium Bhd in 1997

where he is currently the CEO.

9) Dr. Leong Chik Weng, 48Independent non-executive director, since 2009

Qualification > BSc in Chemical Engineering (West Virginia University, US), PhD in

Chemical Engineering (University of Massachusetts, US)

Experience > He joined Raychem Corporation Menlo Park from 1989 to 1996. His last

position at Raychem was Technical Director. He is currently the CEO of e-Lock

Corporation Sdn Bhd.

Note: Chin Lai Yong is the sister-in-law of Lee Siew Heng.

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Facilities and Equipment

The interior décor of OLD TOWN WHITE COFFEE have been amazing arranged to suit the

perfection of creating memories of walking into a time capsule. Inside the café, customers are

welcomed with a modern ambience comprising of old black and white pictures hanging on

the wall showing history of the café, black wood parquet flooring, and walls that uniquely

decorated.

Tables are made from marbles so that customers can have a sense of luxury feeling to their

dining experience. Plus, the chairs offered are in two forms i.e. a classy chair with a

combination of marble and black wood and another in the form of bench that is comfy and

relaxing. Basically, these tables and chairs complimented the whole traditional and ultra-

modern look flawlessly.

The equipment used for coffee making and beans roasting are all derived from overseas so

that customer will get unadulterated feeling of enjoying their drinks. This is also to match the

standard set by the franchise in order to serve people efficiently at all levels.

Significantly, this particular OLD TOWN WHITE COFFEE outlet is located at 1 st floor of

Jusco Alpha Angle Shopping Center, which is in Wangsa Maju. Thus, in order to cater to lot

of customers, a free WIFI services is being provided so that people can surf the net and enjoy

their food at the same time.

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Food and Beverages

All the cafe outlets are supported by three (3) centralised food processing centres operated by

OLDTOWN subsidiaries, Dynasty Confectionery, Esquire Chef and Emperor’s Kitchen. The

centralised food processing centres are responsible for the processing of all the ingredients

including the freshly baked signature toasts that are served at the cafe outlets. They have a

menu that reflects the central theme with a focus on serving local fare that is traditionally

available at coffee shops. These include half boiled eggs, specialty rice, homemade toasted

bread and buns, noodles, sandwiches and many others.

Some of their signature food that is offered at the cafe outlets includes the following:-

- Kaya and Butter Toast (Double);

- Omega Soft Boiled Eggs;

- OLDTOWN Ipoh Chicken Hor Fun;

- SUPREME Nasi Lemak;

- OLDTOWN Curry Mee; and

- OLDTOWN Rendang Chicken Rice;

.

Kaya and Butter Toast (Double) Omega Soft Boiled Eggs

SUPREME Nasi Lemak OLDTOWN Ipoh Chicken Hor Fun

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The coffee and tea beverages offered at our cafe outlets are specially formulated and

manufactured for our ‘OLDTOWN WHITE COFFEE’ cafe outlets which differ from our

range of retail pack instant coffee mix and roasted coffee powder. Some of our signature hot

and cold coffee beverages offered at our cafe outlets include the following:-

- OLDTOWN White Coffee (Hot);

- OLDTOWN White Coffee (Cold);

- OLDTOWN’s NAN YANG – O (Hot);

- OLDTOWN’s NAN YANG – O (Cold)

- OLDTOWN White Coffee Freeze;

- OLDTOWN Xi Mut Milk Tea (Hot);

- OLDTOWN Xi Mut Milk Tea (Cold); and

- OLDTOWN Coffee Lava.

OLDTOWN White Coffee (Hot) and OLDTOWN White Coffee (Cold)

OLDTOWN’s Nan Yang - O (Hot) and OLDTOWN White Coffee Freeze

OLDTOWN’s Nan Yang - O (Cold)

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Service Personnel There were total of nine employees in the café outlet, including the Supervisor, Ms. Natasya.

Generally, the restaurant manual indicates that there is 3 division of hierarchy level when it

comes to their organization structure. It can be explained as follows:

Bar Crew

Kitchen Crew

Service Crew

Generally, the bar crew are designed to deliver customer service in the form of serving and

presenting beverages quickly and efficiently. They also have to assist in keeping the cafe,

front-of-house and toilets clean and tidy, at all times besides keeping up to date with current

promotions and new products. The bar crew in this outlet are made of 2 people of which one

being local and another is a foreigner.

As for the kitchen crew, the organization appoints 3 people (2 local and 1 foreigner from

Nepal). Their duties are mainly on preparing, cooking and presenting food quickly and

efficiently, meeting OLDTOWN standards. They also need to assist in keeping the kitchen

clean, hygienic and tidy at all times. Needless to say, kitchen crews significantly have to

work safely around kitchen equipment and report any maintenance issues to the manager.

Basically, service crew job descriptions is to takes customer orders for drinks, appetizers,

entrees and dessert items and delivers all requested items to the table and ensures restaurant

patrons are comfortable and taken care of throughout the meal. The crew also delivers the

check at the close of the meal and may take the customer's payment in the form of cash or

credit card. In this outlet, only 1 service crew is recruited which origins from Nepal as the

café is small and requires less people to maintain it.

In order to facilitate Ms. Natasya in her performance of work, there are 2 Assistant

Supervisor available in this outlet. They are being one local and another foreigner from

Myanmar. OLDTOWN management generally recruits foreigners from only 2 countries,

particularly being Nepal and Myanmar. The employees that work in all 3 division of bar

crew, kitchen crew and service crew are extensively trained for full 6 months before being

stationed nationwide.

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OLDTOWN have strategically located their training center at two places which is in

OLDTOWN Subang and OLDTOWN Sri Rampai. The employees are being trained on how

to properly communicate and converse in English language and Bahasa Melayu in order to

deal with taking orders, greeting customers and others. Plus, the workers are also being

groomed on how to prepare food and beverages according to OLDTOWN standards so that

the distinguished quality can always be maintained every time.

The Restaurant Manual hierarchy in Alpha Angle Shopping Center branch can be show as

below:

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Crew Leader

Restaurant Manual

Orientation Crew Assistant Supervisor

Supervisor

Bar Crew Kitchen Crew

Service Crew

Best Practices

Oldtown have generally excelled in their individual experimentation of best practices in F&B

industry locally. This is evident in terms of adherence to their standard operating procedure

(SOP). According to Ms. Natasya, each Oldtown outlet will send their Assistant Supervisors

and Supervisor to attend Basic Operation Management Training (BOMT). The purpose of

this training is to familiarize the upper management level with recent updates, Oldtown

distinguished F&B preparation standards, customer ethics, regulations and promotions. Later,

this upper management level people, need to establish these standards among the employees

in order to prevent mistakes and errors.

In addition to this procedure, certain ‘inspectors’ are assigned from Oldtown headquarters in

order to conduct audit as per food and the outlet operation system. These are vital in order to

ensure cleanliness and hygienic foods are properly maintained from time-to-time. Internally,

this particular audit is being branded as ‘Rose Audit’

Similarly, another best practice of Oldtown is to use their own coffee when it comes to

satisfying the customer needs and wants. Needless to say, customers are being treated with

Old Town White Coffee which is a blended of 3 types of coffee beans i.e. Robusta, Arabica

and Liberica, of which 70% of the coffee bean used is Robusta. This instant coffee mix is

special as it is only used in outlet and is not available at departmental store.

The validations of these best practices are constantly monitored by Oldtown by propagation

of schedule preparation and checking on weekly interval basis. Regular inventory checking

are also monitored in order to prevent wastages and to save organization resources.

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The Biggest Challenge

The main problem that the Oldtown Alpha Angle branch is facing originated from issues

regarding customers. When it comes to matters consisting of late orders and foods are not

tasty, the customers can be seriously pushy and needy. Under normal circumstances, these

behaviors by the customers are perfectly normal as they are paying customers and deserved to

be treated with respect and honor. However, at times, the customers can be grumpy naturally

and overreacted to the slightest mistake or error without being compassionate and

understanding on the workers.

This problem can be highlighted through the portrayal of the following business model:

Porter’s Value Chain Analysis Framework

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Inbound logistics (Suppliers, Warehousing, and Inventory Control)

Outbound logistics (Distribution, order fulfillment)

Marketing & sales (Advertisements and promotions, pricing, loyalty programs)

Brand/Brand Image/Recognition (Customer relations, customer feedback)

Company Infrastructure (Administrative management, planning management, accounting. etc)

Human Resource Management (Labor, personal skills training and development employee benefits. etc)

Technology Development (R&D, process automation, design, etc)

Procurement (Raw materials, machines and equipment, etc.)

Customer dealing issues (errant customers, late delivery, and tasteless food)

Inbound logistics (Suppliers, Warehousing, and Inventory Control)

Solutions

Generally, the solutions relating to customer issues are solved by using personal discretion

and logical thinking. This is done by following a list of steps highlighted by Oldtown

management particularly in dealing with errant customers. Much of this guideline will be

used by Assistant Supervisors, Supervisors, and Managers to pacify customers that are not

happy with current services that arise out of wrong billing, late orders and receiving tasteless

food and beverages.

Below are the lists of steps that Oldtown employees have to adhere when it comes to matter

of dealing with customers:

Steps:

1. Listen to customer > Customer needs to maintain an eye contact

regularly in order to show respect

> Listen attentively

> Do not interrupt customer when they are speaking

> Empathize

2. Acknowledge > Convey problems to Managers about full

information of the situation

3. Settle the problem > Settle the problems immediately

> If unable to settle, get superior to help out

4. Thank the customer> Thank the customer for their food and

beverage

> Assure them this thing never happen in future

> Invite the customer to return again

As for the incidence of prepared food being tasteless or spoiled, customers are being given an

option of ordering different food at the cost of the original dish. This is regardless of the price

as Oldtown wants to maintain good relationship with consumer at all times. Similarly,

another solution also being practiced in the form of waiver of bills for the same scenario

described earlier.

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Process Flow For Distribution Activities

The Group currently has two food processing centres in Ipoh and one in Subang Jaya,

Selangor. Oldtown processed food is distributed by their own logistics to their warehouses

and outlets in Malaysia, Singapore, and third party warehouses in East Malaysia and

Indonesia.

Processed food from processing centre in Ipoh is distributed to their warehouses in

Butterworth, Ipoh and Subang Jaya. Processed food from their processing centre in Subang

Jaya is distributed to the warehouses located in Subang Jaya, Ipoh and Butterworth

Baked goods from the confectionary and bakery centre in Ipoh are distributed directly to

Oldtown café outlets in the northern region and also to warehouse in Subang Jaya.

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Café Outlets (North)

Café Outlets

(Central)

Café Outlets (South)

Café Outlets (Singapore)

Warehouse (Ipoh)

Warehouse (Butterworth)

Warehouse Indonesia

Warehouse (Subang Jaya)

Warehouse (Johor Bahru)

Warehouses (East

Malaysia)

Confectionary and Bakery Ipoh)

Food Processing Center (Ipoh)

Café Outlets

(Indonesia)

Café Outlets

(East Malaysia)

Food Processing Centre (Subang

Jaya)

From the warehouses in Butterworth and Ipoh, the processed food is distributed to Oldtown

café in the northern region.

From Oldtown warehouse in Subang Jaya, baked goods and processed food are distributed to

local café outlets in the central region and warehouse in Johor Bahru. While, processed food

are also distributed to third party warehouses in East Malaysia and Indonesia.

From warehouses in Johor Bahru, baked goods and processed food are then distributed to the

café outlets in the southern region and Singapore.

From the warehouses in East Malaysia, processed food is distributed to the café outlets in

East Malaysia.

From the warehouse in Indonesia, processed food is distributed to Oldtown café outlets

located in Indonesia.

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Conclusions

Improvement in terms of constant changes is the key for OLD TOWN WHITE COFFEE

continuous success. By working and tinkering with existing business model, practices and

strategies will ultimately give them the competitive advantage to stay ahead from the rest of

the competitors. Needless to say, the company’s legacy remained unscathed for the last

decade due to their striving effort in managing customer’s needs and wants effectively.

Significantly, Oldtown have established their best practices in terms of coffee making on par

with other F&B heavyweights such as StarBucks and Dome. This is only achievable by their

fluidity in internal coffee making process and selection process of highest grade coffee beans

in order to serve their customers. Integrated business also enables Oldtown to control most

aspects of the value-added chain to control product quality and service provision, as well as

to retain as much of the profit as possible within the Group.

Responses to customer’s feedback in terms of negative complaints pertaining to quality of

service, quality product and facilities and environment have been carefully scrutinized.

Progressively, it helps to build a good reputation among food critics and industry experts so

that any errors are immediately addressed without procrastination. By striking a balance in

this two core areas, Oldtown can look up to aggressive expansion plan with confidence and

valor that much needed for in order to be a global player.

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Appendix

The principal business activities of Oldtown Group are depicted as follow:

Notes:

† Also includes instant bottle coffee which represented a very small proportion of Oldtown total revenue FYE 2010

* RTD Coffee started in 2009

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BusinessActivities of

Oldtown Group

Operation of Café Chain

Manufacturing of Coffee and Other Beverages

Marketing and Sales of Coffee and Other

Beverages

Own Café Outlets Instant coffee-mix Instant coffee-mix †

Partially owned outlets

Franchised and licensed outlets

Food Processing

Roasted coffeepowder

Instant milk tea mix

Instant chocolate mix

Roasted coffeepowder

Instant milk tea mix

Instant chocolate mix

RTD coffee *

White coffee background

White Coffee originated from Ipoh, Malaysia and is known for its robust aroma and its

creamier and richer taste. It is basically produced from the same species of coffee beans that

black coffee used, i.e. Robusta or Arabica coffee. However, Old Town White Coffee is a

blended of 3 types of coffee beans i.e. Robusta, Arabica and Liberica, of which 70% of the

coffee bean used is Robusta.

The main difference between white and black coffee is basically the way the coffee beans are

roasted. To produce a traditional ‘black’ coffee, coffee beans are roasted with sugar and

margarine. While ‘white’ coffee beans are only roasted with margarine. Without sugar, the

roast is not as dark and hence termed as ‘white’ coffee.

Coffee beans introduction

Arabica coffee is a pricier and more superior specie as compared to Robusta coffee. It

produces the rich flavour and body found in a good cup of coffee. Arabica coffee is difficult

to grow, and prone to disease. Hence, requires more hand cultivation and result in lower yield

harvests per acre.

Robusta specie is a hardy, high yielding plant which is resistant to numerous pests. Most of

the large coffee companies in the world will blend a small amount of Arabica coffee beans

with a larger portion of Robusta coffee beans.

Liberica is a specie of coffee that originated from Liberia, West Africa since 1843. Today,

most of the liberica coffee trees are grown in Malaysia, Indonesia and Philippines with some

in West Africa, and India. However, only nearly 1% of Liberica coffee is traded in coffee

trading around the world. This beautiful long-living plant is strong, lush, with fruits and seeds

proportion double to those of Arabica and more immune to parasites attacks.

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