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.
3 | P a g e
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.
4 | P a g e
Milestones
Oldtown Group has won numerous awards through their subsidiaries and substantial
shareholder, Old Town International. These awards are listed below:
5 | P a g e
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.
6 | P a g e
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
7 | P a g e
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.
8 | P a g e
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.
9 | P a g e
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)
10 | P a g e
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.
11 | P a g e
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.
12 | P a g e
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
13 | P a g e
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)
14 | P a g e
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.
15 | P a g e
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:
16 | P a g e
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.
17 | P a g e
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
18 | P a g e
19 | P a g e
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.
20 | P a g e
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.
21 | P a g e
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.
22 | P a g e
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.
23 | P a g e
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
24 | P a g e
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.
25 | P a g e