SHABU HACHI GROUP:

MANAGING IN TURBULENT TIMES

"Shabu Hachi, Hachi Grill or Hachi Group is not just a brand. It is a promise we make to the customer,
" - Githa Nalaeza (Shabu Hachi Founder)

Healthy, halal food at an affordable price. This is the kind of promise that Githa Nafeeza, founder of
Shabu Hachi, had in mind when together with her husband, she launched the shabu Hachi restaurant
chain. It didat take long for the restaurant to gather wide attention and later r became a success.
Shabu Hachi was first established in 2015, during intense competition from big players such as Gyu
Kaku, Kintan Buffet and the well-known family restaurant chain Hanamasa. Despite the tough food
and beverage (F&B) industry competition, Shabu Hachi managed to develop and earn its own
success. The new restaurant chain started to grow rapidly within the first three years and opened a
total of six new cutlets since the brand first hit the market in 2015. In the following years more
outlets were introduced, induding the restaurant chains new concepts in 2018 such as Hachi Gril in
Alar Sutera Tangerang and, in 2019, Shabu Hachi at Gato Subroto Museum Satria Mandala. The
brand continued to grow and evolve and is currently known as Hachi Group.

Despite the restaurant's continued growth and success, having a strong brand and winning awards
together with national recognition, it would soon face a new kind of challenge. In 2020, the year
after the company's success, Indonesia would face an inconvenient truth. The coronavirus, initially
started in Wuhan, China, had reached Indonesia, particularly the capital of Indonesia, Jakarta. The
restaurant chain would face unexpected changes they had never experienced before. Indonesia's
growing economy suddenly turned around, as massive isolation measures and safety protocols were
introduced nationwide. People were asked to stay at home; schools, universities, recreation sites
and shopping centers were dosed, economic recession became inevitable, and the future of the
company was now at question.

Company History

Established on 17 April 2015, Shabu Hachi was founded as a local Indonesian company!. It was
founded by an Indonesian couple, Githa Nafeeza, a former television anchor, and her husband
Sudjarwo Budiono. The couple's idea came when they both travelled to Japan, Hong Kong, and
Singapore. By the time the couple returned to Indonesia, they both found it hard to find the same
food sensation they could easily find overseas. After careful consideration and thoughtful business
analysis, the couple decided to enter the Shabu F8B industry. The name "Shabu Hachi* itself means
the product "shalt/ (thin meat and vegetable cooked in stock with dipping sauces)

and ‘HachI in Japanese means number eight which represents the symbol of infinity and a constant
flow of energy and power. In Japanese culture, the number eight is often associated with material
wealth, money, and success in business.

Eat Better, Feel Better, Live Better

The company's tagline "Eat Better, Feel Better, Live Better" is not just a slogan but has become the
core philosophy of the company. The company believes that its true success comes from their
customers ultimate satisfaction. The restaurant offers healthy food that can be served quicky at an
affordable price.

"This is the kind of promise that the company wants to deliver to

the customer, said Githa Nafeeza, CEO of the Hachi Group. The restaurant serves a range of 40
different food choices (Exhibit 1) mainly shabe shabu and yakinilar that consists of imported beef,
seafood, salad, vegetables, and even a wide range of cakes choices such as dorayaki, takayakl,
rakitor/robatayald, Korean kimchee, chocolate pudding and sweet cassava from Thailand. In August
2018, Shabu Hachi was awarded both the Halal MUI (Majelis Ulama Indonesia) and MURI (Museum
Rekor Indonesia) certification for being the first all-you-can-eat (AYCE) shabu-shabu and yakinikur
halal restaurant in Indonesia. In 2019, the following year, Hachi Grill was also awarded the Halal MUI
certification with "Excellence* (Exhibit 2) for their Halal Assurance System implementation.

Industrial Background

Back in 1987, the pioneer of all-you-can-eat (ACE) Japanese restaurant in Indonesia was Hanamasa.
For almost 30 years Hanamasa had no significant competition and was the sole player in the
industry. In 2014, the Boga Group introduced another al-you-can-eat Japanese BBQ restaurant
named "Kintan Buffet' and joined the competition.? Later in 2015, the largest Yakiniku restaurant
operator from Japan with 700 outlets worldwide, 'Gyu-Kaku’ opened its first outlet in

§SO Tangerang'. Around the same time, "Shabu Mach/ opened its first branch in Ampere, South
Jakarta. During the past 5 years, Indonesia experienced stable and continuous economic growth,
making the Indonesian F&B all-you-can-eat industry interesting to the players that started at nearly
the same time, and thus were competing head-to-head with one another.

According to Statista (Exhibit 3), since 2017 the estimated revenue growth in the Indonesian F8B
segment nearly quadrupled its market size from US$472m in 2017 to USs1,50Im in 2020, making the
segment increasingly interesting. Indonesia's continued economic growth rate and rising middle ass
helped the F8B industry continue to grow. According to the BPS Statistical Yearbook of Indonesia
(Exhibit 4), another interesting trend that could be found in the rising middle class was that the
percentage of monthly expenditure per capita for prepared food and beverages continued to rise for
both urban and rural citizens from initially 16.82% in 2018 to 17.269 in 2019. This rising trend
indicated that people were spending more money for prepared food and beverages and that this
trend would likely grow in the future.

Pandemic and Economic Crisis

On 2 March 2020, two Indonesian citizens tested positive for the novel coronavirus after being in
contact with an infected Japanese national. It was announced by Indonesia's President Joko Widodo
on national television. The coronavirus took Indonesia by storm, within siX weeks more than 7000
Indonesian citizens (Exhibit 5) would test positive with the coronavirus, with the death rate reaching
over 600 cases. The virus, now known as COVID-19, would suddenly drag the country into both a
human and economic crisis. The coronavirus panderic didnt just affect Indonesia but had also been
recognized as an international pandemic worldwide, infecting millions of people and even killing
hundreds of thousand people.

These events had a huge impact on the nation's economy, as the public started to panic. There was a
run-on health masks, vitamins, hand sanitizers and groceries by the public. The USD-IDR exchange
rate fell around 15% from Rp. 14,000 to Rp. 16,500 (Exhibit 6), while the Indonesian stock exchange
rate plummeted nearly 40%6 to 3.8 from initially 6.0 in early January 2020 (Exhibit 7), the lowest
since 2016. Soon after, massive isolation measures and safety protocols were introduced in the
country.
Starting with the nation's capital in Jakarta, the largest city in Indonesia with a population of over 10
million, all schools and universties were suddenly closed. Recreation sites such as Ancol (a coastal
area in north Jakarta) and /Monas (the national monument) were restricted and/or dosed.

Shopping centers were dosed, while offices started to send their workers to work from home and
atizens were requested to stay at home and strictly avoid crowds whenever possible.

Saving the nation's economy in the face of suddenly spiking unemployment rates was deemed the
priority. Companies had to make provisions to establish a 'new normal. The Hachi Group worried
that their restaurants would become a potential source of infection.

People, People, People

Since its first opening in 2015, the Shabu Hachi restaurant chain grew at a faster speed than the
Hachi Group could imagine. The number of restaurants under the Hachi Group jumped from to
outlets in 2015 to a total of eleven outlets in 2019 causing the number of restaurant drew to grow
rapidly to 1400. Githa understood that the crew is what made Shabu Hachi great. She always treated
the crew like her own family, and for Githa, family always comes first. A company that takes care of
their employees, would eventually have employees that take care of the customers. Soon Githa
would face a difficult decision between choosing to close all their outlets for the safety of their
workers and customers. Closing outlets would mean stopping sales and producing no incore without
knowing when this pandemic would end while risking the future of the company. On the other hand,
remaining open would produce sales but at the risk of the safety of their workers and their
customers. Either decision would greatly affect the company.

Delivery and Take-Away Launch

The Hachi Group restaurant chain was well-known for is warm and unique ambience, friendly
service, and their wide range of food choices. These characteristics were the core strengths of the
company. In April 2020, the coronavirus had already spread nationwide and on Apri 9, 2020, the
Governor of Jakarta announced that large scale social restrictions (Ps88) were effectively to be held
in the capital. These restrictions were later extended until 22 May 2020°- These large-scale social
restrictions impacted strongly on the F8B industry. No dine-in customers were allowed as citizens
were to stay at home to comply with restrictions on social life imposed by the government to
contain the spread of the coronavirus?. More than 6800 restaurants were forced to dose and over
200,000 employees in this industry had to be laid off amid the pandemic?. To save their employees
and the future of the company, the Hachi Group were forced to think of new solutions to save their
business and planned to launch new delivery and take away services (Exhibit 8]. After careful
consideration, preparations were made, and the restaurant chain planned to launch the new
services starting from April 6, 20201

Shabu Hachi's Crisis Management

Starting from March 22, 2020, Hachi Group finally decided to dose all their outlets to support the
goverment's large-scale social restrictions (PS8B. During the dosing period, the management team
implemented new safety and health protocols for their employees. Facing the 'new normal era, all
on-duty staff were to undergo 14 days of self-quarantining, applying health check procedures such
as checking body temperature, and using hand sanitizers. Further measures were implemented such
as regular outlet sterilization, masks for both customers and staff, extra self-hygiene for staff and
limitation on the number of customers dine-ins. Ansoff (1965, 1979,
1984) analysed the relationship of capability, strategy, environment, and performance and
presented theoretical propositions; for different types of environments, different solutions are
applied. Change in the business model emvironment greatly affected the business environment of
the F&B industry (Exhibit 9). Despite Shabu Hachi's previous success, its survival would now depend
on the response of their management team.

What to do?

Que to the coronavirus pandemic outbreak, large scale social restrictions (PSBS), extensive massive
isolation measures, and safety protocols imposed nationwide severely affected the FaB industry.
Dining in at restaurants was no longer allowed. What were the effects of the existing service
blueprint? What marketing strategies were required to improve the organization's capability to save
the business? Was the Hachi Group's attempt to change its product from a warm and unique
ambience to delivery and take-away services the right kind of innovation? What were the social and
economic effects on the target customers? What could the Hachi Group restaurant chain do to save
both the future of the company and the safety of their workers? How could Shabu Hachi sustain its
competitiveness and stay profitable with increasing costs due to increasing safety protocols and
extensive isolation measures?

Slide 1: Title

Title: "Shabu Hachi Group: Managing in Turbulent Times"

Subtitle: "Navigating the Impact of COVID-19 and Economic Crisis"

Slide 2: Introduction

Introduction to the Case

Brief Overview of Shabu Hachi Group

Reiterate the Challenge: COVID-19 Pandemic and Economic Crisis

Explanation (Slide 2): In the introduction, briefly outline the case study and provide an overview of
the Shabu Hachi Group. Clearly state the main challenge faced by the company, which is the impact
of the COVID-19 pandemic and economic crisis.

Slide 3: Company Background

Founding of Shabu Hachi

Brand Philosophy and Tagline

Explanation (Slide 3): In this slide, introduce the background of the company, including its founding
and the core values reflected in its brand philosophy and tagline.

Slide 4: Pre-COVID Success

Discuss Shabu Hachi's Success and Expansion

Factors Contributing to Success

Explanation (Slide 4): Describe the company's success and growth trajectory prior to the pandemic.
Highlight the key factors that contributed to Shabu Hachi's success.

Slide 5: Arrival of COVID-19

Timeline of COVID-19 Arrival in Indonesia

Immediate Impact on Economy and Society

Explanation (Slide 5): Present a timeline of when COVID-19 arrived in Indonesia and emphasize the
immediate impact it had on both the economy and society.

Slide 6: Initial Challenges

Economic Downturn

Safety Concerns for Employees and Customers

Explanation (Slide 6): Outline the initial challenges faced by the company, including the economic
downturn and safety concerns for both employees and customers.

Slide 7: Dilemma: To Close or Remain Open

The Decision-Making Process

Balancing Economic Survival and Public Health

Explanation (Slide 7): Detail the dilemma the company faced, the decision-making process involved,
and the need to strike a balance between economic survival and public health.

Slide 8: Transition to Delivery and Takeaway

Shift in Business Model

Launch of Delivery and Takeaway Services

Explanation (Slide 8): Discuss how the company adapted its business model by launching delivery
and takeaway services, highlighting the strategic shift made in response to the crisis.

Slide 9: Crisis Management Strategies

Safety Protocols Implemented

Employee and Customer Safety Measures

Explanation (Slide 9): Describe the crisis management strategies implemented, including safety
protocols for employees and customers, and how the company adapted to the "new normal" era.

Slide 10: Key Takeaways

Summarize the Main Insights and Lessons Learned

Emphasize the Importance of Adaptation and Innovation

Explanation (Slide 10): Provide a concise summary of the key takeaways from the case study,
emphasizing the lessons learned and the importance of adaptability and innovation in times of crisis.

Political:

 Government Regulations: Compliance with government regulations related to food safety,

hygiene, and restaurant operations is essential. Changes in regulations can impact
operations and costs.
 Taxation Policies: Taxation policies, such as VAT or sales tax, can affect pricing and
profitability.
 Health and Safety Regulations: Compliance with health and safety regulations, especially
during the COVID-19 pandemic, is critical. Adherence to social distancing and sanitation
requirements is necessary.

Economic:

 Economic Downturn: Economic factors, such as recessions or economic crises, can affect
consumer spending on dining out, potentially impacting Shabu Hachi's revenue.
 Exchange Rates: Fluctuations in exchange rates can impact the cost of imported ingredients,
affecting profitability.
 Inflation: Rising inflation can lead to higher operational costs for ingredients, labor, and
utilities.

Social:
  Consumer Preferences: Changing consumer preferences for healthy, halal, and affordable
dining options align with Shabu Hachi's offerings but need to be continually monitored.
 Demographics: Understanding the demographics of the target market and adjusting the
menu and marketing accordingly is essential for success.
 Cultural Trends: Shabu Hachi's success may be influenced by cultural trends related to dining
habits and preferences.

Technological:

 Digitalization: Embracing technology for online ordering, delivery, and payment options can
enhance customer convenience.
 Automation: Implementing automation in kitchen operations or inventory management can
improve efficiency.
 Data Analytics: Utilizing data analytics to understand customer behavior and preferences can
inform menu choices and marketing strategies.

Legal:

 Food Safety Regulations: Compliance with food safety and hygiene regulations is critical to
maintain the restaurant's reputation and avoid legal issues.
 Labor Laws: Adherence to labor laws, including wage regulations and working conditions, is
necessary for employee satisfaction and compliance.
 Intellectual Property: Protecting trademarks and intellectual property associated with the
Shabu Hachi brand is important to prevent infringement.

Environmental:

 Sustainability: Increasing awareness of environmental issues may lead to a demand for

sustainable sourcing practices and eco-friendly packaging.
 Climate Change: Climate-related disruptions can affect the availability and cost of certain
ingredients.

1. Technology-Related Key Success Factor:

Online Ordering and Delivery Platform:

Key Factor: An efficient and user-friendly online ordering and delivery platform is crucial for success
in the modern restaurant industry. It enhances customer convenience, especially in a post-COVID-19
world where online ordering has become more prevalent.

2. Manufacturing-Related Key Success Factor:

Ingredient Quality and Sourcing:

Key Factor: Consistently sourcing high-quality ingredients, especially imported beef, seafood, and
vegetables, is essential. Ensuring a stable and reputable supply chain for these ingredients is crucial
to maintain the quality of dishes and meet customer expectations.

3. Distribution-Related Key Success Factor:

Efficient Delivery Logistics:

Key Factor: Establishing an efficient and timely delivery system is critical for providing a positive
customer experience. Quick and reliable delivery ensures that food arrives fresh and hot at the
customer's doorstep.

4. Marketing-Related Key Success Factor:

Brand Building and Customer Engagement:

Key Factor: Building a strong brand identity and engaging with customers through effective
marketing strategies is vital. Creating a unique brand image and maintaining a strong online
presence helps attract and retain customers.

5. Skills and Capability-Related Key Success Factor:

Employee Training and Customer Service:

Key Factor: Investing in employee training and fostering a culture of exceptional customer service
sets Shabu Hachi apart. Skilled and customer-focused staff can enhance the overall dining
experience, leading to customer loyalty and positive word-of-mouth.

Key Factor for Overall Success:

Customer-Centric Approach:

Key Factor: The overarching factor that ties all these elements together is a relentless commitment
to a customer-centric approach. Understanding and exceeding customer expectations for healthy,
halal, and affordable dining experiences is the core of Shabu Hachi's success. This includes
continuously adapting to customer preferences, maintaining food quality, ensuring safety, and
providing exceptional service. A customer-centric mindset drives innovation and long-term success
in the competitive restaurant industry