International Journal of Business and Economy (IJBEC) eISSN: 2682-8359 | Vol. 4 No. 4 [December 2022]
Journal website: http://myjms.mohe.gov.my/index.php/ijbec
HOW TO DEVELOP MICRO-SIZED CULINARY ENTERPRISES: A CASE STUDY OF THE INDONESIAN
VILLAGE OF RANCAMANYAR
Ida Nuraida1*
1 Vocational and Professional Program, Parahyangan Catholic University, Bandung, INDONESIA
*Corresponding author: [email protected]
Article Information:
Article history:
Received date : 8 November 2022 Revised date : 20 December 2022 Accepted date : 28 December 2022 Published date : 29 December 2022 To cite this document:
Nuraida, I. (2022). HOW TO DEVELOP MICRO-SIZED
CULINARY ENTERPRISES: A CASE STUDY OF THE INDONESIAN VILLAGE OF RANCAMANYAR.
International Journal of Business and Economy, 4(4), 75-85.
Abstract: Micro-small scale food businesses in Indonesia are growing rapidly. However, many of them do not know how to manage their business to grow.
There is no research that focuses on identifying problems in the micro-sized culinary business. In the Indonesian village of Rancamanyar, many housewives have high talent, creativity, skills and abilities in cooking, even though they have a low educational background. Their business is alive but not growing. The aim of this study is to investigate how to improve and develop micro-sized culinary businesses, in overall management aspects. The research method was descriptive qualitative. In general, there were eleven important issues in many aspects of management that needed to be addressed immediately, including setting the same price for different ingredients and quality of the product, lack of trust in subordinates, lack of employee welfare, and lack of hygiene. This study offers solutions that are divided into 4 major aspects of management (marketing management, operations management, financial management, and human resource management) in the short, medium and long term.
Keywords: culinary, micro-sized business, development, management.
1. Introduction
The majority of Indonesian micro-small scale businesses or industries are engaged in the food sector. According to data from the Central Statistics Agency (BPS), the number of Indonesian micro-small scale businesses in the food sector reached 1.51 million business units in 2020.
The proportion of Indonesian micro-small scale businesses in the food sector reaches 36% of the entire national Indonesian micro-small scale businesses, which totals 4.21 million business units. The culinary business is growing rapidly and varies in every level of society, including in the rural communities. Many housewives in the village explore and develop their hobbies, creativity, innovation, interests and talents in cooking by making snacks such as pastry, sponge cake, and cake. Their hobbies, talents, and interests form additional income for the family, or even become the main source of its income. They can develop their talent to become professional chefs in the future because they have a high level of creativity, innovation, experiences, skills, and abilities, which can support household life, increase family income and the welfare of local communities.
The presence of MSMEs of culinary business is not accompanied by a good management pattern. There are several problems faced by culinary business owners, both from external and internal factors (Ghatak, 2010). Problems arise from internal factors, such as lack of professional management of the organization, lack of mastery of technology and weak marketing, low quality of entrepreneurship, lack of financial/cash-book accounting, investment, less innovative product processing, lack of information, lack of working capital and shortage of skilled workforce. Meanwhile, other problems arise from external factors, such as the presence of new competitors, and the same substitution products from foreign franchises as a result of ASEAN free trade (Abernethy & Vagnoni, 2004). The determining factors in the production of leading small-medium food industry are investment, production capacity, labor, sales, and the utilization of technology simultaneously. However, individually, the sales have a significant influence on the production of leading small-medium food industries which is determined by promotion and market share (Yuvanda, R., Zamzami, & Safri, 2020). One way to develop the business of creative industries in culinary business for MSMEs is from the external side, namely the method of bundling products and from the internal side, namely strengthening management, especially financial management (application-based) (Utami &
Lantu, 2014). The external model of creative culinary industry development for MSMEs can be explained through the various roles of supporting institutions: the role of the media (printed, electronic, and promotion institutions), the role of agents (tourist travel agencies), the role of financial institutions, and the role of city government (Manteiro & Kabu, 2019).
A business that has been running for several years but which is difficult to develop can be caused by a lack of understanding of the overall management aspect or because of a limited educational background. There is no research that focuses on identifying problems in the micro-sized culinary business. This study used a micro-sized culinary businesses case study in the village of Rancamanyar, Indonesia. The actors from the micro-sized culinary business were housewives with a low educational level. The problem encountered is their business still exists but is difficult to be developed. These housewives do not know how to manage their business to grow, but they do have high talent and expertise in cooking. Their family is experiencing economic difficulties, so they sell a variety of foods. They managed their business by themselves. There is a lack of trust from these business actors to delegate their work to others.
The purpose of this study was to investigate how to improve and develop micro-sized culinary
businesses in the general management aspects including operation management, human resource management, financial management, and marketing management.
2. Literature Review
What is the chef's competence from a stakeholder perspective? Professionals in commercial kitchens should demonstrate strong managerial and leadership skills, as well as operational and administrative ones. Professionalism and democratic management should be exhibited by chefs, who should further develop their emotional intelligence (EI) competency (Marinakou &
Giousmpasoglou, 2020). There is a competency framework to classify executive chefs’
competencies: managerial, operational, behavioral and skills-related. The first two competencies can be improved through education and training. Meanwhile, the third and fourth are soft competencies that require more time for development in workers. Each competency was further divided into sub-competencies: culinary research, emotional control, negotiation skills, job guidance and proactive thinking ability (Wan, Hsu, Wong, & Lio, 2017). MSMEs of the Italian food sector do have potential to go global and internationalize their business if they leverage their competences. International trade intensity is not only positively related to their sunk cost ratio, financial slack intensity and technological capabilities, but also has a U- shaped linkage with the number executive managers (Sadghi & Biancone, 2018). What is the critical success factor of street food destinations? The availability of diverse street food resources and cultures, coupled with rich historic city cores can sustain street food vending (Chatibura, 2021).
Increasing sales performance of food business can be achieved by the cooperation of chefs and suppliers. Besides that, innovative and valuable products can improve performance and maintain a competitive advantage. Moreover, tacit knowledge sharing can become a chef’s ability to learn and provide competitive advantages and benefits (Wu, Ku, & Wu, 2022).
Financial Management for MSMEs culinary business are the importance of cash flow reports and modeling of cash flow reports cash (Manteiro & Kabu, Model of Creative Economic Development for Micro, Small and Medium-sized Culinary Industries in Kupang City Indonesia, 2019).
Environment factors can influence creative culinary business. There is a close relationship between the creativity of culinary artists and the quality of their environment. Therefore, it is important to develop and maintain a physical, social, cultural and educational environment that is conducive to culinary creativity (Horng & Lee, 2009). There are three creative experiences of an extraordinary group of pastry chefs: creative harmony in the form of sensorial and symbolic poetry; imaginative episodes as a hypnotic state of inspiration and incubation; and the creative duality of scientific rationalism and artistic fashion (Lee, Blum, & Tomas, 2020).
The items of customer needs that determine the priority level of customer needs for micro culinary fried rice enterprise are as follows. The variable of product quality in the Performance dimension with items including delicacy, high quality ingredients, varied menu and large portion is the variable of customer needs with the highest priority. The variable of perceived benefit in the dimension of a statement of value with items including low prices and discount occupy takes second place. The variable of service quality in the dimension of responsiveness with the indicator item fast service ranks third (Wicaksono & Fatimah, 2020).
3. Methodology
The research design used descriptive qualitative research, which is categorized as a case study (O'Reilly & Parker, 2012), focusing on the micro-sized business industry sector engaged in culinary businesses in Rancamanyar Village, Indonesia. This study analyzed data obtained from interviews and observations of 4 housewives who have established a micro-sized culinary business from 2014 until now. Their business become a source of family income. The reason for choosing the object of research into 4 micro-sized culinary businesses was that these four housewives have similar characteristics between them. They do not have a good educational foundation, they have high talent, creativity, skills and abilities in cooking, they have culinary business experience for 8 years, their business is alive but difficult to grow. One of the housewives do everything herself because she does not want to hire employees/assistant. The other three housewives only have 3 to 4 temporary employees.
The list of questions for the in-depth interview can be found in Appendix 1.
4. Results
The data findings derived from the interviews and observations in Appendix 1 indicate that most of the micro-sized culinary businesses have not carried out the indicators in each field. In general, it can be concluded the following important issues need to be addressed immediately.
1. In general, the main problems of the company were highlighted by the owner.
There is limited space for production. There is inadequate equipment (capital) such as the lack of an oven and mixer with a larger capacity. The interviewees do not understand how to promote their product. Currently, it is still limited to installing banners in front of the house, personal selling and promoting via WhatsApp. The target market is still around the house and the traditional market. Consumers consist of resellers and end-users in the surrounding community. End-users place orders frequently, but not regularly. Sales increase during Eid al-Fitr, so recruiting temporary employees takes place especially during Eid. The four micro-sized culinary businesses haves been running to generate profits for 8 years, but there is no business progress.
2. Organization structure.
One of the housewives who owns a micro-sized culinary business does all the production, marketing, finance, and human resource management activities by herself. There is no production assistant and no professional organizational structure like small-to-large companies, and there is no hierarchy of employee relations. She just recruited temporary employees when there were many orders on Eid al-Fitr. Her family only occasionally lends a helping hand as a food courier to the neighbors. Three other micro-sized culinary businesses have two to three assistants to assist with the production. Marketing, finance, and human resource management activities are managed by the owner. Housewives in the region only have primary educational backgrounds.
3. Work process from purchasing raw materials to selling to consumers generally can be picked up by the consumers themselves, delivered, or using the services of an online motorcycle driver.
4. An important issue that needs to be addressed urgently is in the area of cooperation and information sharing.
There is no cooperation for one housewive who do everything by herself. Overall, they have difficulty training freelancers because the latter did not follow instructions such as dough and raw materials are not weighed, the dough crumbled due to using too much butter, and it could not be moulded. In addition, the oven timer was broken, so the cake was scorched.
5. Important issues that need to be addressed immediately can be identified in the field of hygiene and lay-outs.
The taste of culinary products is delicious, cheaper, and unique, compared to similar products, but it is really necessary to improve hygiene at the production site. Due to limited space, the production area is still integrated with the family room or other rooms. There is no capital to expand the production area. Hygiene, conciseness, neatness, cleanliness, care, and diligence, need to be improved. Two of the micro-sized culinary businesses do not have production desks so everything is done on the floor. The workspace and production area are still messy and not neatly organized and clean. There is no anticipation of closing access to animals, such as cats, cockroaches, and rats that may enter the production area.
Placement and grouping of production areas such as dough are still mixed with clothes, children's study rooms, television tables, wardrobes, and the like. There are no shelves or cabinets to store raw materials and cooking utensils. The floor of the production area is slippery. This slows down and complicates the production process.
6. Important issues that need to be addressed immediately in the workplace are safety &
comfort.
There is no fire extinguisher yet. When cooking, chefs have not got used to washing their hands, using hairnets, gloves, and masks.
7. Important issues that need to be addressed immediately in the field of human resource and quality management.
One of micro-sized culinary business do not want to recruit an assistant to help her because the results of the assistant's cooking did not match the owner's expectations. She managed all activities by herself without involving the family or recruiting assistants to help the business. She makes measurements of raw food ingredients based on her feelings, not based on recipes. She is lazy to make recipes based on her own creativity. However, the feeling was good because it tasted so good that she did not believe it was prepared by someone else. The consequence is she often feels tired and sick, when she is overloaded by receiving large quantities of purchase orders. In three other micro-sized culinary businesses, the labor turnover for temporary employees is high. There is a lack of employee welfare. Wages per week are below regional minimum wage regulations.
Working hours vary depending on the number of purchase orders so that working hours can be 8 to 12 hours per day. If employees work more than 8 hours, there is no overtime pay. Employees do not receive a lunch allowance and do not receive religious holiday
allowances. When they received a lot of orders, some had to be rejected due to a shortage of manpower.
8. Important issues that need to be addressed immediately in the field of bookkeeping and calculation of cost of goods/selling.
Family finances and business finances are combined. They do not know how much income and expenses per day. There is no bookkeeping and calculation of cost of goods/selling.
As a result, the selling price of similar products using different variations, or different ingredients, or a different quality of raw materials, will be the same. For example, the selling price of brownies in 1 box consisting of 10 flavors is the same as the selling price of single flavored brownies. The selling price of the original chili sauce is the same as the selling price of the chili sauce made from squid.
9. Important issues that need to be addressed immediately in the field of product innovation and development management.
So far, the new products are only seasonal, based on the best-selling products in the market.
New product innovation needs to be improved.
10. Important issues that need to be addressed immediately in the field of new markets, promotion and social media.
They do not think about market expansion, packaging changes to reach new markets, making basic marketing tools (business cards, brochure packaging, and catalogs) according to the target market. For promotion, the use of social media has not been optimally used, such as not using personal email, paid Facebook, WhatsApp business, and Instagram, they have not thought about selling through the marketplace.
11. Important issues that need to be addressed immediately in the field of production.
There are no estimation, no safety stock, and no raw material inventory records. When they received many orders that must be served quickly, some had to be rejected because of the unprepared availability of raw materials.
5. Discussion
Based on the results above, the following methods will be described to improve the performance of micro-sized culinary businesses. The development of micro-sized culinary businesses can be divided into short-, medium-, and long-term improvement, and can be divided into 4 general functional aspects, namely marketing management, operation management, finance management, and human resource management.
Short-term improvements are as follows. In marketing management aspect, micro-sized culinary business can expand online marketing (such as paid Instagram and Facebook marketing). They can update the front banner infront of the house (brand, name and product photos) to explain in more detail to their neighbours and passers-by about what kinds of products they sell. They could change, update, and complete their WhatsApp profile picture with the brand name and product examples. In packaging, the brand should be made more
dominant, completed with composition, weight, and expiration, for each product variant. They could create a price list of products and a brochure for manual and digital sales. In addition, they can create a consistent, uniform and eye-catching brand.
Short-term improvements for general operation management are as follows. They should make labels for raw materials so that they are not confused and make it easier for employees to work.
Providing a production information board will make it easier for them when orders need to be completed. They should maintain cleanliness by washing their hands and using a hairnet during production so that no hair strands enter the dough. They need tidying up unused boxes/boxes, discarding useless items, storing and classifying items that can still be used in easy-to-reach places. In addition, they need to carry out stacking activities by arranging into one place for production equipment that was previously still scattered in the kitchen. To maintain cleanliness, it is necessary to provide a trash can in the production area. Management of business licenses is also important to provide a sense of security for consumers, also ask for permission from the drug and food control bureau, halal certificate. They need to prepare a production record book/register and an inventory of each raw material with safety stock so that they can estimate when to repurchase materials if supplies are running low. To minimize slippery floors, it is necessary to provide a mat. They also need to block animal access to production areas.
Short-term improvements for general finance management are as follows. Separating business and family finances is important. Separating personal money and business money will make them evaluate business expenses and income clearly. In addition, financial bookkeeping becomes more effective and efficient, and money for business capital will be protected because there are clear transaction records, so they can know whether the business is profitable or not, thus making it easier to make decisions about the business. For businesses, records of income and expenses are created (bookkeeping). It is important to record the cost of production, cost of goods manufactured, as well as the cost of goods sold for every variant of products. They need to calculate how many break-even points there are for each product variation, to find out what the minimum number of products that must be sold so as not to lose. They need to record the electricity bill per month divided by kwh per day for production, and calculate the amount, to be included in the cost of production.
Short-term improvements for general human resource management are as follows. They need to recruit employees to overcome the labor shortage so that they can fulfill orders from consumers. They need to increase employee satisfaction and loyalty by improving the compensation package as follows: providing a minimum wage that is adjusted to the regional minimum wage, providing overtime pay if casual workers work more than 8 hours per day, and providing food allowance. In addition, they need to improve training for employees and provide briefing to employees every morning. They need to increase trust and delegate authority to employees. However, they still need to maintain the confidentiality of recipes and product quality by preparing homemade culinary base dough. Employees just continue to stir, roll, print or bake.
Middle-term improvements for operations management include a purchase production table for dough making and molding. Middle-term improvements for marketing management are creating company profiles and catalogs, expanding distribution channels to stores, taking care of halal certification so that consumers feel safe consuming products. Middle-term improvements for human resource management consist of recruiting employees to overcome
the shortage of workers to help owners fulfil orders from customers. New employees can occupy the positions of production staff, market administrator, and so forth.
Long-term improvements for operations management are increasing product innovation by adding product variants, replacing or adding ovens, and producing frozen food. Long-term improvements for marketing management are promoting frozen food, expanding markets outside Bandung, and expanding distribution channels to market places. Long-term improvements for financial management include buying a laptop/computer for record bookkeeping.
6. Conclusion
By implementing the above strategy, micro-sized culinary businesses that have high potential in the culinary field will avoid selling at a loss because they can calculate how much production costs, how much income and expenses, and how much profit they get. Adding promotion methods, expanding distribution channels and target markets will help them increase sales.
They need to increase employee satisfaction and welfare at the lowest cost. They need to increase trust in employees without having to divulge secret recipes. Recording of raw material inventory also needs to be provided with a safety stock so as to minimize running out of raw materials during production. They do not have to refuse orders if there is a shortage of raw materials or labor.
The three improvement phases are expected to improve the general management of micro-sized culinary businesses in Rancamanyar Village and to increase hygiene factors, customer satisfaction and product sales. These strategies are relevant to be applied in the four research objects but require trials and adjustments to be applied in similar businesses elsewhere. The direction for future studies is to expand the sample size of the research object and expand the scope of the research area.
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APPENDIX 1: List of Questions
No Questions
1 What company issues are highlighted by owners and workers?
2 Does the owner have employees, create a division of work, and create a job description for each employee?
3 What is the work process starting from purchasing raw materials, producing, to selling to consumers?
Put a yes or no check mark on questions a, b, and so on
4 Cooperation and sharing information Yes No
Cooperation.
a. Do production errors often occur due to lack of information?
b. There are regular meetings (every day/week) to discuss production Sharing information:
a. There is production board/inventory records Worker advice
a. Employees are used to issuing ideas for the betterment of the company b. There is already a suggestion box / idea board or other way to give an idea
5 Hygiene and lay-out Yes No
Good housekeeping
a. General cleaning regularly
b. Routinely clean up after finish production c. Items are labeled
d. Work equipment is cleaned regularly
e. Workers wear hygiene support (masks, aprons, gloves) f. Clean and dry work area
g. No insects & mice in the work area Lay-out
a. The arrangement of the work area is efficient (not many back-and- forths or to- and-fros)
b. The work area is clean from dust, patchwork and other dirt
6 Work safety and comfort Yes No
Work safety
a. Workers wear safety support equipment (safety shoes, masks, headgear) b. The laying of electricity/gas/kerosene/etc are safe
c. Workers work in a comfortable position (with table and chairs) d. Sufficient workplace lighting
e. Safe floor (no risk of falling) f. Low risk of moving goods g. Good air circulation
h. Workers have easy access to drinking water i. Fire extinguishers
7 Human Resource (HR) and product quality improvement Yes No
HR policy
a. Workers receive new skills training b. Standard Operating Procedure (SOP) c. Job description
d. Minimum wage paid e. Overtime checked f. Quality checked
g. Reject items are collected and counted h. The company has product standards
8 Bookkeeping and calculation of Cost of Goods / Selling Yes No
Bookkeeping
a. Family finances are separated from business finances b. Business expenses and receipts are recorded
c. There is an annual financial report
d. Business tax is paid based on sales revenue Selling price calculation:
a. Cost of goods calculated changes regularly
b. Selling price is determined based on cost price analysis c. The owner gets a salary from the business every month d. Electricity/water is calculated as part of the cost
9 Goal: product innovation & development Yes No
a. There are new products regularly
b. New products are created based on the analysis of hot-selling products c. Provided workers / special time for product development / design
10 Destination: new market, promotion & social media Yes No
New market
a. The company is gradually expanding the market b. Companies make packaging changes to get new markets
c. The company has basic marketing tools (business cards, brochures, price list of products, catalogs)
d. Prepare business cards, packaging, brochures, price list of products, catalogs, which are adjusted to the target market
Social media
a. The company has email
b. The company carries out promotions on social media (Facebook page, Instagram) c. The company sells through the market place (bukalapak.com, lazada.com, etc.) d. The company updates social media regularly
