As revelers filed into the Empirica nightclub, on a recent Friday night, in Jakarta’s business district just a stone’s throw from the stock exchange, manager, Joe Chen, was counting on a good night.
International DJ’s were lined up ready to play to play to a crowd that would number 800 or more. Already some were filing into the converted warehouse to take their place on the dozen or so white leather couches where minimum drink orders started at almost $400. Women inexplicably decked out with angel wings handed out free cigarettes compliments of one of the night’s sponsors.
But even a blow-out night wouldn’t undo a steady decline in patron numbers over recent years, says Chen, chief operating officer of Enzo Group, which runs Emprica and a swag of other properties. Troubles sourcing alcohol, a slowing economy, and growing conservatism is crimping Jakarta’s once rollicking entertainment scene.
“This year was supposed to be our recovery year,” says Chen.
“It hasn’t happened.”
Instead, for at least some in the food- and- beverage scene, the doldrums have set in. Consumers, especially young ones, are increasingly fretting about job opportunities, prompting some to rein in spending on a night out.
After having falling consistently over the past decade, Youth unemployment has topped 19%, according to the International Labour Organization’s most recent data say. Slowing demand for Indonesian commodities like minerals and energy have limited GDP growth to little more than 5% in recent years, a far cry from the 7% or more that the country’s president, Joko Widodo, has promised.
For Chen that means fewer revelers through the door. Roughly 800 would show on any given Saturday, when his company first took over the sprawling 2000 square meter venue in 2013. That number halved until the club closed for three months for renovations earlier this year. Now, unless there’s an event as on this night, Chen still struggles to woo 600.
Next year he plans to move the club to a smaller venue, in line with consumer preferences and spending.
“People just aren’t spending like they used to.”
Over at the Union Brasserie and Bakery it’s a slightly different story. Ensconced in leather booths amid wood paneling and white tiles suggesting a European café, patrons tuck into gourmet variants of Indonesian staples such as nasi goreng or ox tail soup. Outsized slices of red velvet cake are a dependable favourite.
On a recent Saturday afternoon, as patrons crowd the bar as they wait for a table, Wibi Hananto, head of public relations for Union Group, which owns the restaurant and 13 others in Jakarta, has to speak up to make himself heard.
“Things were booming,” says Hananto, recalling when he first joined in 2012.
“It was a really good business. Now it’s a lot less.”
Restaurant owners, who didn’t want to be quoted owing to worries they may tip their hand to competitors say average spending per table has dropped by a third.
In Muslim majority Indonesia, where the restaurant Indonesia comes to a virtual stand still during the fasting month of Ramadan, tighter spending can have an outsized impact on a restaurant’s fortunes. The year-end holiday season can make up for 40% of Union’s revenues.
Adding to headaches are troubles sourcing alcohol, especially spirits. Importers are often short of favourite brands, prompting some managers to dip into the black market – a risky proposition as a tax hungry government steps up raids to crackdown on bootleggers.
“You have to be creative and steer customers to less popular brands,” says Hananto who says the company steers clear of the black market.
Other venues have been force out of business entirely following the inauguration in October of the Baswedan administration, which swept to power in April thanks to support from conservative Muslims. Last month, the city revoked the license of notorious massage parlour Alexis Hotel in the capital’s red light district in the north on suspicion that it is a front for prostitution.
The city’s lurch to the right has police skittish. The only sizable gay nightclub, Apollo, has been closed for nearly a month following Baswedan’s inauguration in October. One of the club’s investors speaking on condition of anonymity because he didn’t have permission from the other shareholders said police told investors would no longer accept protection money. Though homosexuality is legal, a police raid or Islamic hardliners seemed likely.
“It’s just too risky,” said one of the venue’s six investors.
To be sure, spending on conferences, and tourism are helping matters in other segments. J.W. Marriott, which operates 43 properties in Indonesia, will open three additional properties in Bali, the island of Belitung as well as one in Jakarta.
Tourism has been Indonesia’s fastest growth industries. While Bali’s erupting Mt Agung has disrupted tourism traffic, arrivals are expected to almost double by the end of the decade.
Even so, elsewhere, spending is less buoyant, said Union’s Hananto.
“Purchasing power is decreasing,” Hananto said. “People are being more cautious.”
This story first appeared in the Business Times of Singapore. Click here for the story