After seven years operating as the most highly sought out speakeasy in the city, Omakase + Appreciate is KL’s favourite cocktail bar and one of the pioneers to have paved the way in positioning Malaysia securely in the international bar scene. Here, co-founder, Shawn Chong reveals in honest truth and candour their inspiring journey and what it takes to call time on a bar that was once the first Malaysian bar that is listed in the top 10 of Asia’s 50 Best Bars Award 2016.
By Shawn Chong, co-founder of Omakase + Appreciate and Bar Class Academy Asia. Interview and words Theri Burhan. Edited by Lim Aileen.
Seven years ago, Karl Too and I were young and we had time on our hands. We didn’t feel like we had a lot of risks because if we failed in this venture, we just had to find a job elsewhere and work very hard to pay back for this mistake, if it were to become a mistake.
Back in 2011/2012, I was freelancing as a part-time lecturer, an events consultant, and was also representing Malaysia in the Diageo Reserve World Class competitions. (Shawn is the Malaysian champion for years 2009, 2011, and for 2015 when he also won the South East Asian title). As a free agent, the money was good and I also had a lot of time, time that I spent in TATE where I would one day meet Karl. He always shared his findings with me and I remember saying to myself, maybe this guy would make a good partner.
I had a personal drive to build something on my own because I knew that there would be no bar or hotel that would allow me the freedom to do whatever I wanted. If I wanted to make a name for myself, I would need to have a place that I could work the way I wanted to. Building my own bar was the solution, and that was my ultimate goal.
Omakase + Appreciate was a hit right away
We opened in April 2013 and it was a hit right away. We picked up just after three months of opening when we expected our business to pick up in six months, and we were at our peak all the way till the beginning of 2015. And then our sales peaked again in 2016 because of Asia’s 50 Best Bars Awards.
The importance of numbers
On the surface, the bar was a huge success but our cash flow was troubled. In 2015, GST (Goods and Services Tax) kicked in, and then SST (Sales and Service Tax) was implemented with the new government regime in 2018. Then, we were young entrepreneurs, and we made miscalculations assuming that it’s just basic cash flow. We should have brought in an accountant from the beginning.
One of the biggest hits to our finances was when we tried to open Sparrow in Kota Damansara. It was actually supposed to be opened in 2015. Unfortunately, an encounter with the construction side and other minor factors delayed our opening until 2016. And that put a big dent in our cash flow. Even till today, we’re still trying to pare off that loss which hasn’t been fully paid off yet.
We were still trying to recuperate from the compounding losses over the years, and then 2019 turned out to be not quite a good year for business. Many more new bars opened and people were more excited to visit new venues. Even though we have built Omakase + Appreciate’s brand trust and people who believed in us came back regularly, the piece of the pie had been split.
We were hitting the daily sales numbers but for some reason, the cash flow was not working.
Maybe we weren’t paying attention to our numbers. We were still making a loss, still recovering for the losses from the past. With even a 5% loss of revenue compared to the month before, business takes a hit.
So, it came down to this final scene. Can we continue carrying on like this?
Closure Execution and key measures taken
We had a conversation in November 2019 and we came to an agreement to give ourselves about a month or so to decide on what to do. In December, we made the decision to close for good as cash flow was not picking up. So, that gave me about two months to execute the closure plans as below:
- Cutting down our costs and at the same time, being very subtle about offloading
- Stop purchasing expensive whiskies and gins, and to completely stop expensive purchases in December
- Stop serving standard menu items. We stripped our menu down to 4 specials and everything else was off menu, going back to omakase style, based on whatever liquor we had
- Buying only the bare necessities on a weekly basis with cash-in-hand from January onwards. This is to control our credit owing.
- Take pay-cuts as owners. This was non-negotiable for me and Karl
- Public announcement a month before closing. We have been around for seven years! We didn’t want to scare guests because they’ve shown us so much love.
We gave ample time to inform people of our closing. Those who really believed in us were supposed to make a trip to say goodbye but unfortunately, our plans had been cut short by 3 weeks when the COVID-19 MCO was announced. Our farewell party was supposed to be on 6th April, our anniversary.
Key takeaways
Spend time reflecting
Reflect on what you’ve done in the past and take note of what has worked and what hasn’t worked. That’s how I’m approaching my new businesses moving forward. Bringing in what has worked in the first seven years gives me a good perspective on how to start anew.
The one thing that hasn’t worked for us in Omakase is diversification. When myself and Karl moved on to do other projects, our time was taken away from the bar itself and that has directly affected business because the bar was very personality-based. So, that’s one thing that will lessen in my upcoming business
Be realistic
Yes, it’s romantic to have a bar for 7 years. Our goal was to reach 10 years, actually. Simply because there was a nice ring to the sound of the number ten. We have to be realistic and it was a hard decision but it had to be made.
You have to be realistic about your needs. For me and Karl, yes we owned the business and it was a great thing to have but we still needed to earn a living, and this business was not giving us what we planned for in the beginning. My dad’s teaching aptly applies here as he would say,
Don’t be sentimental. Sometimes, you need to let it go
You also have to be realistic about yourself as individuals. It is good to have a backup plan. You need to check yourself and see what your options are after closure. It’s not to take a break and then figure it out.
Be decisive
If you need to close it, don’t think twice and go back to it. Do what you need to do to close it. I think the best metaphor here is if you’re drowning and you’re not a good swimmer, you have to fight to come back out of the water because it’s do or die.
Questions from Industry Peers
What is the one change or adjustment you should have done from the start?
Definitely management style. I think over the past seven years as a young entrepreneur, you’re still figuring out what’s the best way to manage or try to manage everything in a sense. It is hit and miss learnings along the way. With that knowledge now, I think I can start on better grounding.
One of the things that I underestimated from the beginning was accounting. I thought it was easy to manage a small business, that it was just cash flow in and out. But I soon realized that I don’t have the in-depth knowledge on how to deal with taxes or with government bodies. I will be making a conscious effort to work alongside my accountant on a consistent basis instead of just having her do bookkeeping.
Will the closure of Omakase create a wave effect in the industry?
It depends. Closure within the next few months might be due to COVID-19. In fact, I think people can be unpredictable. There might also be scenarios where business owners go, “So, now we have a chance to take a bigger share of the pie.” So, maybe businesses will do more instead.
Read Angel’s article on 15 Most Popular Cocktails in Malaysia in 2019 here
As one of the first classic cocktail bars to open in the city, what struggles did you have to overcome in your first years of business?
So many. Here goes:
Cash flow and making sure that the numbers are right
When you actually start a business, you’re already in debt. You create the credit with suppliers, we even had credit with our furniture maker. So, how do you manage that and eventually pay it off? That was one of the challenges in our first year, especially.
Human Resource
This is, of course, a challenge for the whole industry. Let me share from experience with Omakase + Appreciate. As we were a classic cocktail bar and omakase-styled, to train the bartender to do what we do is a long and timely process.
The lifespan of my bartenders has always been about two years. The first year to train them up in terms of service, understanding very basic cocktails, and then the second year to learn about flavour pairings and how to make your cocktails. Unfortunately, this allows only a small window for our staff to progress. By the time we want to give them more responsibility, they are ready to move on for a better pay or a new working environment. As young entrepreneurs, it was a little hard to manage staff retention.
Social media strategy
From the beginning, we wanted to respect the speakeasy concept as much as possible: discreet and subtle. This applied also to our Marketing communications. We only managed a Facebook page for updates like notices, occasional closures due to festive seasons, new menus etc. We didn’t have an Instagram account, we didn’t use social media platforms for advertising and that was the reversed-edged sword. We were losing out on gaining more market share.
Consistency, consistency, consistency
After the first two years, we were spending less time behind the bar and because of that, we lost focus on posting our monthly menus. We used to change menus every month and posted it on Facebook each time. Even that was enough to entice our customers then. But we weren’t consistent in the last few years and that really affected us.
Any advice you would like to offer your global bar family during this trying time for our industry?
We still need to find a way to believe in what we do well, what we do best. The bar scene is not going to go back to the normal for the next 18 – 24 months. But we can’t give up bartending. At this moment, my advice is just be hopeful. Try to hold on as much as possible to what we believe in until it’s a breaking point. Be prepared to adapt and move fast.
With Omakase closing and the MCO in place, how are you keeping yourself busy and maintaining sanity?
I have been keeping myself busy with activities which are not bar related. I think that helps. I am taking this time to rest. This is a time where you can focus on yourself. I think the metaphor here would be like on the plane emergency – you put on the mask on yourself first. So that I can eventually be strong enough to help others in the future. Seven years continuously on the road is quite a long time.
Read Josh’s Covid-19 open letter to industry peer on surviving the downtimes here
What’s next?
I am focusing on building up Bar Class Academy Asia, a platform dedicated to the advancement of the beverage industry via education starting locally and also, hopefully, to branch out regionally.
We just built a new physical location for practical lessons, which I believe is still important today. There’s only so much virtual education can do because this is a very practical profession. But we are definitely looking at developing more virtual classes. We are currently offering junior bartending courses teaching the basics. The ultimate goal is to become not just a platform but an accessible avenue for people to gain bar knowledge.
We’re still keeping this under wraps but I am working on a new concept focusing on more Malaysian elements. Yes, you heard that here first. For Omakase + Appreciate, 60-80% of our customers were locals. We want to reconnect with the locals now, more importantly, in this climate where we will definitely not see a lot of travellers in the next 18-24 months. So, not all is lost just yet!
