Want to open few Ice cream - Gelato shops in KL

Some high-order items to take into account are that if you are a foreigner, you will need to set up a corporate structure.  This requires an initial investment that ranges from RM1 million if the business is 100% owned by foreigners, to RM350,000 if it is part-owned with a Malaysian citizen.

The other reason a corporate structure is required, is that a person needs a work permit (called an employment pass) to operate a business.

This link may provide you with some detailed information about several of your questions:

http://malaysiabizadvisory.com/malaysia … oreigners/

From January 2014, anyone that produces or sells food of any type, has to have an additional licence, apart from the normal ones from the local authority, that qualifies them to operate in the area.

Unregistered  producers or vendors could be penalized with RM10k fine or a 2 years jail term.

www.fosimdomestic.moh.gov.my

Minimum wage is now RM900 per month in peninsula Malaysia, but expect to pay considerably more (up to RM2,000 ++ ) and there are limitations on hiring foreigners to work for you:

http://www.mida.gov.my/env3/index.php?p … gn-workers

Kiosk rental various according to the location.  You could see if there is some information on  www.mudah.my about property/kiosk rentals and salaries.

Tax - http://malaysiabizadvisory.com/2014-mal … -tax-rate/

Most of the major shopping malls already have well established Gelato kiosks so you will have competition.

Dear Gravitas

Thanks a lot for all the useful notes!

Thanks Mike

I think competition is the spin of the market.
I work in F&B business in Hong Kong since few years and i can assure you that this is quite an aggressive city in terms of competition

But the gangsters are meaner here and the mupettness of officials!

Hahaha...yes I lived in Hong Kong for seven years a while ago. I set up a successful garment buying office in Central despite the competition. Well good luck in Malaysia.

I don't think ice cream is particular interesting in Malaysia. All the outlets I can think of have diversified. The public are more into bubble drinks and exotic deserts, such as the Taiwanese and Korean varieties. The failure rate of food businesses in KL is huge.

A Turkish ice cream outlet has already been conned into opening a premises at Bukit Bintang Monorail area,  which was closed due to the construction of the MRT after 3 months. The outlet was just demolished.  They now sell from some outlets nearby associated with middle East owners at RM5 per serving.  It's not a level playing field in Malaysia. It's who you know, not what you know.

To add to Gravitas' comments, the Gelato kiosks at Pavillion and KLCC never seem to have many customers....and it's true that Taiwanese drink kiosks such as Chatime are really popular at the moment. Hong Kong and Malaysia are not the same.

We will try our best

I have been in KL only twice so I don't have lots of data with me.
But I tried to do some researches online.

I see that the dessert consumption rate is one of the highest in Asia (unfortunately also together with diabetes cases).
The number of ice-cream/Gelato outlet/brands in KL is more than the double of the one you can find in HK.

When I visited a couple of Gelato shop (Gelatissimo) on weekdays the numbers of sales per hour were 30% higher that the one in HK: actually the price was 30% less and probably the rent 50-60% cheaper. Making a fast calculation: more profit per hour.

IN KL I saw people eating ice-cream while walking on the street (you will seldom see in HK).

I agree on the diversification: as per our concept we keep away from the traditional "gelato by scoop" and we are more close to a "dessert look and feel". In our corner we will sell also cookies and coffee.

Regarding the distribution: we are trying to find some partners with few Point of Sales already established selling  sweet products. Any suggestion?

Interesting observations. I have never seen a busy ice cream shop but lots that have closed down. Having said that, the new trend is to have branded outlets in the motorway service areas along major highways (north-south). Baskins now has an outlet at one, alongside Starbucks and KFC.

The statistics about ice-cream eaten are probably influenced by McDonalds, as they sell it for RM2 and it is often an extra item after having a meal there. The numbers would certainly be impressive if they were included, as McD and KCF are the most popular cheap food outlets in the country and are located everywhere. Cendol is also sold on nearly every street corner and market, again for about RM 5-7 a serving. Indeed, street food is probably responsible for the high dessert consumption figures.

Even at Pavilion, outlets struggle to compete against low cost/high turnover food items. As Malaysia is Islamic, the coffee shop and drinks culture is large. Its a form of socialising that does not have to be very expensive and sometimes people share or the outlet gives BOGOF. There are a lot of "pop-up" outlets in all the Malls which are cheap to rent. Whether they are suitable for the logistics of ice cream, would require an enquiry.

An important difference is the level of wages in Malaysia is probably considerably lower than in HK and so disposable income is affected. Wouldn't Singapore equate more with HK than Malaysia?

Gravitas your notes are always very interesting: in which field do you work?

Popup stores can be a good temporary solution to test the market.

Singapore? We are also moving few steps there even if the city has the same big issues of Hong Kong: high rent, small spaces and same level wages.

The high investment required (RM1 million) is certainly a factor for foreigners, although the money can be removed from the balance sheet to cover expenses, as long as it is returned for the annual report and accounts.

The other issue may be the size of the outlet?  For restaurants the outlet has to be in the luxury category and the size must be a minimum of 1,500 square ft. So I am not sure how the concept of small outlets will fit the requirements to open a business in Malaysia for foreigners? It may be necessary to set up a main ice cream restaurant to be able to branch out into smaller offshoots?

It's always complicated and there are quite a few restrictions on what type of businesses can be opened by foreigners. The links to the biz site given earlier will give all the details.

It may well be the tourist trade is the most promising for ice cream, and therefore the site is all important, as the majority stay in the KL City and closest suburbs. Bangsar or Mont Kiara are popular areas, but of course, like KL City area, the rents are high.

Addressing the halal status and getting accredited, is also something to consider.

I will try to sort out some more info for the minimum required space.
The local company will be a 50% investment/shares with a local partner (this is the business model we usually pursuit).

As I was saying we need only 2-300sqf.
In Hong Kong one average rent in a good-traffic-location (not prime location) within malls is around RM15,000 (for 300sqf). For KL actually we target to find something around RM8,500.

On the certification matter we are undergoing EEC, HACCP, KOSHER, HALAL

If you have a local partner, the rule about minimum space does not apply - its only for 100% foreign owned food outlets.

http://malaysiabizadvisory.com/incorpor … y-sdn-bhd/

Currently the financial requirement is RM 350 000 and paid up capital of RM 500 000 for a joint venture.

Some monthly prices for food-related selling space:

Monthly rentals of food outlet space

Thanks Gravitas: I had a look at the rental website yesterday.
Can you suggest few malls that can be interesting for us?

Sent you a private mail.

Hi,
I am not so positive about ice cream business here in Malaysia. However, you can try starting a café or restaurant business.
I have a restaurant for 1 1/2 years now and planning to sell  the business for RM60,000 urgently.
My husband and I are returning back to Egypt urgently. The business is running and we have many regular customers.
The price of RM60,000 includes the deposit (RM23000), the furniture and all utilities and the company with licenses as well. My company is a local company of RM500,000  paid up capital and it is eligible for foreign visas for both directors and staff.
If you are interested, please let me have your phone number and I can contact you. Since the company is active, you can take over the company and we only need to change directors name.
T

Dear rasel10

can you send me a private message with more details, pictures, locations on the map, financial sheets?

It is a big mistake to look at THE established brand of gelato in THE busiest tourist part of kl and make broad statements. Also in the hottest times in last ten years!

I have seen so many frozen yoghurt, ice cream and gelato places start and go bust in 3 months. Including the daftly overpriced nitrogen frozen on the spot ice cream.

In Malaysia adults don't eat ice team that much. The consumption of sweets is kuih (small fried cakes) cendol, ABC and the Taiwanese style iced desserts as well as ice tea. Although in my area on ONE street TWELVE tea shops opened in last year. Four now closed and all look empty including the well known brands (one that closed was well known).

In Malaysia "fools rush in" is the business approach. And the cards are stacked against foreigners. If you have no local knowledge best to think of any investment as high risk money you are ready to burn. 3/4 chance you will lose everything. Saw it happen in bangsar. Loads of foreigners opened businesses. Some never even opened before they were forced to shut!

Gravitas is spot in really.

Today I walked past 3 Gelato outlets. By looking at the stainless steel containers, they had not had any customers and had already been open for 4-5 hours. It is a very risky business but it is interesting that you saw a different scenario.  If you do take over a restaurant that has already been established (I would say don't do as it is better to create your own). The hidden problems can be that the terms of reference for the business may not cover what you want to do. Also there is a question how long a lease the parties have entered into - which the new owner would have like a millstone around their neck for several years and are escaping from that commitment.  Remember in Malaysia that leases work differently. Unless there is a "diplomatic" clause, the lease cannot be broken and the lessee is responsible for paying all the months or years agreed to upon signing. It can be a horrible awakening.

Hi Resel I sent you PM  for yr subject matters. Regards.

Hi,
I am interested in yr business or similar me. Pls contact e. Thanks

Latest news about Gelato in Malaysia:

http://www.thestar.com.my/Business/SME/ … -Malaysia/