Many people may associate Indonesia with Islam. In fact, approximately 90% of the population in Indonesia practices Islam. Under Islamic teachings, the consumption of alcohol is generally prohibited.

Given this context, some may question the viability of operating an izakaya in Indonesia, wondering, “Can an izakaya really be a sustainable business in such an environment?”

To answer this question directly: the number of izakaya (known locally as “IZAKAYA”) in Indonesia is on the rise, and this business model shows considerable potential.

This article provides an overview of the izakaya landscape in Indonesia, with a focus on Jakarta. It covers various types of izakaya, price ranges, and common reasons for failure. We hope this information will be valuable for companies considering market entry into Indonesia.

Spread of Izakaya in Indonesia

Trends in Izakaya Popularity

When one hears the term “izakaya” in the context of Indonesia, it’s not uncommon to assume that such a business model would be unfeasible in a predominantly Muslim country. Indeed, expanding nationwide across Indonesia may present challenges. However, in major urban centers such as Jakarta and Surabaya, izakaya have become commonplace and easy to find.

According to Google Trends data in Indonesia, interest in the term “Izakaya” has been steadily increasing over the past decade. Ten years ago, izakaya in Indonesia were mostly targeted at Japanese expatriates living in the country.

In contrast, more recently there has been a rise in izakaya targeting the local Indonesian population. These establishments cater not only to affluent ethnic Chinese Indonesians—who often follow religions other than Islam and consume both alcohol and pork—but also to younger Muslim customers who are increasingly visiting such venues.

To appeal to a broader demographic, including Muslims, many izakaya offer alcoholic beverages while also advertising “No Pork, No Lard” policies, creating an environment that feels more accessible to Muslim patrons. Of course, there are Muslims who refrain entirely from entering establishments that serve alcohol, but others are more flexible in this regard.

Emergence of “Halal Izakaya” Without Alcohol

The pinnacle of Indonesia’s izakaya boom is arguably the emergence of establishments that operate as izakaya without serving any alcohol. These so-called Halal Izakaya offer menus composed entirely of Japanese cuisine and café-style beverages, with no alcoholic drinks provided.

For example, some establishments maintain the traditional izakaya ambiance by serving coffee in sake bottles, allowing Muslim customers to enjoy the atmosphere of a Japanese izakaya in a culturally and religiously appropriate way.

Popular Izakaya in Jakarta, Indonesia

As previously mentioned, numerous establishments in Indonesia already operate under the name “IZAKAYA.” However, few are directly operated by Japanese companies; rather, most are developed locally by Indonesian entrepreneurs.

Accordingly, this section introduces notable izakaya establishments that cater to a broad customer base, including Indonesian patrons, classified roughly by price range rather than by ownership type (e.g., “Japanese-affiliated” or “local-owned”).

Due to the difficulty of comparing prices based solely on menu items, we use the estimated cost of a typical dining experience—comprising two to three alcoholic drinks, several side dishes, and a meal—as the benchmark. Please note that this includes some subjective judgment by the author. Costs are generally lower if no alcohol is consumed.

High-End Izakaya

Here, we introduce several high-end izakaya, where the average customer spend is estimated at over JPY 6,000 (approx. USD 38.70) per visit.

Okuzono

Image Credit: Instagram OKUZONO Japanese Dining
Located in Senopati, an upscale district in South Jakarta, Okuzono is a premium izakaya that offers authentic Japanese cuisine. It has also expanded with a branch in Bali.

The menu at Okuzono is considered highly authentic, even by Japanese standards, and closely resembles what one would expect from a Japanese restaurant in Japan. As a result, it has gained recognition among affluent Indonesians as the go-to destination for authentic Japanese cuisine. Its ability to appeal to both Japanese expatriates and local Indonesians serves as a valuable reference for businesses considering localizing their izakaya offerings.

Instagram: https://www.instagram.com/okuzono.id

Kurune

Image Credit: Instagram KURUNE
Also located in the Senopati area, Kurune is a popular choice among wealthy Indonesians. The restaurant features visually striking dishes such as straw-grilled meats, hand-rolled sushi, and mille-feuille hot pots. While maintaining a distinctly Japanese ambiance, the photogenic menu items also appeal to younger generations who view the restaurant as a trendy Japanese dining spot.

The team behind Kurune also operates Sumibi, a robatayaki-style izakaya. Both Kurune and Sumibi have long been favorites among local customers.

Instagram: https://www.instagram.com/kurune.senopati

Mid-Range Izakaya

Below are selected mid-range izakaya establishments where the average customer spend is estimated between JPY 3,000 and JPY 6,000 (approx. USD 19.35–38.70). These venues are not only accessible to affluent customers but also suitable for the middle class seeking a special dining experience.

Kushimusubi

Image Credit: Instagram Kushimusubi
Kushimusubi is located within the City Walk shopping mall in Sudirman, a central Jakarta business district.

Given the concentration of Japanese companies and expatriates in the Sudirman area, the restaurant initially catered largely to Japanese patrons. However, it has recently gained popularity among Indonesians as well. Currently, the customer base appears to be evenly split between Japanese and Indonesian diners.

The restaurant offers familiar izakaya-style menu items for everyday dining, while also serving premium options such as omakase sushi prepared by Japanese chefs and wagyu beef dishes. Its ability to attract a diverse clientele—from Japanese expatriates to local Indonesian families—demonstrates the effectiveness of a flexible menu strategy.

Instagram: https://www.instagram.com/kushimusubi.jakarta

Nishi Izakaya Japanese Resto & Bar

Image Credit: Instagram Nishi Izakaya Japanese Resto & Bar
Located in the Tebet area of South Jakarta, Nishi Izakaya operates in a district known for large parks and traditional markets, somewhat removed from the zones frequented by expatriates.

Nishi Izakaya’s menu features both authentic Japanese cuisine and localized items such as sushi rolls, which may be closer to what Indonesia’s middle-class diners imagine when they think of “Japanese food” or “sushi.”

With offerings that include ramen, set meals, and a wide range of desserts, the restaurant serves not only as an izakaya but also as a family-friendly restaurant or café. The alcohol menu focuses on beer, shochu, and cocktails.

Instagram: https://www.instagram.com/nishi.jkt

Budget-Friendly Izakaya

Next, we highlight budget-friendly izakaya where the average customer spend is under JPY 3,000 (approx. USD 19.35). These establishments are affordable enough for Indonesia’s middle class to visit casually and are especially popular among younger patrons.

Izakaya Kashiwa

Kashiwa is located in the Blok M area of South Jakarta, once known as a Japanese enclave. In recent years, Blok M has transformed into a trendy district attracting a younger crowd.

Having operated for many years in this area, Kashiwa was originally intended for Japanese clientele. Recently, however, it has been rediscovered by local youths as a “super-affordable Japanese izakaya.”

Kashiwa’s most distinctive feature is its extremely low pricing. Many menu items start at approximately JPY 300 (approx. USD 1.93), evoking the charm of Japanese standing bars.

Instagram: https://www.instagram.com/izakayakashiwa

Yabe! Izakaya

Image Credit: Instagram Yabe! Izakaya by Sangmaha Group
As a reference beyond Jakarta, we introduce Yabe! Izakaya, located in Bandung—Indonesia’s third-largest city. Known for its cooler climate and as a weekend destination for Jakarta residents, Bandung has recently seen a rise in bars and izakaya.

With a generally lower cost of living than Jakarta, Yabe! Izakaya also offers more affordable pricing. Some appetizers are available from as low as JPY 100 (approx. USD 0.65), making the venue popular for daily use among local youths. The drink menu includes a relatively wide selection of beer, sake, shochu, and whiskey, making it a noteworthy example of a local izakaya outside Jakarta.

Instagram: https://www.instagram.com/yabe.izakaya

Popular Izakaya in Jakarta, Indonesia – Special Feature: Halal Izakaya

In recent years, there has been a rise in izakaya-style establishments that do not serve alcohol but still carry the “IZAKAYA” label. Considering that Muslims make up 90% of Indonesia’s population, this trend is hardly surprising. As a reference, we introduce one such establishment below.

Sore Izakaya

Image Credit: Instagram SORE Ramen & Yakitori
Sore Izakaya operates three locations across Jakarta and the neighboring city of Tangerang. Despite bearing the name “IZAKAYA,” these establishments do not serve alcohol. Instead, their drink menus include coffee, tea, and juice, positioning them more as “Japanese food cafés” rather than traditional izakaya.

Pricing is on the lower end, with yakitori starting from approximately JPY 90 (approx. USD 0.58), and ramen or rice bowls available from around JPY 400 (approx. USD 2.58). Patrons can casually enjoy Japanese cuisine and relax with a coffee after their meal—a concept that may well represent a uniquely Indonesian take on the izakaya experience.

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Company Formation in Indonesia

Case Studies of Failed Izakaya Businesses in Indonesia

While the establishments introduced above are all popular and successful, not all izakaya ventures in Indonesia meet with success. Some struggle to attract customers or are forced to close. Below, we share examples of common pitfalls that may serve as useful reference points for readers.

Misalignment in Expected vs. Actual Customer Spend

Roughly a decade ago, as izakaya began to gradually proliferate in Jakarta, one such establishment opened in the Pantai Indah Kapuk (PIK) area of North Jakarta, known for its large ethnic Chinese Indonesian community. Given that many Chinese Indonesians consume alcohol, the assumption was that an izakaya concept would be well received.

The location chosen was in a more residential part of the district, where rental costs were relatively low and inexpensive eateries were prevalent. As a result, many patrons stayed for extended periods, ordering promotional beer and inexpensive side dishes. This significantly reduced average spend per customer, straining the restaurant’s profitability.

Ultimately, the restaurant could not cover its operational costs and was forced to shut down within a short period. This case illustrates the risk of a mismatch between the projected and actual customer spending patterns.

Lack of Skilled Personnel for Quality Control

Another case involves a high-end izakaya known for authentic Japanese cuisine, managed by an Indonesian owner and a Japanese chef.

The restaurant initially enjoyed a strong reputation and steady customer base. However, a dispute led to the departure of the Japanese chef. Among the remaining kitchen staff, none had deep experience with genuine Japanese cuisine. Although they followed manuals and produced dishes that were “good enough,” a gradual decline in quality became evident.

Eventually, the restaurant resolved the issue by hiring an experienced Indonesian chef with extensive knowledge of Japanese food. This case underscores how Japanese cuisine remains a specialized field in Indonesia and highlights the importance of having personnel capable of maintaining quality standards at all times.

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Business Potential of Izakaya in Indonesia

As outlined throughout this article, izakaya establishments have increased significantly in Indonesia’s urban areas over the past decade. At the same time, the number of Indonesian tourists visiting Japan has been growing rapidly, resulting in more Indonesians returning home with firsthand experience of authentic Japanese cuisine.

This trend suggests a continued rise in demand for Japanese food, including izakaya-style dining, in Indonesia. Furthermore, as shown in earlier sections, even izakaya that do not serve alcohol are gaining traction among local consumers. While Japanese observers may see such venues as merely “Japanese cafés,” the growing recognition of the word “IZAKAYA” and the popularity of Japanese-style dishes as trendy café fare highlight a distinct market trend.

Just as sushi has undergone unique transformations and gained global appeal as “SUSHI,” the izakaya concept may likewise evolve independently overseas, taking root as “IZAKAYA” in its own right.