Overview

Top 5 Foodservice (by value) in 2019-2020

Source: Euromonitor International and company website

 Source: Indonesian Franchise Association

Source: Indonesia’s Ministry of Trade

Indonesia has strong long-term potential for franchise businesses. The franchise industry began to enjoy widespread popularity in the early 1990s when many well-known U.S. franchises arrived in Indonesia. The Indonesian restaurant and food franchise sectors have consistently grown over the past decade due to increasing disposable income levels and a greater interest in socializing beyond their families and the workplace. Some Indonesians visit restaurants while waiting for Indonesia’s late afternoon and evening traffic jams to dissipate.  

Most Indonesian franchise seekers are interested in well-established and innovative food and beverage business concepts such as fine-dining restaurants, Quick Service Restaurants, pizza chains, hamburger chains, coffee shop chains, and ice cream shops. Most famous U.S. F&B brands are here in Indonesia, such as Kentucky Fried Chicken, Domino Pizza, Pizza Hut, McDonalds, Burger King, Carl’s Jr. Starbucks, Dunkin Donuts, and Baskin Robbins. The most recent U.S. F&B brand entering Indonesia is Subway, which was once in the country in early 2000. Since its opening in October 2021, Subway now has 27 stores in Jakarta, Bekasi, Tangerang, and Surabaya. Other promising sectors include health and fitness centers, education, and retail or particular convenience stores. 

Rising disposable incomes and a large young population make Indonesia an attractive market opportunity. Demand for cafes, restaurants, and bars continue to rise in major Indonesian cities. Indonesia’s growing middle-class communities seek international cuisine, convenience and after-hours venues for socializing. 

The overall value of the Indonesian foodservice sector grew at a CAGR of 7.7% from 2014-2019. Foodservice sales reached $24.3 billion in 2020, a decline of more than 40 percent from the previous year. Full-service restaurants accounted for 83 percent of total foodservice sales, followed by fast food (6%), cafés/bars (5.5%), street stalls (4.4%), and self-service cafeterias (1%).

Based on records from the Ministry of Investment/Coordination and Investment (BKPM), foreign investment in the food and beverage sector was USD2.08 billion from January to September 2021, which grew by 75.93% compared to the same period in 2020 of USD1.14 billion.  Total foreign investment grew by 9.9%, and domestic investment grew by 5.8% for January – September 2021.

Local investors are receptive to well-known, established U.S. franchises. Quality, brand recognition, and innovation all play a big part in the success of U.S. franchises with Indonesian investors. In addition to product pricing, U.S. franchisors must consider adapting to local tastes to guarantee success in the Indonesian market. 

Recent discussions with Indonesian investor groups have indicated increased reticence toward partnering with new foreign brands and a preference for strengthening their existing brands. One factor contributing is the rupiah’s depreciation relative to the US dollar. However, new investor groups are showing interest in starting their first franchising chains. Despite these groups’ relative lack of experience, they may be a suitable option for U.S. franchises hoping to enter the Indonesian market. 

The annual International Franchise, License & Business Concept Expo and Conference will be held on virtually on August 5-7, 2022, in Jakarta, Indonesia. It has a virtual expo that will be held on August 5-31, 2022. For more information, visit https://franchise-expo.co.id/.

Interested parties may contact Commercial Specialist Fidhiza Purisma at Fidhiza.Purisma@trade.gov.