How FNB Franchise Infiltrate the Indonesia Food Market
A franchise is a cooperation contract between a person or company (Franchise) and the parent company (Franchisor) which acts as a trademark holder to regulate and grant trade permits to the designated franchisee. With the success of Taco Bell and the warm welcome that the Indonesian gives towards the upcoming opening of Subway, the franchise business continues to grow rapidly in Indonesia.
According to data from the International Franchise Attractiveness from the University of New Hampshire in the United States, Indonesia has a potential market attraction ranked fifth in the world out of a total of 131 countries, with a population of 267 million people.
Learn more about the franchise industry and Indonesia and how COVID-19 making an impact in the industry through this article.
Overview of the Global Franchise in Indonesia
Franchisees are optimistic that franchise business growth in Indonesia will grow 8% to 10% this year. Head of the Indonesian Franchise and Licensing Association (WALI) Levita Supit said this year, the prospect of the franchise and franchise business is better than last year. This is because, last year, people were still observing, so they were reluctant to do franchise business. However, this year after the democratic party, it is believed that many people will be interested in doing franchise business.
Popular Global Franchise in Indonesia
Here is a list of food and beverage franchise companies that successfully expanded their business to Indonesia:
- Mc Donald
McDonald’s is an American fast-food company, founded in 1940. Not only with its hamburgers and french fries, but McDonald’s is also known for its chicken products, breakfast items, soft drinks, milkshakes, wraps, and desserts. McDonald’s generated total revenue of USD 19.21 billion in 2020 with 39,198 restaurants all over the world. McDonald first entered Indonesia in 1991 in Sarinah, Jakarta. Until 2021, there were 227 McDonald’s outlets in Indonesia. McDonald’s Indonesia revenue is USD 183,5 million in 2017 and it makes McDonald’s the third most popular franchise in Indonesia.
2. Dunkin Donuts
Dunkin Donuts is an American multinational coffee and doughnut company, founded in 1950. This dessert company generated total revenue of USD 287.4 million in 2020 with more than 11,300 outlets all over the world. This franchise is one of the oldest food and beverage businesses entering Indonesia, Dunkin Donut has been established in Indonesia for 36 years, since 1985. There were more than 200 Dunkin Donut outlets in Indonesia. Dunkin donut is the most popular doughnut brand in Indonesia, it is present in every shopping place in Indonesia.
3. Taco Bell
Taco Bell is an American-based chain of fast-food restaurants originating in California in 1962. The restaurants serve a variety of Mexican-inspired foods, that include: tacos, burritos, quesadillas, nachos, novelty, and specialty items, along with a variety of “value menu” items. There are 7,427 TacoBell outlets with total revenue of USD 1.49 billion in 2020 from all over the world. TacoBell is one of the new franchise companies that entered Indonesia. It first opened in Jakarta in December last year. However, even though it was only opened for the first time, apparently TacoBell received a good reception from Indonesian citizens. This can be seen from the number of TacoBell Indonesia visitors who reached 500 more. Though the capacity provided by TacoBell Indonesia is only 182 seats. Therefore, TacoBell plans to open other outlets in various regions in Indonesia.
The Prospects of the Franchise Business in Indonesia
Of the three food and beverage franchises above that are engaged in different types of food, it can be concluded that the franchise business in the field of food and beverage is in high demand in Indonesia. This is motivated by the population of Indonesia which reaches more than 267 million. No doubt, this country is the largest foodservice market in the Association of Southeast Asian Nations (ASEAN) region. With rising incomes among the growing middle class and changing lifestyles, the foodservice sector in Indonesia grew at a compound annual growth rate (CAGR) of 4.2% from 2015 to 2018, reaching USD 49.5 billion in sales in 2018. That is USD 18.6 billion higher than the rate of the second top country in the region, Thailand. Indonesia’s foodservice sector is projected to grow at a CAGR of 3.4% from 2019 to 2022, reaching USD 56.7 billion in 2022. Within the foodservice sector, Indonesian customers spent USD billion 23.1 billion on food.
Based on a survey from Statista in 2018 entitled “Indonesia: Which fast food (quick service) restaurants do you go to if any?”, the results of the five most popular food and beverage brands in Indonesia are from abroad. The brands are KFC, McDonald’s, Pizza Hut, Burger King, and Domino. The five brands have long entered the Indonesian market and have managed to prove that the potential of the food and beverage franchise business in Indonesia is very large.
The growing number of working mothers has led Indonesian families to eat out more often. For high-income consumers, food may not be the primary factor in choosing foodservice outlets as they also consider ambiance and branding. For low-income consumers, eating out is regarded as a typical time for family gatherings. Thus, regardless of branding, these consumers usually visit food-service outlets within shopping centers. To respond to these trends, most international franchise FnB brands in Indonesia offer new products such as family weekend packages.
Recent surveys have shown that while Indonesian consumers like to try new cuisines, they still have a preference for Asian foods. To respond to this, International brands have to customize their menu to suit Indonesian taste buds. From these facts, it can be concluded that to maximize the potential of the FnB franchise business in Indonesia, more in-depth research is needed on the tastes of the Indonesian market.
Enter Indonesia’s Franchise Business With Bright Indonesia
Indonesians are very welcoming toward an international franchise. And looking at the success of international franchises such as McDonald’s and Taco Bell, one must be quick and take the opportunity right away to gain the benefit from the industry, but they also need to understand the market.
To enter Indonesia’s bicycle industry, it is crucial to have the right local partner. BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Business Registration and Establishment, and Management and Strategy Consulting that can help you in expanding, developing, and improving your business. We can register and establish your products and company, as well as obtain the work and stay permit in Indonesia (expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), limited stay permit (KITAS)) easier.
Our strategy consulting services domain focuses on supporting private sector clients with comprehensive and specialized development regarding the company’s needs and also on the public sector for a broader scope.
For more information, email email@example.com
*This article is written by Candy Bestari and Sintya Nur Muftiana