Indonesia The Foodservice Industry

Transcription

1 International Markets Bureau MARKET ANALYSIS REPORT MAY 2013 Indonesia The Foodservice Industry Source: Shutterstock Source: Shutterstock

2 Indonesia The Foodservice Industry EXECUTIVE SUMMARY Indonesia continues to offer great opportunities for Canadian suppliers of agricultural and agri-food products to the foodservice sector. In 2011, the Indonesian consumer foodservice market recorded healthy sales of US$38.4 billion. Indonesia has weathered the 2008 global financial crisis relatively well because of its heavy reliance on domestic consumption as the driver of economic growth. The Indonesian economy grew 6.4% in 2011 and is forecast to continue growing from now through to The stable economy has led to rising disposable incomes, which have increased the purchasing power of consumers at foodservice outlets. An increase in the country s eating-out culture among younger demographics and middle-toupper class segments has also helped boost demand for foodservice items. The most popular foodservice channels in Indonesia are full service restaurants and street stalls/kiosks. The foodservice sector continues to grow with new menu launches, an increase in promotional activities, and outlet expansion. Foodservice operators are taking advantage of social media tools to promote their brands, especially to young people. Operators are also looking beyond big cities and moving into smaller ones to grow their market. Chained fast food brands lead the way in expanding the number of foodservice outlets, with KFC and McDonald s being the main players. While most foodservice operators are found in standalone locations, expansion into non-standalone locations, e.g. shopping malls, office buildings, and schools/campuses, will further grow the foodservice market. INSIDE THIS ISSUE Executive Summary 2 Country Profile 3 Demographics 3 Economy 3 Consumer Expenditure 3 Trade 3 Consumption Trends 4 Eating Preferences 4 Retail 4 Foodservice 4 Foodservice By Location 5 Foodservice By Channel 6 Cafés/Bars 6 Fast Food 8 Self-Service Cafeterias 11 Full Service Restaurant 13 Travel and Tourism 17 Overview 17 Promotional efforts 17 Future Outlook 17 Conclusion 18 Sources 18 Source: Mintel PAGE 2

3 COUNTRY PROFILE Demographics Indonesia is the world's fourth-largest country by population, third-most populous democracy, and is home to the world's largest Muslim population. Indonesia s population has grown steadily since the 1990s, reaching almost 250 million people in 2012, with a population growth rate of 1.03% (CIA World Factbook). Based on 2011 estimates, about 27.3% of the Indonesian population was, at that time, between 0 and 14 years old, and about 66.5% of the population was between 15 and 64 years old. People over 65 years of age constituted about 6.1% of the population (CIA World Factbook). According to the CIA World Factbook, Jakarta is the most densely populated Indonesian city, with 9.1 million people. Other major cities include Surabaya with 2.5 million people, Bandung with 2.4 million, Medan with 2.1 million, and Semarang with 1.3 million. The rising urban population, caused by an influx of people from rural areas to the major cities, has been a cause of concern for the government. In order to stall this migration, the Indonesian government has established schools and higher education centres in rural areas. Tourism in rural areas also encourages inhabitants to stay while providing them with substantial employment and self-employment opportunities (Euromonitor). Economy The Indonesian economy was not as severely affected by the global recession in 2008 as its regional neighbours. Despite challenges to economic growth, such as a complex regulatory environment, an unemployment rate of 6.6%, inadequate infrastructure, and 12.5% of the population living below the poverty line, the economy saw growth of 6.4% in 2011 (CIA World Factbook). According to the CIA World Factbook, real Gross Domestic Product (GDP) growth remained robust in 2011, growing an estimated 6.5%, up from 6.2% in GDP per capita in 2011 was estimated at US$4,700. Income distribution remains highly unequal in Indonesia; wealth tends to be concentrated in large metropolitan zones and held by a minority of the population. The Indonesian government has implemented a wide range of reforms in recent years to improve educational outcomes and enhance productive employment to help reduce income inequality. Consumer expenditure On a per household basis, overall consumer expenditure in Indonesia increased by over 91% from , rising from US$3,935.5 per household in 2006 to US$7,523.3 in 2011, due to an increase in disposable income. Rising disposable incomes have allowed Indonesians to increase their expenditure on food and beverages. Around one-third of consumer expenditure is allocated to food and non-alcoholic beverages (Euromonitor). Trade Source: Shutterstock Indonesian exports to the world totalled C$201 billion while imports into Indonesia were valued at C$176 billion in 2011 (Global Trade Atlas). Indonesia s top export partners were Japan, China, Singapore, the United States and South Korea. The top five import partners were China, Singapore, Japan, South Korea and Thailand (CIA World Factbook). Indonesia is a significant importer of both bulk and processed food. The country is a major importer of food commodities, such as wheat, dairy products, soybeans, and corn. In addition to commodities, it also imports food ingredients and packaged products, such as vegetable oil, margarine, sauces, dressings and condiments. PAGE 3

4 CONSUMPTION TRENDS Eating preferences Rice, vegetables, and fish and seafood are staples in the Indonesian diet. As a maritime country, fish and seafood are plentiful and are affordable sources of protein. As a result, consumption of meat is less frequent. Poultry and beef are popular, while pork consumption is limited due to the large Muslim population. Dairy products are also not as popular. However, increased exposure to Western culture and rising disposable incomes mean that more Indonesians are exploring new food items and cuisines (Euromonitor). In recent years, the health and wellness trend has played an important role in consumer foodservice. As Indonesian consumers, especially the middle-to-upper income urban population, become better educated and pay more attention to their health, there will be an increased demand for healthier food and drink (Euromonitor). Retail Source: Shutterstock In general, one of the most significant opportunities for food exporters is supplying processed and packaged products to the rapidly developing retail and foodservice sector. Western foods are seeing increasing popularity, and demand for Western imports will grow as a result (Euromonitor). While fresh foods are still highly preferred, the Indonesian consumer is buying more processed and packaged food as the organized grocery retail market expands. Indonesian consumers, particularly those in urban areas, are gradually shifting away from buying fresh food on a daily basis, and towards buying packaged food in hypermarkets and convenience stores. The packaged food industry has shown strong growth, as more consumers have less time to cook from scratch. As the modern retail sector thrives, smaller independent retailers are threatened (Euromonitor). Foodservice In 2011, the Indonesian consumer foodservice market recorded healthy sales and steady growth. The resilience of the Indonesian economy has resulted in rising disposable incomes, increasing the purchasing power of consumers at foodservice outlets. An increase in the country s eating-out culture among younger demographics and middle-to-upper class segments has also helped boost demand for foodservice items. Foodservice operators are taking advantage of social media tools to promote their brands, especially to young people (Euromonitor). The foodservice sector continues to develop, with new menu launches, an increase in promotional activities and outlet expansion. Foodservice operators are looking beyond major cities and expanding into smaller cities where there are fewer competitors and operating costs are lower. Prominent chained operators expanding into smaller markets include KFC and Pizza Hut (Euromonitor). Although independent foodservice outlets still occupy the majority of the market, Indonesia has seen many foreign food brands and chained companies enter and expand throughout the country. Major chained foodservice players in Indonesia are KFC and McDonald s (Euromonitor). Major challenges that will limit the growth of the foodservice market include fuel price hikes, rising commodity prices, and increases in real estate prices. While middle-to-upper income consumers will not significantly change their consumption levels at foodservice outlets, these factors will affect the purchasing power of low-to-middle income consumers (Euromonitor). PAGE 4

5 FOODSERVICE BY LOCATION Stand-alone locations accounted for 51% of the total number of consumer foodservice outlets in 2011 and were mainly held by independent foodservice brands. Chained foodservice operators were mainly found in non-standalone locations, such as shopping malls, grocery retail outlets, offices, campuses, hospitals and apartments. However, leading chained operators, such as KFC and McDonald s, were actively expanding into standalone locations that can offer more flexibility, such as operating 24-hours a day, and can thereby generate more revenue (Euromonitor). The top three non-standalone locations in 2011 were retail (e.g. shopping malls), travel (e.g. fuel stations) and leisure (e.g. theme parks). The growing number of shopping malls, leisure places, and fuel stations has helped fuel the growth of non-standalone foodservice outlets. Travel locations saw the fastest outlet growth, reaching 17,662 outlets in 2011 (Euromonitor). As shown in Table 2, foodservice at travel and leisure locations is expected to register the fastest compound annual growth rate (CAGR) in outlet numbers over the forecast period, with rates of 1.5% and 1.4%, respectively, by Table 1: Forecast Foodservice Value % Growth Foodservice by Location Value (US$ Billion 2011) CAGR 2011/2016 Total Total Standalone Leisure Retail Lodging Travel Table 2: Forecast Units/Outlets % Growth Foodservice by Location Units (2011) CAGR 2011/2016 Total Total 200, Standalone 102, Leisure 15, Retail 62, Lodging 1, Travel 17, Table 3: Forecast Sales Transaction % Growth Foodservice by Location Transactions (millions 2011) CAGR 2011/2016 Total Total 5, Standalone 3, Leisure Retail 1, Lodging Travel Source of All: Euromonitor, 2012 PAGE 5

6 FOODSERVICE BY CHANNEL Cafés/Bars Cafés/Bars Channel synopsis Cafés/bars are gaining popularity among young people, middle-to-upper income consumers and business people, recording growth of over 9% in current value terms to post sales of almost 33 trillion rupees* (Rp) in The number of outlets reached 3,618, growing by approximately 4% in Cafés/ bars continued to be dominated by independent operators, although chained cafés/bars, particularly international brands, saw their share of outlets increase due to the growth in specialist coffee shops. As illustrated in Table 6, from 2011 to 2016, cafés/bars in total are forecast to see a constant value CAGR in outlet numbers of over 3% (Euromonitor). Specialist coffee shops registered the largest current value growth in 2011, at over 15%, with Starbucks as the leading brand. This solid performance was largely due to the development of chained outlets. While two global brands, Starbucks and The Coffee Bean & Tea Leaf, dominated the chained specialist coffee shops category, a local brand, Excelso Café, was the third-largest brand in the country. These three had a combined value share of around 74% of total chained specialist coffee shops in 2011 (Euromonitor). With café culture developing in the country, international and local chained coffee shops and franchises are increasing in popularity and expanding the number of outlets, especially in bigger cities. Unlike Starbucks and The Coffee Bean & Tea Leaf, which are found mainly in major cities, Excelso Café is also established in smaller cities. It also offers its menu items at a lower price and so is more affordable compared to Starbucks and The Coffee Bean & Tea Leaf; it is therefore able to reach a wider consumer base. Popular menu items in local cafés include snacks, hot/cold sandwiches, bakery products, and simple dishes such as spaghetti or lasagne (Euromonitor). The top ten chained cafés/bars are shown in Table 4. Channel prospects Growth in outlet numbers and transaction volumes of cafés/bars is forecast to slow down from 2011 to Cafés/bars face indirect competition from other types of consumer foodservice, such as fast food bakery products. For example, fast food bakery brand J Co Donuts & Coffee achieved major success when it introduced various types of coffee and other drinks to complement doughnuts. Dunkin Donuts may introduce various coffee-based drinks, thus posing a significant threat to cafés/bars, such as Excelso Café (Euromonitor). Canadian exporters can tap into this growth in menu offerings among foodservice competitors and supply bakery goods, snacks and other popular café items. In 2011, eat-in accounted for almost 98% of value sales. The takeaway concept, e.g. drive-thru facility, has not gained significant traction in the country. While drinks make up the bulk of sales, outlets are introducing more food items. Many are also offering free Wi-Fi access, live music and other live entertainment to encourage customers to spend more time and money at their outlets. One of the strategies employed by cafés/bars operators to increase value sales is to localize their menu with items like coffee blends in fruit flavours, such as durian. Other efforts include offering promotions, such as ladies nights and happy hour discounts, and co-branding with credit cards to offer rewards (Euromonitor). Although coffee shops dominate the café/bars channel, teahouses are also seeing increased value growth and expansion. Teahouses are mainly found in bigger cities and target the health-conscious consumer by emphasizing the health attributes of tea. Prominent brands include Tea Addict, Taste Tea and Travel Café. Juice/smoothie bars, however, have had limited penetration in Indonesia (Euromonitor). Tables 5 and 6 provide a detailed breakdown of the cafés/bars channel by category in terms of value and outlet numbers. *Bank of Canada 2011 Year Average Exchange Rate: 1 rupee (Rp) = C$ PAGE 6

7 FOODSERVICE BY CHANNEL Table 4: Top 10 Chained Cafés/Bars Brands and % Share by Value Brand Brand Owner Starbucks Starbucks Corp Excelso Café Excelso Multirasa PT The Coffee Bean & Tea Leaf International Coffee & Tea LLC Oh La La Café Oh La La International PT McCafé McDonald s Corp Bakerzin Baker s Inn Holdings Ya Kun Kaya Toast Ya Kun International Pte Ltd Black Canyon Black Canyon Thailand Co Ltd Dôme Dôme Coffees Australia Pty Ltd Bengawan Solo Coffee Bengawan Solo Coffee PT Table 5: Cafés/Bars by Category: Forecast Foodservice Value (Rp billion) and CAGR (%) Category CAGR Chained bars/pubs Independent bars/pubs 25, , , , , , Chained cafés Independent cafés 4, , , , , , Chained juice/smoothie bars Independent juice/smoothie bars Chained specialist coffee shop 1, , , , , Independent specialist coffee shop Chained cafés/bars Total 1, , , , , , Independent cafés/bars Total 30, , , , , , Cafés/bars Total 32, , , , , , Table 6: Cafés/Bars by Category: Forecast Outlets and CAGR (%) Category CAGR Chained bars/pubs Independent bars/pubs Chained cafés Independent cafés 2,100 2,163 2,224 2,280 2,332 2, Chained juice/smoothie bars Independent juice/smoothie bars Chained specialist coffee shop Independent specialist coffee shop Chained cafés/bars Total Independent cafés/bars Total 3,123 3,215 3,303 3,383 3,457 3, Cafés/bars Total 3,618 3,757 3,891 4,015 4,132 4, Source of All: Euromonitor, 2012 PAGE 7

8 FOODSERVICE BY CHANNEL Fast Food Channel synopsis In Indonesia, foreign/international brands dominate the fast food market (except in the Asian fast food category) and benefit from greater brand recognition, larger promotional budgets, a higher number of outlets, and first-mover advantage in many areas. Major international players include KFC, Dunkin Donuts, McDonald s and Baskin-Robbins (Euromonitor). According to Euromonitor, chained fast food dominates the fast food channel, with KFC as the leading operator, as shown in Table 9. Local chained fast food operator Es Teler 77 also dominates the market, and along with KFC and McDonald s, makes up 54% of the chained fast food market. Despite the positive economic growth, several chained fast food brands, including ToniJack s, Popeye s Chicken & Seafood, Swensen s, and Daily Bread, exited the market as a result of fierce competition from leading chained operators. Food, as opposed to beverages, makes up 90% of total fast food sales. Eat-in accounts for approximately 74% of value sales, although takeaway and home delivery is growing to meet the demands of busy young professionals and young people who value quick, cheap and convenient-to-access food (Euromonitor). Asian fast food and chicken fast food contributed the most to value sales for the fast food channel as a whole, at 37% and almost 30%, respectively. Convenience store fast food makes up less than 1% of total fast food value sales but recorded an impressive current value growth of 65% in 2011, with brands Circle K and Bright leading the way (Euromonitor). Asian fast food is especially popular in Indonesia as menu items are adapted to Indonesian tastes. Local chained Asian fast food is found in more locations, as well as in smaller cities as local franchise costs are less expensive than those for international franchises, fuelling their expansion (Euromonitor). Channel prospects Euromonitor reported bakery fast food and ice cream fast food as two emerging categories that are rising in popularity and surpassing established categories such as burger and chicken fast food. Bakery and ice cream fast food is performing better due to the novelty of the categories, and because these categories mainly target middle-to-upper income consumers who tend to be less price sensitive. Bakery products fast food registered current value growth of almost 18% and ice cream fast food saw current value growth of 40% in Fast casual dining is another emerging category that saw current value growth of almost 10% in 2011, up from 9% in The concept emphasizes quick table service in a comfortable atmosphere and attracts the growing number of middle-to-upper income consumers with busy lifestyles. Leading brands in this category are local operators Es Teler 77 and Mister Baso (Euromonitor). The presence and awareness of fast food among Indonesian consumers is already high; outlet numbers, volume transactions and constant value sales are thus expected to slow due to the maturity of the market. Increasing health consciousness, especially among the urban population, is also challenging fast food growth, since food in these outlets tends to be less healthy and high in fat, sugar or salt. Additionally, more households are shifting to home-cooking (Euromonitor). Most chains are advised to develop new and innovative offerings that suit Indonesian tastes, in order to maintain growth. Offering affordable packaged meals, discounts and promotional giveaways will also attract customers (Euromonitor). PAGE 8

9 FOODSERVICE BY CHANNEL Forecast foodservice value Fast food posted growth of 11% in current value terms in 2011 to register sales of Rp13.5 trillion, which was a slight decline from the year before. As shown in Table 7, fast food is forecast to register CAGR of 6.3% from 2011 to This growth is due to price increases and increased purchases by middle-to-upper income consumers. However, middle-to-lower income consumers face diminishing purchasing power, which will reduce their consumption at fast food outlets (Euromonitor). Table 7: Fast Food by Category: Forecast Foodservice Value (Rp billion) and CAGR (%) Category CAGR Fast food total 13, , , , , , Chained fast food total 10, , , , , , Independent fast food total 2, , , , , , Other fast food Bakery products fast food 1, , , , , , Chained bakery products , , , , , Independent bakery products Burger fast food 2, , , , , , Chained burger 2, , , , , , Independent burger Chicken fast food 4, , , , , , Chained chicken 3, , , , , , Independent chicken Ice cream fast food Chained ice cream Independent ice cream Fish fast food Latin American fast food Middle Eastern fast food Chained Middle Eastern Independent Middle Eastern Asian fast food 5, , , , , , Chained Asian 3, , , , , , Independent Asian 1, , , , , , Pizza fast food Convenience stores fast food Chained convenience stores Independent convenience stores Fast casual dining 1, , , , , , Source: Euromonitor, 2012 PAGE 9

10 FOODSERVICE BY CHANNEL Forecast outlets Fast food outlet numbers grew by more than 9% to reach over 4,800 in Most operators are choosing to expand their outlets through company-owned stores rather than increasing the number of franchisees to maintain service and product quality (Euromonitor). Forecast outlet numbers by category for the period from 2011 to 2016 is illustrated in Table 8 below. Newer chained fast food players, such as Carl s JR, Red Mango, 7-Eleven and MOS Burger, are following the footsteps of larger chained players and looking to expand beyond Jakarta and move into smaller cities. This will result in more competition among the various outlets (Euromonitor). Table 8: Fast Food by Category: Forecast Units/Outlets Category Fast food Total 4,847 5,227 5,608 5,978 6,349 6,727 Chained fast food Total 3,366 3,719 4,074 4,423 4,775 5,138 Independent fast food Total 1,481 1,508 1,534 1,555 1,574 1,589 Other fast food Bakery products fast food ,026 1,057 1,082 1,104 Chained bakery products Independent bakery products Burger fast food Chained burger Independent burger Chicken fast food 1,098 1,154 1,204 1,243 1,278 1,309 Chained chicken ,000 1,030 Independent chicken Ice cream fast food Chained ice cream Independent ice cream Fish fast food Latin American fast food Middle Eastern fast food Chained Middle Eastern Independent Middle Eastern Asian fast food 1,592 1,632 1,680 1,735 1,800 1,875 Chained Asian ,020 Independent Asian Pizza fast food Convenience stores fast food Chained convenience stores Independent convenience stores Fast casual dining Source: Euromonitor, 2012 PAGE 10

11 FOODSERVICE BY CHANNEL Table 9: Top 10 Chained Fast Food Brands and % Share by Value Brand Brand Owner KFC Yum! Brands Inc Es Teler 77 Top Food Indonesia PT McDonald s McDonald s Corp A&W Yum! Brands Inc Hoka Hoka Bento Eka Bogainti PT J Co Donuts & Coffee J Co Donuts & Coffee PT California Fried Chicken Pioneerindo Gourmet Intl Tbk PT Texas Chicken AFC Enterprises Inc Dunkin Donuts Dunkin Brands Inc Baskin-Robbins Dunkin Brands Inc Source: Euromonitor, 2012 Self-Service Cafeterias Channel synopsis Self-service cafeterias reported current value growth of almost Rp1.8 trillion or 8% and the number of outlets increased by more than 4% to reach 500 outlets in Self-service cafeterias are less popular in Indonesia and face competition from other foodservice outlets (Euromonitor). Self-service cafeterias are often located in offices, school campuses, and shopping malls but are also being established inside modern retailers, such as supermarkets/ hypermarkets. Self-service cafeterias offer a wide range of dishes prepared in advance and sold at relatively low prices. These characteristics appeal to certain populations, such as students, who are seeking fast and affordable meals with the flexibility to choose meal sizes. Office workers and shoppers also dine often at self-service cafeterias (Euromonitor). Source: Shutterstock According to Euromonitor, eat-in contributed around 72% of value sales within self-service cafeterias in Nonetheless, takeaway saw its value share increase by two percentage points. The takeaway option is increasingly popular due to busier lifestyles. Most of the self-service cafeterias value sales were generated by food purchases, which claimed a 73% share in Consumers prefer to purchase drinks at nearby street stalls/kiosks, which are cheaper. The majority of self-service cafeterias in Indonesia are independent and owned by domestic companies. Vinso is a more established local independent brand. Carrefour Indonesia PT and Alfa Retailindo Tbk PT dominated the chained self-service cafeteria category in the country. Carrefour is the only multinational brand and makes up almost 60% of the chained category by value. Foreign brands are generally more focused on establishing other types of foodservice outlets, namely cafés/bars, full service restaurants and fast food, that typically generate higher revenues. Carrefour s self-service cafeterias, often called Carrefour Snack Corner, offer sit-down areas, an extensive food and beverage menu, as well as takeaway service (Euromonitor). PAGE 11

12 FOODSERVICE BY CHANNEL Self-Service Cafeterias (continued) Channel prospects As described in Table 10, the self-service cafeteria channel is expected to see a constant value CAGR of 3% up to Chained self-service cafeterias, with a forecast constant value CAGR of 9.9%, are expected to perform better compared to independent operators, with a forecast constant value CAGR of approximately 1% (Euromonitor). Table 10: Self-Service Cafeterias: Forecast Foodservice Value (Rp billion) and CAGR (%) CAGR Self-service cafeterias 1, , , , , , Chained self-service Independent self-service 1, , , , , , Source: Euromonitor, 2012 Consumer foodservice operators, such as cafés/bars, full service restaurants and fast food, are expanding their presence in locations such as shopping malls, office buildings and schools/campuses. These outlets will present direct competition to self-service cafeterias, which are mainly found in these locations (Euromonitor). Table 11 shows the forecast CAGR in outlet numbers for the self-service cafeteria channel. Source: Euromonitor, 2012 Table 11: Self-Service Cafeterias: Forecast Number of Outlets and CAGR (%) CAGR Self-service cafeterias Chained self-service Independent self-service As cafés/bars, full service restaurants and fast food outlets continue to dominate consumer foodservice in the near future, it is unlikely that self-service cafeterias will see any significant growth or expansion. Although self-service cafeterias are a more economical choice compared to other consumer foodservice channels, the eating-out culture in Indonesia, which continues to grow in popularity, is expected to slow growth in the self-service cafeteria channel as consumers increasingly choose other channels (Euromonitor). PAGE 12

13 FOODSERVICE BY CHANNEL Full Service Restaurants Channel synopsis Full service restaurants saw current value growth of almost 8% in 2011 to reach more than Rp276.3 trillion. The number of outlets totalled 99,717 in Full service restaurants are the most familiar foodservice format to Indonesians (aside from street stalls/kiosks) and were introduced into the market long before the arrival of fast food and cafés/bars (Euromonitor). With the channel s emphasis on dining out, eat-in accounted for almost 93% of full service restaurants value sales in However, takeaway did see some growth despite only accounting for 2% of total value sales in full service restaurants in 2011(Euromonitor). Independent full service restaurants dominated outlet numbers, transaction volume and value sales of the full service restaurant channel over chained full service restaurants. Rumah Makan Padang dominated the independent category. As shown in Table 12, Pizza Hut dominated the chained full service category and is the only full service pizza brand. Pizza Hut owes much of its success to its first-mover advantage, menu innovation, aggressive outlet expansion into smaller cities, investment in mass media, and promotional offerings (Euromonitor). Local full service restaurant outlets are more numerous than those of international/foreign brands. However, international/foreign outlets tend to generate higher value sales, as they target upper-income consumers and are thus able to charge more for their menu items (Euromonitor). Broken down by cuisine type, Asian full service restaurants dominate outlet numbers, transactions volume and value sales within the full service restaurant channel, representing 83% of the channel by value. Rumah Makan Sederhana is one of the more prominent chains within Asian full service restaurants. Indonesian consumers like to eat noodles, and chained noodle-themed full service restaurants, such as Hot CMM, Bakmi Japos and Bakmi GM also are popular (Euromonitor). The most popular casual dining full service restaurants serve North American fare or pizza. The leading chained operators for casual dining include Pizza Hut, Planet Hollywood, Papa Ron s, Hard Rock Café and Sizzler. Casual dining saw current value growth of almost 9% in 2011 as a result of price increases and continued spending from their target base of middle-to-high income consumers. Most casual dining outlets are located in big cities and are frequented by business people, young adults or those entertaining guests (Euromonitor). PAGE 13

14 FOODSERVICE BY CHANNEL Full Service Restaurants (continued) Table 12: Top 10 Chained Full Service Restaurant Brands and % Share by Value Brand Brand Owner Pizza Hut Yum! Brands Inc Sederhana, Rumah Makan Sederhana Citra Mandiri PT Planet Hollywood Planet Hollywood Inc Sizzler Worldwide Restaurant Concepts Inc Papa Ron s Eatertainment Int l Tbk PT Bakmi GM Griya Mie Sejati PT Fish & Co OB Singapore Operations Pte Ltd Hard Rock Café Hard Rock Café Intl Inc Tony Roma s Romacorp Inc Hot CMM Hot Cwie Mie Malang Source: Euromonitor, 2012 Channel prospects Competition within the full service restaurant channel is strong and will continue to intensify. The maturity of the market, price increases, and decreased spending from the middle-to-low income group will affect the growth of full service restaurants. Full service restaurant operators, especially chained, will look to boost sales and maintain growth by targeting middle-to-upper income consumers who have greater spending power. Strategies include introducing more sophisticated dishes, incorporating healthier ingredients, and revamping outlet designs. Other strategies include developing affordable set menus, co-branding to offer discounts, expanding into smaller cities, and offering other perks, such as free wi-fi and play areas for children to attract families (Euromonitor). Some full service restaurants may encounter indirect competition from cafés/bars that are diversifying and incorporating semi-restaurant elements such as complete meal and beverage menus. However, menu prices in cafés/bars generally tend to be higher than those of full service restaurants and therefore attract fewer customers (Euromonitor). Asian full service restaurants will continue to dominate the full service restaurant channel as the cuisine choice during the forecast period. However, niche cuisines, such as Latin and Middle Eastern, are seeing the fastest growth and are forecast to see constant value growth of 7% and 6%, respectively. As Indonesians increasingly develop a palate for foreign cuisines, these niche categories will see an increase in popularity (Euromonitor). Pizza Hut will continue to dominate the chained full service restaurant category in the forecast period due to outlet expansion, aggressive promotion and new product launches (Euromonitor). PAGE 14

15 FOODSERVICE BY CHANNEL Full Service Restaurants (continued) Table 13: Full Service Restaurant by Category: Forecast Foodservice Value (Rp billion) and CAGR (%) CAGR Full service restaurant total 276, , , , , , Chained total 8, , , , , , Independent total 268, , , , , , Asian full service 261, , , , , , Chained Asian 3, , , , , , Independent Asian 258, , , , , , European full service 2, , , , , , Chained European , Independent European 2, , , , , , Latin American full service Chained Latin American Independent Latin American Middle Eastern full service Chained Middle Eastern Independent Middle Eastern North American full service 4, , , , , , Chained North American 1, , , , , , Independent North American 2, , , , , , Pizza full service 3, , , , , , Chained pizza 2, , , , , , Independent pizza Other full service 3, , , , , , Chained other Independent other 2, , , , , , Casual dining full service 39, , , , , , Chained casual dining 39, , , , , , Independent casual dining Source: Euromonitor, 2012 PAGE 15

16 FOODSERVICE BY CHANNEL Full Service Restaurants (continued) Table 14: Full Service Restaurant by Category: Forecast Units/Outlets Full service restaurant total 99, , , , , ,953 Chained total 1,115 1,199 1,284 1,368 1,453 1,536 Independent total 98,602 99,241 99, , , ,417 Asian full service 97,623 98,257 98,700 99,047 99,298 99,449 Chained Asian Independent Asian 97,015 97,597 97,987 98,281 98,478 98,576 European full service Chained European Independent European Latin American full service Chained Latin American Independent Latin American Middle Eastern full service Chained Middle Eastern Independent Middle Eastern North American full service Chained North American Independent North American Pizza full service Chained pizza Independent pizza Other full service Chained other Independent other Casual dining full service 4,459 4,530 4,593 4,648 4,699 4,746 Chained casual dining 4,459 4,530 4,593 4,648 4,699 4,746 Independent casual dining Source: Euromonitor, 2012 PAGE 16

17 TRAVEL AND TOURISM Overview Tourism contributes significantly to the Indonesian economy and is an extremely important contributor to the success of the foodservice market. Foodservice is a significant area of expenditure for tourists and the sector benefits substantially from Indonesia s tourism industry. Indonesia itself was not significantly affected by the 2008 economic recession that continues to plague many other countries; inbound and domestic tourism were only slightly affected following the crisis. While incoming tourism receipts dipped in 2009, it rebounded to Rp68.1 trillion in 2011, as shown in Table 15. As the Indonesian tourism sector is still largely underdeveloped, it has the potential to grow. Promotional efforts Table 15: Balance of Tourism Payments by Value (Rp billion) Domestic tourism is very important to the Indonesian tourism industry, accounting for a much higher proportion of overall tourism expenditure than international arrivals. New trends and themes to encourage travel are being developed every year to maintain the interest of domestic travellers. Since early 2009, culinary tourism has become an important phenomenon, encouraging domestic tourists to experience the distinct local flavours and dishes from different parts of the country. This trend has contributed to a growing interest in region-specific Indonesian cuisines, increasing the number of foodservice outlets catering to these tastes (Euromonitor). To attract foreign tourists, the Indonesian tourism board is continuing its promotional campaign Visit Indonesia Year. The board introduced a new theme, Wonderful Indonesia, for 2011 and 2012, which has already resulted in double-digit growth in inbound tourism for The Visit Indonesia Year campaign is expected to continue in 2013 and beyond (Euromonitor). Future outlook Incoming receipts 69, , , ,070.1 Outgoing expenditures 35, , , ,248.3 Balance of payments 34, , , ,821.8 Source: Euromonitor, 2012 The outlook for overall inbound and domestic tourism is positive. Although the real value of tourism receipts dropped by 1.5% in 2011, gains of 4.2% were expected for 2012, with the government setting a target of eight million foreign tourists for Tourism is expected to continue its rebound, with domestic tourism expenditure leading the recovery. Singapore, Malaysia, and China are some of the biggest contributors to inbound tourism in Indonesia due to proximity and convenience. Inbound tourism is expected to grow as the economies of these neighbouring Asian countries recover (Euromonitor). Measures from both the government and private industry to support the tourism industry are expected to continue in the coming years. For example, the Indonesian government has pushed for a common Association of Southeast Asian Nations (ASEAN) visa to attract tourists from neighbouring countries. The number of low-cost carriers is growing, making air travel more affordable to a greater proportion of the population. The growing adoption of online booking by Indonesian consumers is also facilitating travel by making it easier to book travel arrangements (Euromonitor). PAGE 17

18 CONCLUSION As consumer lifestyles change, disposable incomes rise, and foodservice options expand, people are choosing to cook less. This trend has contributed to the growth and success of the Indonesian foodservice sector as consumers seek out convenient and ready-to-eat meals. Although local Asian cuisine is important to the Indonesian population, consumers are welcoming Western style meals as well. For example, the success of Pizza Hut in the country shows that people are willing to try new dishes and cuisines. As Indonesians become more accepting of foreign foods, other international brands will slowly make their way into the market. While international brands tend to target the middle-to-upper classes in large cities with the buying power and willingness to purchase higher-end products and services, local brands are targeting all classes and income levels throughout the country. Source: Planet Retail Major challenges that will limit the growth of the foodservice market include fuel price hikes, higher commodity prices, and increases in real estate prices. While middle-to-upper income consumers will not significantly change their consumption levels at foodservice outlets, these factors will affect the purchasing power of low-to-middle income consumers. A significant opportunity for food exporters to Indonesia is supplying processed and packaged products to the rapidly developing retail and foodservice sector. Canadian exporters can benefit from the growth of the foodservice market in Indonesia by supplying foodservice operators with ingredients for their meals. As the majority of consumers of Western food products are located in cities, targeting these areas first will increase the likelihood of success. Given the popularity of Indonesia as a tourist destination for foreigners, Canadian exporters should consider supplying products to foodservice operators in travel locations, where Western food will be especially in demand. Canadian companies looking to export to Indonesia should contact Agriculture and Agri-Food Canada s Agri-Food Trade Service regional contacts at or contact the Canadian agri-food trade commissioners in South East Asia at SOURCES Central Intelligence Agency. (2012). The World Factbook. Indonesia. Euromonitor. Countries Overview Indonesia. Euromonitor. (November 2009). Consumer Foodservice by Location Indonesia. Euromonitor. (November 2009). Consumer Foodservice Indonesia. Euromonitor. (November 2009). Consumer Lifestyle Indonesia. Euromonitor. (January 2012). Packaged Food in Indonesia. Euromonitor. (June 2012). Travel and Tourism Indonesia. Euromonitor. (August 2012). Consumer Foodservice Indonesia. Euromonitor. (August 2012). Consumer Foodservice by Location Indonesia. Euromonitor. (August 2012). Full-service Restaurants Indonesia. Euromonitor. (August 2012). Self-service Cafeterias Indonesia. Global Trade Atlas. (2012). PAGE 18

19 The Government of Canada has prepared this report based on primary and secondary sources of information. Although every effort has been made to ensure that the information is accurate, Agriculture and Agri-Food Canada (AAFC) assumes no liability for any actions taken based on the information contained herein. Indonesia: The Foodservice Industry Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2013). ISSN AAFC No E Photo Credits All photographs reproduced in this publication are used by permission of the rights holders. All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada. For additional copies, to request an alternate format, and for all other inquiries regarding this publication, please contact: Agriculture and Agri-Food Canada, Global Analysis Division 1341 Baseline Road, Tower 5, 4th floor Ottawa, ON Canada K1A 0C5 Aussi disponible en français sous le titre : Indonésie : Industrie de la restauration Reproduction or redistribution of this document, in whole or in part, must include acknowledgement of Agriculture and Agri-Food Canada as the owner of the copyright in the document, through a reference citing AAFC, the title of the document and the year. Where the reproduction or redistribution includes data from this document, it must also include an acknowledgement of the specific data source(s), as noted in this document. Agriculture and Agri-Food Canada provides this document and other report services to agriculture and food industry clients free of charge.