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allooning expenses from rising operational costs and a minimum-wage hike has Indonesia'€™s Kentucky Fried Chicken (KFC) franchisee, PT Fast Food Indonesia (FAST), feeling the pinch.

The publicly listed company ended last year with a 6.31 percent increase in revenue (including food sales, beverages and music CDs) to Rp 4.21 trillion (US$322.3 million) from Rp 3.96 trillion in 2013.

The moderate growth in revenue failed to compensate for the firm'€™s surging expenses, however, bringing down net profit by 2.7 percent to Rp 152.05 billion in 2014 from Rp 156.3 billion in the previous year, according to a financial report published on Monday.

FAST finance and administration general manager Mario B. Ledres said previously that increasing operational costs and the rise in the provincial minimum wage would affect his firm'€™s bottom line.

'€œThe minimum wage increased 14.5 percent a few years back to more than 32 percent in 2013 and 18 percent in 2014,'€ he said.

General administration expenses increased by 14.3 percent to Rp 391.3 billion last year from Rp 342.4 billion in 2013, with employee salaries rising by 17.95 percent, according to the financial report.

The company'€™s selling and distribution expenses rose by 5.9 percent to Rp 1.98 trillion from Rp 1.87 trillion year-on-year (yoy).

Mario said the government'€™s decision to raise the price of subsidized fuel late last year had increased FAST'€™s transportation costs, which made up between 50 percent and 53 percent of the firm'€™s total operational costs.

FAST previously stated the firm would build 60 to 65 new outlets this year, with a total estimated investment of Rp 240 billion.

Of the 476 KFC outlets in the country counted at the end of 2014, 400 are wholly owned.

FAST said it was more upbeat about the country'€™s market potential than it was concerned about the current challenges.

Café and Restaurant Association of Indonesia (Apkrindo) chairman Eddy Sutanto said that fast-food restaurant chains would still be a lucrative market, with the sector recording faster growth than other types of restaurants in the country.

Over 1,000 restaurant outlets are registered with Apkrindo; the majority for brands like McDonald'€™s, Pizza Hut and KFC.

Indonesian Food and Beverage Association (Gapmmi) chairman Adhi S. Lukman estimated the country'€™s total food and beverage sales last year hit some Rp 742 trillion.

International brands such as KFC and McDonald'€™s continue to benefit from heavy investment in advertising and promotion '€” particularly TV advertising '€” which attracts Indonesia'€™s growing consumer base, according to research firm Euromonitor International.

Euromonitor International reported that KFC, McDonald'€™s and Es Teler 77 dominated chain fast food sales in Indonesia in 2013, with a combined value share of 51 percent.