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Jakarta Post

KFC to add 65 new outlets next year

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Fri, December 26, 2014   /  11:40 am

The franchise holder of the Kentucky Fried Chicken (KFC) brand in the country, PT Fast Food Indonesia (FAST), plans to open between 60 and 65 new outlets in and outside Java to tap into the country'€™s growing food retail market.

FAST business development general manager Gandhi Lie said on Tuesday that his firm would spend around Rp 240 billion (US$19.2 million) on the expansion, of which about Rp 200 billion would be used to open 40 to 45 new '€œstand alone'€ outlets, with the remaining Rp 40 billion to set up 20 '€œKFC box'€ outlets.

 '€œWe will use our internal cash as well as partner with landlords to build the new outlets next year,'€ he said without providing details on the composition of each source of funds.

FAST had cooperated with a number of landlords under revenue-sharing deals, under which FAST shared 5 percent of its revenues with the landlords, he said.

Gandhi told reporters that his firm would build the stand-alone stores anywhere in the country with good market potential.

The KFC-box outlets, meanwhile, would be opened at public places such as train stations, malls and universities, said FAST finance and administration general manager Mario B. Ledres.

KFC box is a KFC concept store that utilizes minimal space and mainly focuses on take-away, but still provides a number of seats for customers.

Mario estimated that the store-number boost would help his firm reach between 10 percent and 13.9 percent sales growth next year, outperforming industry growth.

'€œDespite the challenges ahead, we believe in the country'€™s huge market potential, with the eastern region showing good potential,'€ Gandhi said.

The easternmost province of the country, Papua, recorded 14.84 percent economic growth last year, the highest among all provinces, while West Papua came second with 9.3 percent growth. The two surpassed national economic growth of 5.7 percent.

With its current 476 outlets across the country, over 400 of which are wholly owned, the publicly listed company recorded a 6.9 percent revenue increase (including sales of food, beverages and music CDs) to Rp 3.1 trillion in the first nine months of this year from Rp 2.9 trillion in the same period last year.

'€œWe aim to see a 5.8 percent increase in our revenues to Rp 4.4 trillion and a 7.7 percent increase to Rp 4.4 trillion in our sales [only from food and beverages],'€ Mario said.

The projection was lower than the firm'€™s initial growth target of 12 percent, mainly due to increasing operational costs and provincial minimum-wage hikes, he explained.

The government'€™s decision to lower fuel subsidies by around 36 percent raised FAST'€™s transport and traveling costs, which accounted for between 50 percent and 53 percent of the firm'€™s operational costs, he added.

Mario said, however, his firm would unlikely increase its fried chicken selling prices until the first quarter of next year to maintain customer loyalty.

Other than surging operational costs, FAST'€™s revenues were pressed by provincial minimum-wage hikes of around 18 percent nationwide this year, he added.

'€œMinimum wage has increased from 14.5 percent a few years back to more than 32 percent last year and 18 percent this year,'€ he said.

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