Food manufacturers move in on thriving restaurant business

Food manufacturers move in on thriving restaurant business

The Jakarta Post, Jakarta | Business | Mon, February 24 2014, 12:21 PM

Food producers have increasingly moved into the restaurant business to gain footholds in the lucrative food-service industry, following the lead of beverage firm Rekso Group, which has run the fast-food restaurant chain McDonald’s since 2009.
“Many more people will likely want to eat something other than home-cooked meals as they achieve increased purchasing power,” Café and Restaurant Association of Indonesia (Apkrindo) chairman Eddy Sutanto said recently.
“The number of people in the nation’s consumer class will double to at least 90 million people by 2030, from 45 million in 2010,” he said, citing global consulting firm McKinsey & Company’s recent survey, adding that most consumer spending would be on food.
Eddy said that food manufacturers expanded their business portfolios by operating restaurant chains to tap deeper into the very promising food market, with a total annual value of more than Rp 500 trillion (US$42.5 billion).
A subsidiary of food giant PT Indofood Sukses Makmur (INDF), which is best known for its Indomie instant noodles, Segitiga Biru wheat flour and Bimoli cooking oil, will soon open a restaurant chain here.
The subsidiary, publicly listed PT Indofood CBP Sukses Makmur (ICBP), announced in November last year that it would run the restaurant chain through a joint venture with Japan’s pizza and bread manufacturer JC Comsa Corporation.
“The joint-venture company will mainly produce and process various flour-based dishes, and manage a restaurant chain,” ICBP corporate secretary Elly Putranti said recently.
“We will hold a 51 percent stake in the joint-venture company and JC Comsa the remaining 49 percent,” she said, adding that she could not yet disclose when the company would open its first restaurant.
JC Comsa, which is listed in Japan’s JASDAQ Securities Exchange, produces various Italian breads, sauces, condiments, meat and chicken products. It also runs several restaurant chains in Japan, including Shanghai Express, Hishizen Bento, Hishizen Sushi and Italian restaurant Popola Mama.
JASDAQ released a statement on Nov. 18, 2013, stating that Indofood and JC Comsa had initially aimed to build their first restaurant in Jakarta in January this year, with pizza as one of its menu items.
The joint-venture firm would also build a central kitchen in Jakarta for its planned national restaurant chain.
Besides Indofood, flour producer PT Sriboga Raturaya, already made its debut in February last year by opening a Japanese restaurant chain Marugame Udon (udon are thick-wheat-flour noodles).
The chain is owned by a joint venture, Sriboga Marugame Indonesia, which Sriboga Raturaya established with Japan’s restaurant-managing firm Toridoll Corporation.
Sriboga Marugame Indonesia president director Stephen James McCarthy said the firm would invest Rp 150 billion to build 38 Marugame Udon restaurants in the country’s five major cities by 2018.
Sriboga Raturaya has also been the master franchisee for Pizza Hut in the country since 2004. It booked around Rp 2 trillion in revenues from Pizza Hut in 2012, a 150 percent increase from the Rp 800 billion in 2007.
Meanwhile, the producer of the Richeese cheese wafer, PT Kaldu Sari Nabati, has been running its own fast-food restaurant chain, Richeese Factory, since 2011. Kaldu Sari opened its first restaurant selling fried cheesy chicken in Bandung, West Java, and now it has several outlets in Jakarta.
Apkrindo’s Eddy said fast-food restaurant chains would still be a lucrative market choice for food producers because the sector recorded the fastest growth compared to any other type of restaurants.
“We now have over 1,000 restaurant outlets registered with our association and nearly 1,000 of them are McDonald’s, Pizza Hut or Kentucky Fried Chicken [KFC],” he said.
“Besides aiming to expand their business to earn more profits for the food industry, food manufacturers also want to boost sales of their raw products by selling their products to their own restaurants,” said Indonesian Food and Beverages Association (Gapmmi) chairman Adhi S. Lukman.
Indofood, which will soon open its restaurants selling pizzas, produces 3.2 million tons of flour per year — the largest output by one company in the country.
Sriboga Raturaya, which sells pizzas and udon through its restaurant chains Pizza Hut and Marugame Udon, operates Indonesia’s third-largest flour mill with an annual output of 570,000 tons.
With a total population of 240 million people, Indonesia has become a huge market for various industrial sectors, including food and beverages.
Adhi estimated that total food-and-beverage sales in the country would surge by 6 percent this year from around Rp 700 trillion last year.
“The elections will boost national consumption by between 0.3 and 0.6 percent of total gross domestic product [GDP], while food prices are getting more stable this year. These factors will lead to bigger food consumption,” he said. (koi)