Limited-Service Restaurants in Indonesia

PROSPECTS

Strong performance of limited-service restaurants based on ability to attract millennials

Limited-service restaurants saw an excellent performance during the review period due to outlet expansion and increased transactions as well as the rise in fintech companies and their aggressive promotional activities, including cashback and discounts. The provision of periodical menu innovations is also often employed by many players in limited-service restaurants such as Burger King and Pizza Hut.

Third party delivery services account for higher share of category landscape

Third party delivery services account for a significant and growing share of category sales. In the past, some limited-service restaurants surged ahead of the competition by providing delivery services, as not all fast food restaurants offer this service.

LSR will continue to see strong growth over the forecast period

The outlook for limited-service restaurants in Indonesia is predicted to continue positively as long as the dollar exchange rate is favourable because although most of the raw materials used by LSR players are sourced locally, some such as meat and cheese, are imported. As the rupiah is currently getting stronger, the outlook is positive, however players should prepare in case the rupiah weakens.

COMPETITIVE LANDSCAPE

KFC retains lead through franchise and menu developments

KFC retained the lead in limited-service restaurants in 2019. While most industry players are located in urban areas, KFC is targeting the east of Indonesia and low-income consumers.

The development of new menus attract a wider audience and keep consumers engaged

Changing consumer preferences are driving growth trends in limited-service restaurants. New product innovation and seasonal menus are constantly developed to meet local preferences.

Alongside menu offerings, service and convenience remain equally important

Along with the menu concept of limited-service restaurants, fast and convenient service is required in this category to succeed. Many brands originally present in full-service restaurants moved into limited-service restaurants by developing smaller outlets that can easily be expanded to reach more consumers.

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