McDonald's and Burger King Increase Outlets Growth

McDonald’s Indonesia targets outlet growth at 10-15 percent in 2011. Currently the fast food restaurant has 112 outlets all over Indonesia. Last year, the fast food operator, which is now controlled by PT Rekso Nasional Food, built 19 new outlets while renovating 30 others.

Koko Hadiono, Director of Operational and Training of Rekso Nasional Food, stated that in the previous years, McDonald’s outlets yearly construction are only around one to three percent. The development investments of each of McDonald’s outlets costs Rp 5 billion. This covers equipment, seat capacity, design, decoration and does not even include location rental cost. This year, McDonald’s will focus on building independent outlets, and will no longer be renting spaces in malls or other shopping centers.

“Currently, 80 percent of our outlets are already independent,” said Koko, Friday. McDonald’s Indonesia recorded an average daily sales of Rp 100 million and is visited daily by four to five thousand customers per outlet.

McDonald’s will reopen their outlet in the Sarinah Department Store, Jakarta in February 14. Previously the location of the outlet has changed hands to Tony Jack's restaurant owner, Bambang Rachmadi. Rekso won the tender that was conducted by Sarinah Thamrin at the end 2010.

Another strategy that was implemented by McDonald’s this year is to focus sales on breakfast menu sets at Rp 15 thousand per portion on independent outlets.

Regarding the price increase of food raw materials, McDonald’s Indonesia does not plan to increase their selling price. The policy taken is different with McDonald’s in the United States and Europe, which announced a price increase of 2 to 3.5 percent to adapt to the raw material price increase.

“We are not affected by the food price increase, because the ones that went up are only a few components. What is important now is keeping the customers,” said Koko.

Burger King

Burger King, one of McDonald’s rival, is also planning to do expansion this year. The business division of PT Mitra Adiperkasa Tbk (MAPI) plans to construct 20 outlets. “The outlets that we will build are not only in Java, but also outside of Java,” said Fetty Kwartati, Corporate Secretary of Mitra Adiperkasa.

Burger King believes that the Indonesian population of 240 million people will become a very potential market share for their sales, let alone the more than 60 percent of Gross Domestic Product (GDP) encouraged by the consumption sector. “The number of middle-class population kept on increasing every year,” explained Fetty.

Burger King once failed in Indonesia during the 90’s, but Mitra Adiperkasa brought the brand back due to the strengthening of the population's purchasing power.

Until the end of 2010, Mitra Adiperkasa has owned 17 outlets of Burger King. For the food division, the company also has operated 10 outlets of Domino’s Pizza, 6 outlets of Pizza Marzano and 11 outlets of Cold Stone Creamery.

According to the financial report of Mitra Adiperkasa, till the third quarter of 2010, the food and beverage division recorded a revenue of Rp 130.81 billion, an increase from 2009 of Rp 101.52 billion. In 2010, the division is contributing 10.70 percent toward the total revenue of Mitra Adiperkasa which totaled Rp 4.11 trillion. The number shows an increase compared to 2009, which booked a contribution of 9.76 percent.