S

Examining Indonesia’s Restaurant Industry

in Preparation for ARANGHistory and Projections

A Market Research PresentationBy Tobias Weymar

Agenda

Executive Summary

Southeast Asian Economy

Indonesia’s Macroeconomic Status

Food Trends in Indonesia and Southeast Asia

Economy of Bali

Ubud’s Market

Executive Summary

Indonesia displays some of the strongest fundamentals in Southeast Asia

Indonesia is ripe for investment in the restaurant sector

There is a trend in developed countries away from quick service restaurants (QSRs) to fast casual restaurants (FCRs)

Southeast Asian Economy

Resisted the Middle Income Trap (MIT) so far (The Heritage Foundation)

Consistent growth relies upon increased productivity, which becomes harder with investment inefficiency from easy credit

Displayed positive numbers in Total Factor Productivity (THF) Factors include macroeconomic

fundamentals, demographics, institutions, trade structure, infrastructure, and civil conflicts.

Southeast Asian Economy

Vietnam - houses with disposable income above $7,500 expected to surge to 24% in 2017 from 17% in 2013 (Euromonitor) Public debts above 50% of GDP, public

expenditures are 31% of GDP Ranked as one of lowest investment

freedom worldwide (2014 Index of Economic Freedom)

Philippines – around 6% growth in the last 3 years Public debt is 50% of GDP Domestic investment around 20% since

2000

Thailand – growth dropped to 3 year moving average of approx. 3% Public debt is 45% of GDP (24% in 2008) $15 Billion of investment because of

political instability

Indonesia – steady growth around 6%

Lack of infrastructure, dependence on commodities

Public debt only 24% of GDP Domestic investment

exceeded 30% for 4 consecutive years

Southeast Asian Economy

Vietnam Dependency ratio fell to 41% from 61% in 2000,

expected to drop by only 2% by 2030 Property rights are not respected

Philippines Dependency ratio fell by 9.4% to 62%, fastest growth

in working-age population Subsidizes many state-owned corporations in power,

health care, and agriculture

Thailand Dependency ratio fell by 5.7% to 39%, expected to rise

by 11% Business freedom high and stable

Indonesia Dependency ratio fell by 2.2% Regulatory efficiency is below global average of 64,

over a month to launch a business

Southeast Asian Economy

Vietnam Electricity becoming more

accessible 4 in 10 Vietnamese online, in 2000

nearly none Likely to need bailing out from credit

crisis

Philippines Problems with electrical power

infrastructure Explosion of internet usage MIT canidate

Indonesia – vulnerable to the “resource curse” Commodities are 55% of total

exports, 13% of GDP Problems with electrical power

infrastructure Poor internet penetration Trade minister Gita Wirjawan aims to

protect local and small businesses

Indonesia’s Macroeconomic Status

Domestic consumption contributes 57% of GDP

Urban consuming class contributes significant amount (44% of 138 Million)

Indonesia’s Macroeconomic Status

Consumer sector has largest CAGR at 7.7%

Food and beverage is 2nd largest comsumer market with 5.2% CAGR

Food Trends In Indonesia

Impressive growth across the board

Largest growth in travel and leisure locations

Food Trends in Southeast Asia

Colowide plans to open Gyu-Kaku and a shabu shabu chain in Indonesia (Nikkei) With the help of Maspion

plan to open 50 restaurants in 5 years

Jollibee aims to be largest home-grown chain (Interaksyon) 2,121 outlets in the

Philippines, 575 outlets abroad

Skylark looking to invest in Vietnam, Indonesia, and Thailand (Bloomberg) Have already expanded to

37 outlets in Taiwan

Bali’s Economy

Targeting $5.5 billion USD from tourism (Jakarta Post)

Aiming to attract 3.5 million foreign tourists, 6.5 million domestic tourists

Contributes around 70% of economy (Euro Bali)

85% of tourist expenditure leaves Bali

Exports increasing by about 7.6%, contributing around $380 million USD

Focused in Kuta, Legian, Seminyak, Nusa Dua,and Ubud

Ubud’s Market

Eat, Pray, Love highlights the many tourist attractions of Ubud

Cultural destination based on music and art

Textile, wood, and stone goods contribute to tourist revenue

Price point for many local restaurants is relatively low

Hujan, Bridges, and Locavore have high price points