Rupiah's fall invigorates local food chains

JAKARTA (JP): The sharp depreciation of the rupiah against the U.S. dollar gives more vigor to local food restaurants to compete with their foreign rivals.

Amir Karamoy, the vice president of local food chain operator PT Putera Sejahtera Pioneerindo, said here yesterday that the impact of the currency crisis on local players was less strong than that on foreign chains.

"Foreign chains have to import much of their raw material while their revenue is generated in rupiah... I think they are having a difficult time now," Amir said.

He said local franchise companies like PT Putera Sejahtera, which owns the California Fried Chicken (CFC) food chain, would not be adversely affected by the currency turmoil in the short term because most of the company's raw material was supplied domestically.

"The imported raw material accounts for between 2 percent and 3 percent while the rest comes from the domestic market," he said.

However, in the long term, he said, local franchise companies like CFC and Es Teler 77 would feel the impact because the price of raw material in the domestic market would increase to adjust to the falling rupiah.

In a related development, Sukyatno Nugroho, the owner of the country's traditional franchise food business Es Teler 77, complained yesterday because the rental space in big malls in large cities was in dollars.

"Es Teler 77 cannot afford to pay for the space using American dollars... and if possible, the rental cost in such malls should be paid in rupiah," he said in a statement yesterday.

"Most small companies like Es Teler 77 have suffered losses due to the rupiah's depreciation," Sukyatno said.

Amir said competition in the franchise business was growing with the entry of the world's major fast food chains, such as McDonald's, Wendy's and Kentucky Fried Chicken.

Amir said CFC would open at least six more outlets, one in Cibubur and five in Central and East Java respectively, by the end of this year.

"With these additional outlets, CFC will have 300 restaurants," he said.

However, he did not give further details of the five outlets in Central and East Java.

Amir said some foreign investors had also expressed interest in opening CFC outlets in Singapore, Malaysia, Brunei, Northern Australia, China, Perth, West Australia in cooperation with PT Putera Sejahtera Pioneerindo.

"There has not been any commitment yet but these overseas investors have a high interest in running CFC outlets," he said. (aly)