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Indonesia puts the brakes on U.S. fast food restaurant growth

By Mason White 9:47 AM February 25, 2013
KFC location in Indonesia 

By: Debbie Gross
U.S. fast food restaurant are facing new rules in Indonesia, that undermine the fast growth of U.S. companies in the market, according to press reports in the United States.

Yum! Brands Inc., which owns the restaurant chains KFC, and Pizza Hut, along with other fast food companies may be forced to slow store growth in Indonesia, the fourth most populous nation, due to government rules to protect local small businesses.

In terms of income, Yum Brands Inc., is focusing on growth overseas, particularly in China and Southeast Asia. A new rule that went into force will limit franchisees to 250 service outlets, where fast food sales increased 15 percent in 2011. U.S. fast food restaurants may be restricted from openings new locations in Indonesia, thereby slowing the growth.

“It will probably slow things down quite a bit,” one restaurant expert, said. “This is going to be a stumbling block for Yum, which already has 700 locations in Indonesia,” he added.

The Indonesian Trade Minister, Gita Wirjawan, announced this month the new rule, with some exceptions, in an attempt to protect small and medium sized businesses. KFC, is the top U.S. fast food chain in the Asian nation with 32 percent market share.
“Our local franchise will continue to work with authorities on the guidelines,” a spokesperson for Yum Brands, said.