PIZZA HUT RI: A Corporate Slice of Dismay

PT Sarimelati Kencana (PZZA), the registered name and Stock Market Acronym of Pizza Hut Restaurants in Indonesia, has suffered losses of Rp. 96.7 billion through the end of Q3 2024. This large loss is even worse than the Rp. 38.9 billion loss booked for the same period in 2023.

As reported by Tempo.co, the Indonesia Pizza Hut Franchise’s poor performance is linked to the Company’s reduced gross sales with Rp. 2.3 trillion in gross sales booked through 30 September 2024. This represents a 14.8% decline in sales compared to the first nine months of 2023.

Broken down further, the decline in food and beverage sales at Pizza Hut Indonesia saw food sales of Rp. 1.9 trillion through Q3 2024 compared to Rp. 2.5 trillion in food sales for the same period in 2023. Meanwhile, beverage sales through Q3 totaled Rp. 132 billion, down from the Rp. 197 billion recorded in 2023.

To counteract its financial setback, Pizza Hut has closed 17 outlets across Indonesia thus far in 2024. An official statement issued by PT Sarimelati Kencana on 12 November 2024 stated: “As of September 2024, there are 595 outlets located in 120 cities throughout Indonesia.” The closure of Pizza Hut outlets represents 3% of all brand outlets in Indonesia.

The Pizza Hut franchisee in Indonesia – Sarimelati Kencana, was established on December 16, 1987. The Indonesian pizza chains grew rapidly after PT Sarimelati Kencana was acquired by the Sriboga Group in 2024.

Sarimelati Kencana operates a diversified business base operating upstream suppliers providing ingredients to produce Pizza Hut’s food items. This includes a pasta factory in Jakarta; a sausage factory in West Java; and dough ball factories in West, Central, and East Java, Bali, South Sulawesi, North and South Sumatra, and Riau. The Company also operates a factory in Cikarang to process protein meat products used by all the franchises’ outlets.

Separately, a director of PZZA has told the press that global outlets of the brand are experiencing decreased sales in connection with consumer boycotts linked to the continuing Israeli-Palestinian conflict in the Middle East.

In May 2024, PZZA was trading on the Indonesian Stock Exchange for Rp.248 per share; the share price on 19 November had sunk to Rp. 150 per share – a loss in value of nearly 40% in only 6 months.

Among international franchises reporting declining sales due to boycotts, especially in countries with large Muslime countries such as Indonesia and Malaysia, are Kentucky Fried Chicken (KFC), McDonald’s, Starbucks, and Domino’s Pizzas. Burger King, and Pizza Hut.