KFC Indonesia Narrows Losses as Boycott Impact Fades

Recovery gathers pace despite weak demand

PT Fast Food Indonesia Tbk, the operator of KFC and Taco Bell in Indonesia, is moving out of its deepest slump as the impact of last year’s boycott eases and cost discipline improves margins. Through the first nine months of 2025, the company reported a much smaller net loss and a stronger gross profit, signaling that core operations are stabilizing after a turbulent 2024.

The company booked a net loss attributable to owners of Rp 239 billion (about 14.34 million dollars) in January to September 2025. That compares with a Rp 557 billion loss in the same period of 2024. Revenue edged down to Rp 3.56 trillion (about 213.61 million dollars) from Rp 3.59 trillion, yet the cost of goods sold fell from Rp 1.59 trillion to Rp 1.43 trillion. The reduction lifted gross profit to Rp 2.13 trillion from Rp 2.08 trillion a year earlier. Operating loss narrowed sharply, dropping to Rp 244 billion from Rp 585 billion over the same nine-month periods.

Director Wachjudi Martono said the boycott that erupted in late 2023 and intensified through 2024 has shifted from organized campaigns to more individual choices. He described a market that is gradually normalizing even as some customers still steer clear of brands seen as aligned with Western interests.

Introducing the company’s view, Director Wachjudi Martono said the backlash is receding, though it has not disappeared completely.

“Things have started to thaw, though traces are still there.”

Wachjudi cautioned that 2025 is still expected to end in the red as household finances remain strained. He pointed to weak purchasing power and a softer job market as ongoing challenges, while expressing hope that government actions to spur activity will support a recovery in the next cycle.

Before outlining macro pressures, Wachjudi highlighted what is weighing on sales today.

“Our sales are affected by lower purchasing power and higher unemployment. Some sectors, like manufacturing, still need government stimulus.”

He added that faster regional budget disbursements could help demand. In his words, more spending in local economies would raise traffic and transactions.

“This is an opportunity for us. More money circulating among the public means the economy will pick up and grow.”

How the boycott hit, and why fast food was in the crosshairs

The shock to Western brand franchises in Indonesia gathered pace after the outbreak of the war in Gaza in October 2023. Many consumers chose to avoid companies perceived to be linked to Israel or its allies. That sentiment hit categories that rely on frequent, discretionary purchases, including quick service restaurants and coffee chains. KFC, which has operated in Indonesia since 1979, saw traffic drop sharply in many cities during late 2023 and early 2024.

In the first quarter of 2024, Fast Food Indonesia recorded a net loss of Rp 348.83 billion, up from Rp 5.56 billion in the same quarter of 2023. The early part of 2024 was described by store managers as unusually slow, particularly on weekdays. A KFC manager in Medan, speaking anonymously because they were not authorized to talk to the media, described the empty seats and the shift in weekday patterns after the war began.

Introducing an eyewitness account from North Sumatra, a KFC manager in Medan explained the weekday slump in early 2024.

“The restaurant is very quiet from Monday to Thursday.”

Quick service brands faced a perfect storm. Customers who wanted to express solidarity with Palestinians avoided outlets tied to American names. Social media spread calls to boycott rapidly, and many consumers substituted toward local food sellers. The dynamic echoed trends in neighboring markets, though the intensity varied by country and by city.

Where the boycott stands in Indonesia today

Fast Food Indonesia’s management now sees the movement as fragmented and less coordinated than at the height of 2024. Pockets of resistance remain in some regions, but the most acute phase has passed. This shift helps explain why revenue has only dipped slightly while gross profit has improved. Regular customers are returning, promotions are drawing traffic, and some of the most organized campaign activity has faded.

The broader picture across Muslim majority markets still reflects caution for Western-linked brands. Operators in the Middle East and Southeast Asia continue to report uneven traffic, depending on local sentiment and how visible a brand is in public debates about Gaza. Amarpal Sandhu, chief executive of Americana Restaurants, which runs KFC and other brands across West Asia, captured the pattern of uneven recovery.

Introducing a regional perspective, Americana Restaurants CEO Amarpal Sandhu described the continued presence of the movement.

“The impact varies across geographies, but we would say the boycott is still there.”

Indonesia’s context is distinct. The world’s largest Muslim population, a deep culture of dining out, and an extensive network of malls and roadside restaurants create a large base for quick service dining. That base is proving resilient, though some customers still prefer local brands as a matter of principle or price sensitivity.

Closures, leaner operations, and the path to lower costs

The company’s improving margins reflect significant internal changes that began during 2024. Fast Food Indonesia closed underperforming stores and streamlined staffing to match demand. By the third quarter of 2024 the chain had closed 47 outlets and reduced headcount by 2,274 roles. That left more than 700 stores operating nationwide and a workforce of over 13,000 employees. Such steps are painful for staff and neighborhoods that lose familiar outlets, yet they help shrink fixed costs and concentrate resources in locations with stronger traffic.

Lower cost of goods sold in 2025 suggests additional levers at work. Companies often renegotiate supplier contracts, simplify menus, and adjust portion sizes to protect margins. Indonesia’s quick service menus also tend to be flexible, with localized items that can be priced to meet value expectations. Promotions and bundle offers support transaction counts even when disposable income is tight.

Operating losses shrinking from Rp 585 billion to Rp 244 billion over the nine-month periods show that the cost reset is gaining traction. That number captures store expenses, selling and administrative costs, and other operating items. It excludes finance costs and taxes, so it is a clearer lens on day-to-day business health than net profit alone.

Local brands seize share as consumers pivot

One clear shift across 2024 and 2025 is the rise of domestic competitors. In Indonesia and Malaysia, local chains added outlets and used targeted messaging to attract customers who wanted alternatives to Western names. In Indonesia, a newcomer, Almaz Fried Chicken, opened dozens of stores within months, mostly around Greater Jakarta and parts of Sumatra. Coffee chains such as ZUS Coffee also caught a tailwind as they positioned themselves as homegrown options.

This substitution is about more than politics. Local brands often operate with lower overhead costs per store. They tend to source more ingredients domestically and can fine-tune menus to local tastes quickly. Price points can be more flexible. During periods of weak purchasing power, small price differences matter. That puts pressure on larger franchises to offer compelling value without hurting margins.

Malaysia’s sharper contraction shows regional pressure

Across the Strait of Malacca, KFC’s franchisee temporarily closed more than 100 stores in Malaysia in 2024 as traffic fell and costs rose. The operator said it would consolidate operations in stronger trade zones and redeploy staff where possible. The closures became one of the most visible examples of how sustained boycotts can force large adjustments in Southeast Asia’s quick service sector.

The picture in Indonesia has been less severe, but the two markets share common threads. Consumers used boycotts to express political views, social media amplified those choices, and local brands stepped in. For multinationals in both countries, balancing brand stewardship and local sensitivities has become a core leadership task.

Macro headwinds: why sales are still under pressure

Wachjudi’s comments on purchasing power and unemployment point to the second challenge beyond boycotts. When households face higher job uncertainty, they reduce discretionary spending. Quick service meals, even when affordable, can be among the first expenses to trim. Indonesia’s manufacturing sector has been uneven, and that ripples into labor markets, including part time work that often supports young consumers who spend in malls and food courts.

Government policy can help. Local budget disbursements for infrastructure, public services, and social assistance increase money in circulation. Faster disbursement tends to support small businesses, markets, and urban services where chain restaurants operate. If foot traffic rises, promotions become more effective and the sales mix improves. That is why management views timely regional spending as a practical near term support for a 2026 turnaround.

Moving into 2026, Fast Food Indonesia is betting that a combination of cost efficiency, targeted marketing, and steady normalization of sentiment will lift performance. The company has signaled caution on 2025 profit, but the direction of travel in the operating line is encouraging.

What improves margins when revenue is mostly flat

Investors often ask how a company can show a better gross profit with lower revenue. Three mechanics usually explain the gap. First, procurement can shift toward more cost effective inputs without changing customer experience. Second, the sales mix can tilt toward items with higher margin, for example family bundles or rice based meals that travel well on delivery apps. Third, store level costs drop when underperforming outlets are closed and labor is rebalanced across shifts and locations.

Fast Food Indonesia’s numbers point to some or all of these dynamics. Cost of goods sold fell from Rp 1.59 trillion to Rp 1.43 trillion, a sizable reduction given that revenue slipped only a little. That freed up Rp 50 billion in additional gross profit year on year for the first nine months, which then helped narrow the operating loss. While finance costs and taxes can still push net results into the red, the operating improvement is an important milestone after the 2024 shock.

What to watch through 2026

Several markers will show whether the recovery stays on track:

• Store productivity. Same store sales and transactions per outlet indicate whether customers are returning beyond short lived promotions.
• Cost trends. Supplier prices for chicken, cooking oil, and packaging are central to margin stability.
• Competitive intensity. The pace of openings by domestic fried chicken and coffee brands will shape pricing power.
• Digital channels. Delivery and click and collect drive incremental sales if service times and app offers are sharp.
• Sentiment. Any escalation in the Middle East or new viral campaigns can temporarily knock demand.

For now, the company’s own guidance is cautious. Management sees a credible turnaround window in 2026, with 2025 still held back by the broader economy. That lines up with the pattern seen across the region, where brands report gradual healing but not a full return to pre war habits.

Key Points

• Fast Food Indonesia cut its January to September 2025 net loss to Rp 239 billion from Rp 557 billion a year earlier.
• Revenue dipped to Rp 3.56 trillion, but cost of goods sold fell more steeply, lifting gross profit to Rp 2.13 trillion.
• Operating loss narrowed to Rp 244 billion, showing cost actions are working despite flat demand.
• Management says boycotts have shifted from organized campaigns to more personal choices, with pockets still present.
• Wachjudi Martono expects a potential turnaround in 2026 and warns that 2025 will likely remain a loss year.
• The chain closed dozens of stores and cut headcount in 2024 to reset costs and focus on stronger locations.
• Local competitors such as Almaz Fried Chicken have grown quickly as consumers pivot to domestic brands.
• Malaysia saw more than 100 KFC outlets temporarily close in 2024, underlining regional pressure on Western-linked chains.
• Indonesia’s weak purchasing power and uneven jobs market remain key drags on sales.
• Faster government budget disbursement at regional level could support foot traffic and transactions in 2026.