Page 4 - Demo

We have closed year 2016 with a much better performance in terms of topline as well as bottom line figures compared to the year before. This was mostly contributed by the slight price increase in early March of this year which expectedly contributes to offsetting the cost increases last year, when no selling price increase was effected at all despite spiraling costs. Contributing to this improved performance is the cost saving initiatives implemented by several units in the organization. In the light of a relatively conducive economic condition during the year, the Company generated a total turnover of Rp. 4.99 trillion including consignment sales representing 8.39 percent growth over the previous year. Total revenues consisting of F&B sales, consignment fee from CD sales and home delivery fee amounted to Rp. 4.88 trillion compared to Rp. 4.48 trillion in 2015, generating 9.12 percent growth which is way above last year's growth of 6.32 percent.
Gross margin before royalty during the year as percentage of revenue improved by 1.68 percentage point, from 60.86 percent in 2015 to 62.54 percent this year. This drastic margin improvement amounting to around Rp. 330.4 billion was contributed largely by the price increase during the first quarter of the year coupled with the relatively lower increase of chicken cost per head in 2016 of 1.69 percent compared to the average increase of 2.83 percent in the previous years as well as the gross margin impact of changes in menu mix. The controlled wastage because of the effective introduction of Winger as product innovation likewise contributed to margin improvement during the year.
At the operating level, several cost saving initiatives were undertaken primarily on HR cost, as minimum wage always increases every year. Efficiency and productivity program is continuously implemented at operation level to effectively ensure optimum manpower level required to operate any type of restaurant outlet. This year's national minimum wage increase was not too substantial compared to the previous years, however, because of the effect of salary adjustment on subsequent salary levels, the impact on corporate HR cost as percentage to revenue of around 19 percent is still slightly high. The increase in sales & promotion expenses of 7.45 percent this year was smaller than the 8.39 percent sales growth achieved over last year, thus contributing to this year's cost efficiency. With the foregoing, coupled with the cost saving initiatives done by other divisions ultimately contributed to improving operating profit by 1.70%, from 2.77 percent in 2015 to 4.47 percent this year. Whereas,corporateEBITimprovedto4.64percentthisyearcomparedto2.98percentlastyear.
During the year, additional 42 new store units were opened wherein 7 units are relocations, contributing a total of 35 net new store openings andbringingatotalnationwidenetworkto575storeunits. Outofthetotalnewopenings,6arescaled-downmodel,Boxunitswhichare designed to further penetrate smaller trade areas or serve as fillers in between two regular stores, thereby giving a total 13 box units at the end of2016. Amongthenewcities/municipalitiescoveredduringtheyearincludesKuninganinWestJava,DeliSerdanginNorthSumatera, Payakumbuh in West Sumatera, Singkawang in West Kalimantan, Pinrang and Wajo in South Sulawesi, Kutai Kartanegara in East Kalimantan,KotawaringininCentralKalimantan,MeraukeinPapua,BireuninAceh,TebingTinggiinNorthSumatera. AspartofCompany's development efforts 40 existing stores are renovated and remodeled in line with the new design criteria to make these more trendy complete with updated facilities and much needed amenities in order to further improve image of the brand. All these development initiatives were funded from internally generated funds. In some selected new store development projects, however, part of the total project investment was offered to selected interested parties to provide opportunity to potential private individuals or groups to invest on the brand.
KFC Marvel City di Surabaya, Jawa Timur / KFC Marvel City in Surabaya, East Java 3
2016 Business Performance Highlights