Pizza Hut’s Indonesian franchisee pinned its hopes on the middle class’s expansion in the world’s fourth-most populous country. But its decision to shut 20 stores and reduce its workforce offers a warning for those betting on a consumer boom in south-east Asia’s largest economy.
“We have observed shifts in consumer spending patterns in Indonesia, with a general trend of cautious spending among the middle class,” said Boy Lukito, chief executive of Sarimelati Kencana, the franchisee operator in Indonesia.
Businesses selling everything from pizzas to cars have been hit by Indonesia’s shrinking middle class. The number of people considered to be middle class by the government has declined 20 per cent over the past six years, a risk to the commodity giant’s growth plans and a warning for potential investors such as Apple.