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Start investing in Surabaya’s food and beverage industry

Start investing in Surabaya’s food and beverage industry

Surabaya is rapidly emerging as a hub for the food and beverage (F&B) industry. The second-largest city in Indonesia has a population of over 3 million and a strategic location that connects East Java to the rest of Indonesia and the world.

Surabaya offers a wealth of opportunities for F&B investors. From its rich culinary heritage to its vibrant food scene, Surabaya is a city teeming with potential for those looking to invest in the F&B industry. 

This article will explore why Surabaya is an ideal destination for F&B investment, including its diverse culinary offerings, favorable investment climate, and growing consumer market. 

Why choose Surabaya for F&B investment?

Surabaya has achieved the second-largest investment realization among all cities and districts in Indonesia, totaling around IDR 29.22 trillion. 

The Ministry of Investment/Indonesia Investment Coordinating Board (BKPM) awarded the city for this achievement, with 90% of the investment coming from domestic sources.

The award was given to the Mayor of Surabaya, Eri Cahyadi, who expressed gratitude that the investment would help create jobs and reduce unemployment and poverty in Surabaya.

The investment is expected to stimulate economic growth and support local small and medium-sized enterprises (UMKM).

Read more: The Growing Potential of Property Investment in Surabaya

Opening an F&B business in Surabaya

Opening an F&B business in Surabaya requires careful consideration and planning. Foreign investors must navigate various legal and regulatory requirements. 

Entrepreneurs must obtain business and restaurant licenses, secure a suitable location, and comply with tax obligations for initial establishment.

In the process, restaurant owners must keep up with the latest trends in Surabaya’s food and beverage industry. However, prioritizing healthy and sustainable food choices should be one of the main priorities. 

Besides that, investors are encouraged to utilize local ingredients and incorporate technology to enhance the customer experience.

With the right strategies in place and a commitment to delivering exceptional quality and service, opening an F&B business in Surabaya can be rewarding.

The rising trend in F&B industry in Surabaya

Surabaya has seen a rapid rise in the F&B industry and continues to welcome such growth. For example, the national electronic commerce company Blibli has partnered with the Indonesian Cafe and Restaurant Entrepreneurs Association (Apkrindo) in East Java to support the growth of cafes and restaurants in Surabaya.

According to Apkrindo’s data, this collaboration is established upon the food & beverage industry’s annual growth of 20% in Surabaya. 

Blibli aims to strengthen its integrated omnichannel commerce ecosystem by adding the best cafes and restaurants with attractive offers for Surabaya customers.

This collaboration is also part of Blibli’s strategy to increase local sellers in Surabaya. The company aims to add more than 250 food and beverage options guaranteed to be satisfying, affordable, and easy to access for customers in Surabaya.

With this collaboration, Apkrindo hopes to strengthen local F&B businesses after the official PPKM is lifted. The partnership also offers a unique opportunity for customers to enjoy the best culinary experiences with the best price, discounts, and rewards.

The growing number of foreign investors in Surabaya

Reports have shown a growing interest in foreign investors in Surabaya. Several countries, including Singapore, the Netherlands, China, Japan, and Malaysia, have invested in Surabaya, with Singapore leading the way with an investment value of IDR 1.311 trillion.

Surabaya’s economic growth has also increased, with a 7.17% growth rate in the third quarter of 2022, higher than the 5.58% growth rate of the entire East Java province during the same period.

Surabaya’s potential for economic growth is attracting the attention of foreign investors, which could further enhance its economic development in the future.

Many food and beverage businesses in Jawa Timur are gearing up for the upcoming Ramadan and Lebaran seasons in 2023 and devising strategies to optimize their revenue.

Moreover, several food and beverage establishments are reopening after enduring the impact of the pandemic, with some even inaugurating new branches during the early part of the year.

One of the growing trends in Surabaya’s food and beverage industry is the emergence of bars and lounges, which offer a different dining experience.

These establishments aim to provide a relaxed and comfortable atmosphere where patrons can unwind, enjoy music, and indulge in delectable drinks and finger foods.

The rising popularity of these bars and lounges is evident in the increasing number of Surabaya establishments catering to a diverse clientele.

Another noteworthy trend in Surabaya’s food and beverage industry is using locally sourced ingredients and promoting traditional Indonesian cuisine.

Many restaurants are showcasing the diversity of Indonesian cuisine by offering dishes that feature ingredients native to the region, adding an authentic touch to the dining experience.

Furthermore, as businesses look to maximize their earnings during crucial holiday periods like Ramadan and Lebaran, they seek consultants’ assistance to improve their tax management and implement effective revenue optimization strategies.

By doing so, they hope to attract more customers and enhance their profitability.

How to start F&B business in Surabaya

1. Forming a company

When forming a company, it is essential to determine the type of legal entity of the company.

One possible course of action is establishing a domestic Limited Liability Company (“Local PT”) wholly owned by local entities. However, the appointment of foreign directors is permissible for managing the company’s operations.

Another type of company is a foreign investment company (“PT PMA”). It comprises foreign ownership; some business fields are even permitted complete foreign ownership.

Registering a PT PMA enables businesses to receive investment opportunities from foreign entities otherwise limited in registering a Local 

2. License and certification

To start a restaurant business in Indonesia, obtaining the necessary licenses and certifications in compliance with the country’s regulations is essential. These include a business license to validate the commercial activities of the restaurant.

A restaurant license issued by the Ministry of Culture and Tourism, a working visa for foreign individuals who will work in the restaurant, an alcoholic beverage trading license to regulate the sale of alcohol, and permits from recording labels to play music without infringing copyright laws. It’s worth noting that even food trucks must obtain a restaurant license to operate within the bounds of the law.

Why should you register your business in Surabaya?

By obtaining these licenses and certifications, investors can ensure that their business complies with the law and avoid any legal issues in the future. In sum, Surabaya – much like Jakarta, is rapidly evolving. The sector that has been of particular interest to investors is the food and beverage sector.

However, to set up such a company or a legal entity, there are several things to note, such as the business’s form and licensing requirements. InCorp Indonesia provides company registration services for those looking to exploit such an opportunity.

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    Teddy Willy

    Branch Manager – Surabaya Office at InCorp Indonesia

    With 10 years of experience in business consultancy, Teddy Willy offers expertise in financial and production auditing, sales and marketing, channels and distribution, supply chain management, and human resources for every business sector in Indonesia.

Frequently Asked Questions

    The standard regulations state:

    • Minimum salary of IDR 3.9 mil for the Jakarta region
    • 12-day annual leave (minimum)
    • BPJS coverage
    • Holiday allowance

    To provide you with accurate pricing information for our HR outsourcing services, we consider the complexities of your inquiries and the dynamic nature of regulations in Indonesia. As a result, the pricing for the service may vary accordingly. For detailed information, please get in touch with our consultants.

    As a professional executive search agent, InCorp helps promote job vacancies, screen, and shortlist applicants, conduct pre-interviews, and arrange final interviews with applicants. This can also be topped up with an employee background check.

    For employment, the company is subject to:

    • Employee income tax article 21
    • VAT on both the service invoice and the salary invoice
    • 2% recovery tax on salary invoice

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