Financial Feasibility Analysis and Consumer Preferences on Local Food Small and Medium Enterprises (SMEs)

Abstract

Local processed food products represent a key component of culinary tourism, with the potential to attract visitors and support regional economies. Boyolali Regency in Central Java, widely known as the city of milk, is also a rich producer of diverse fruits, vegetables, and tubers. However, despite this agricultural diversity, the development of high-potential local food products remains limited, even among existing Small and Medium Enterprises (SMEs). This study aims to assess the business feasibility of local food SMEs in Boyolali Regency using financial indicators such as payback period, Net Present Value (NPV), and Internal Rate of Return (IRR). To complement the financial analysis, a hedonic test and consumer purchase interest survey were conducted to identify consumer preferences. The findings indicate strong business feasibility: 81% of SMEs achieved a payback period of less than two years, while the remaining 19% had payback periods under four years. All SMEs recorded positive NPVs and IRRs above 50%. Among the 21 SMEs, five standout products emerged based on consumer preference, namely brownies (Eliztha), celery eggrolls (Indhifaz), “onde-onde” (Onde-Onde Bu Is), peanut rempeyek (Yuni Snack), and gluten-free cookies (Wedang Juminten). The five SMEs also demonstrated strong financial performance with NPV ranging from IDR 110 million to over IDR 350 million, payback periods between 6 to 22 months, and IRR ranging from 54.2% to 187.8%.