Some Franchise Stores Lukewarm to 990-Won Ultra-Low Price Coffee... Inconvenience Falls on Consumers

Paris Baguette, Americano for 990 Won
About 3,000 Out of 3,500 Stores Participate
Some Franchise Stores Say "Cumbersome Brewing Process, Annoying"
"Too Cheap Compared to Labor and Rent Costs"

Mr. A, a rookie office worker in his 20s, recently visited a nearby Paris Baguette store with his colleagues after lunch upon hearing the news that Americano coffee was being sold for 990 won. However, they were disappointed because, contrary to the widely advertised promotion, not all Paris Baguette stores were participating, and the one they visited happened to be a non-participating franchise.

A 'Americano 990 won' promotion poster is displayed at a Paris Baguette store in downtown Seoul. Photo by Moon Hyewon, Asia Economy

As the high inflation situation worsens, ultra-low-priced coffee available for 990 won per cup has emerged. However, unlike the enthusiastic promotion by the franchise headquarters, some franchise owners have shown indifferent reactions by not participating in the promotion, causing inconvenience to consumers.

According to the food service and beverage industry on the 14th, out of about 3,500 Paris Baguette franchise stores nationwide, only about 3,000 were confirmed to be participating in the 'Americano 990 won sale' promotion that started on the 8th.

A Paris Baguette store in downtown Seoul has a promotional poster for "Americano 990 won" displayed. Photo by Moon Hyewon, Asia Economy

Non-participating franchise stores cited reasons such as the cumbersome coffee-making process, the menu price being too low compared to labor costs and rent. One franchise owner, who requested anonymity, said, "Coffee differs from bread in that consumer demands are more diverse and it requires more effort to make. Selling it at such a low price leaves no margin, so I declined to participate in this promotion."

Before launching the Americano 990 won sale promotion, the franchise headquarters went through the necessary procedures to obtain consent from the nationwide franchise owners' council to conduct the promotional event at all franchise stores. This is a required procedure under the Franchise Business Act. According to the partial amendment to the Enforcement Decree of the Fair Transactions in Franchise Business Act, which has been in effect since July last year, the franchise headquarters must obtain consent from more than 70% of all franchise stores to hold a promotion. Promotions with over 70% consent require all franchise stores to participate uniformly.

However, the franchise headquarters allows non-consenting franchise stores to operate autonomously by not participating. Therefore, the headquarters does not have the authority to force the remaining approximately 500 non-participating stores to join the promotion, and coercion could be considered a violation of the Franchise Business Act. Instead, to ease the burden on franchise owners, the headquarters encouraged participation by providing free coffee beans during the promotion period.

Ultimately, the inconvenience falls solely on the consumers. While the franchise headquarters is vigorously promoting the ultra-low-priced 990 won coffee, consumers who visit stores after seeing the promotion may end up disappointed or have to purchase drinks at higher prices if they visit non-participating stores, as in Mr. A’s case.

Mr. A said, "I felt empty and deceived when I visited the store after seeing articles and poster advertisements about the super special coffee discount, only to be informed that the store was not participating in the event. Since buying coffee along with bread would also benefit the franchise owners, I hope they don’t just refuse participation because it’s ‘bothersome’ but join in."

Professor Eunhee Lee of Inha University’s Department of Consumer Studies advised, "When a franchise company holds a groundbreaking discount event, if all franchise stores set a common goal and participate together to enhance brand value, everyone will ultimately benefit. However, if franchise owners’ participation rates drop, the expected effect will inevitably diminish. Since increased consumer visits mean selling even one more bread, I hope franchise brands approach this with a long-term perspective and recognize that the franchise brand is ultimately a shared asset of the franchise owners."

This content was produced with the assistance of AI translation services.