Will Chicken Prices Rise... Franchise Owners Face Pressure to Increase Prices

Franchisee Association Voices "Profitability Decline"
"Increased Burden from Order Brokerage Fees and Labor Costs"
BBQ and Kyochon Say "No Domino Price Hike Expected"

Following Kyochon Chicken's average price increase of 3,000 won for major chicken items last April, bhc Chicken is also considering a price hike. This comes as franchisees' profitability deteriorates due to fixed costs such as labor and rent, the burden of delivery order brokerage fees, and rising raw material prices, leading to growing demands for price increases.

According to the distribution industry on the 20th, at the nationwide franchisee council '2023 Second Half Meeting' held by bhc Chicken on the 14th at the bhc R&D Center in Songpa-gu, Seoul, franchisees voiced calls for realistic measures to improve franchisee profitability and prompt implementation. About 30 representatives from regional franchisee councils in eight cities and provinces nationwide attended the meeting.

bhc Chicken's 'Bburinkle Combo'.
Photo by bhc Chicken

One franchisee attending the meeting said, "The burden of fixed costs such as labor and rent, as well as variable fees like order brokerage and delivery fees, is increasing year by year," adding, "If this continues, franchisee profitability will worsen and may eventually turn into losses. To improve profitability, direct and tangible measures from headquarters, like the recent reduction in frying oil supply prices, must be continuously implemented."

Another franchisee stated, "Consumer adjustment regarding products is necessary for improving franchisee profitability. Of course, in the current situation of rising prices, consumer adjustments such as price increases require a cautious approach," and added, "If the price adjustment is within the generally formed chicken price range, it will greatly help both consumer understanding and franchisee profitability improvement. The price adjustments that have been requested several times should now be realized," urging active consideration of price adjustments.

However, since chicken is considered a 'national snack' and faces strong consumer resistance, deciding on a price increase is expected to be difficult. Moreover, the government's continuous requests to the dining industry to refrain from raising prices for the sake of price stability may also pose a burden.

bhc Chicken stated that it is carefully considering the possibility of a price increase in various ways in response to franchisees' requests. A bhc Chicken official said, "Requests to raise prices considering the difficulties of franchise operations have been steadily accumulating since early this year," adding, "Next year, we will spare no effort in supporting franchise headquarters to increase sales and improve profitability by expanding various customer age groups."

Other chicken companies are drawing a line by saying there will be no 'domino effect' price increases for now. Kyochon Chicken already raised prices by 3,000 won for major menu items in April this year. The price of the signature Honey Combo was increased from 20,000 won to 23,000 won. BBQ raised prices of major chicken products by 2,000 won in May last year.

The last time bhc implemented a price increase was in December 2021, when prices of some products such as 'Haebaragi Fried' were raised by 1,000 to 2,000 won.

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