Kyochon raises up to 3,000 won per dog
“Raising raw material prices and deteriorating profit structure”
Notice of reduction in pizza and hamburger
As Kyochon Chicken decides to raise the price of its main menu by up to 3,000 won at a time, it is expected that the cost of eating out will increase.
According to the related industry on the 26th, Kyochon F&B decided to raise the recommended price for each chicken and part meat menu by 3,000 won and other menus by 500 to 2,500 won from the 3rd of next month. The price adjustment is only a year after November 2021.
With this adjustment, the price of ‘Honey Combo’, one of Kyochon Chicken’s representative menus, will increase by 15% from KRW 20,000 to KRW 23,000. Adding the cost of delivery makes the price perceived by consumers even higher. There are differences depending on the distance, etc., but recently, the delivery fee has increased in cases exceeding 5,000 to 6,000 won. In other words, the era of 30,000 won per delivery chicken is approaching.
Kyochon is in the position that “the franchisee’s profit structure has deteriorated over the years, so we inevitably decided to adjust the price.” It is explained that there is an urgent need to improve the business environment for franchisees as operating costs such as rent, labor costs, and various commissions have recently risen significantly, as well as raw material prices. According to the Korea Broiler Association, following the rise in oil and flour prices, the price of broiler livelihoods has recently hovered around 3,000 won per 1kg, approaching the highest level in 36 years since 1987.
In particular, profitability plummeted as the head office froze the supply prices of major raw material merchants for 10 years after 2014 to reduce costs. According to the Financial Supervisory Service, Kyochon F&B’s operating profit plummeted from 27.9 billion won in 2021 to 2.8 billion won last year, a tenth.
Analysts say that as Kyochon signals an increase in chicken prices, price rises will blow across the industry in the mid- to long-term. Currently, competitors such as BBQ and BHC are known not to consider raising prices. However, when one brand raises the price first, the same industry follows, and the phenomenon has been repeated. In fact, after Kyochon raised the price in November 2021, BHC raised the price in December, a month later, and BBQ in May of the following year, six months later. Other restaurant franchises, such as pizza and hamburgers, have already begun raising prices one after another at the beginning of the year.
Reporter Kim Hyun-yi