Kyochon charges up to 3,000 won per dog
“Rising raw material prices and declining profit structure”
Notice of discount on pizza and hamburger
As Kyochon Chicken decided to raise the price of its main menu 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 all chicken and part meat menus 3,000 won and other menus from 500 to 2,500 from the 3rd of next month. The price adjustment is just one 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. Differences depend on the distance, etc., but recently, the distribution fee has increased in cases that exceed 5,000 to 6,000 won. In other words, the period of 30,000 won per delivery chicken is approaching.
Kyochon is in the position that “the franchisee’s profit structure has declined over the years, so we have inevitably decided to adjust the price.” It is explained that there is an urgent need to improve the business environment for franchises as operating costs such as rent, labor costs, and various commissions have risen significantly recently, as well as raw material prices. According to the Korea Broilers Association, following the rise in oil and flour prices, the living price of broilers has recently hovered around 3,000 won per 1kg, approaching the highest level in 36 years since 1987.
In particular, profitability plunged as the head office froze the supply prices of major raw material traders for 10 years after 2014 to reduce costs. According to the Financial Supervisory Service, Kyochon F&B’s operating profit plunged from 27.9 billion won in 2021 to 2.8 billion won last year, a tenth.
Analysts say that as Kyochon notes an increase in chicken prices, price increases will ripple across the industry in the medium to long term. At the moment, it is known that competitors such as BBQ and BHC are not considering 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 started raising prices one after the other at the beginning of the year.
Reporter Kim Hyun-yi
