Song Jong-hwa, CEO of KYOCHON F&B, on the 14th addressed the "shrinkflation (reducing weight)" controversy surrounding Kyochon Chicken, saying, "We said we would notify consumers through the website, but we did not inform them sufficiently. I do not know whether the updated information was properly conveyed on delivery apps."
At the National Policy Committee's audit of state affairs that day, when Rep. Lee Heon-seung of the People Power Party asked whether he agreed that this was a typical case of shrinkflation, CEO Song said, "The purpose itself was not to start (keeping prices the same while) reducing weight," making this point.
Kyochon Chicken last month cut the weight of 15 boneless chicken items by about 30%, from 700g to 500g, while keeping prices unchanged, stirring a so-called "shrinkflation" controversy. On top of that, amid suspicions that it reduced costs by mixing chicken breast instead of chicken thigh meat, it did not give prior notice and only changed the notation on its website.
In response, when Rep. Lee criticized, saying, "It is late, but consumers still need to be properly notified now. You must clearly announce it on the website, delivery apps, and in offline stores," CEO Song answered, "We will do that."
The Fair Trade Commission's responsibility was also raised. Rep. Lee said, "Chicken is a representative dining-out item closely tied to people's daily lives and directly affects consumer prices," adding, "The Fair Trade Commission should not respond passively just because it is not the responsible ministry. Please review the related matters once at the commission and consult with related agencies such as the Ministry of Food and Drug Safety."
Rep. Park Chan-dae of the Democratic Party of Korea pointed out the shifting of burdens to Kyochon Chicken franchisees. When Park asked whether there had been any compensation under a pledge the head office drafted in Feb. stating "unconditional compensation of expense if deliveries fall short of half the annual average intake," CEO Song answered, "We are offsetting by adjusting the unit cost of some cooking oil."
Park then corrected that there had not been a single case of implementation and pointed out that there were "retaliatory measures," such as notifying some franchisees who reported to the Fair Trade Commission of a refusal to renew their contracts. He said, "For six years, supply disruptions of materials and supplies have repeated, and as the head office violated the franchise agreement, when some franchisees reported to the Fair Trade Commission, the head office notified those franchisees of a refusal to renew their contracts."
Regarding this, CEO Song said, "As a company focused on parts cuts, we experience supply-demand instability every year. Our response has been insufficient, but we are preparing measures from multiple angles," adding, "This year, raw material sales volume rose 2.8%. (However,) overall, a sufficient supply to some extent has been achieved."
When Park asked how they plan to improve the shifting of burdens to consumers and franchisees amid supply-demand instability, CEO Song said, "Direct purchasing lowers the overall brand competitiveness, so it is not easy. (However,) we will put (franchisees, consumers, etc.) ahead of the head office and do our best to help franchisees maintain their livelihoods."