Across the hamburger franchise industry, the possibility of price hikes is resurfacing. After Burger King, foreign franchises such as McDonald's raised prices, prompting domestic franchises to consider whether to follow.
They said most companies are facing similar burdens from higher materials and supplies prices, exchange rates, and labor costs. However, some brands, including No Brand and KFC, said they are not considering price hikes.
According to the industry on the 24th, BKR, which operates Burger King, raised prices for some items starting on the 12th. The flagship Whopper rose from 7,200 won to 7,400 won, and the Whopper Jr. from 4,800 won to 5,000 won. French fries increased from 2,200 won to 2,300 won, and the Whopper set consisting of a Whopper, French fries, and cola went from 9,200 won to 9,600 won. Burger King also raised prices in Jan. last year. McDonald's and Lotteria followed with increases, spreading the price-hike trend across the hamburger sector.
This year, following Burger King, McDonald's also raised prices starting on the 20th. A Big Mac alone rose from 5,500 won to 5,700 won, and a Big Mac set from 7,400 won to 7,600 won. French fries went from 2,500 won to 2,600 won, and soft drinks from 1,900 won to 2,000 won. Burger King and McDonald's said, "Prices for key imported raw materials such as beef patties, buns, and vegetables have risen sharply, and cost pressures from various external factors have increased."
According to the Korean Statistical Information Service (KOSIS), the consumer price index for imported beef in Jan. was 147.19, up 7.2% from a year earlier. Overseas franchises typically use U.S. and Australian patties, and U.S. beef prices in particular have been rising for years. The number of cattle being raised has decreased. According to the U.S. Department of Agriculture, as of Jan. 1, the cattle inventory was 86.2 million head, down 300,000 from a year earlier, at the 1951 level.
Some domestic hamburger franchises said they are considering price hikes. Mom's Touch said, "With ingredient prices, exchange rates, and labor costs all up, we are under cost pressure," and "It is true we are considering raising prices." Lotte GRS, which operates Lotteria, said, "We are not reviewing anything specific yet," but added, "We are continuously considering price increases due to cost pressures."
However, No Brand and KFC said they will watch market conditions for the time being without raising prices. They judged that raising prices could lead to greater customer attrition. A Shinsegae Food official, which operates No Brand, said, "We are not reviewing price increases," and added, "We consider overall conditions such as raw and subsidiary material prices and inflation, and we do not see a need to raise prices." KFC also said, "We do not set prices solely based on cost but decide after considering multiple factors," adding, "We have not recently reviewed price increases."
The government's stance on stabilizing prices is cited as a factor that makes raising prices burdensome. With some materials and supplies such as flour and sugar falling recently, raising prices could widen the gap with consumers' perceived inflation and fuel criticism. Because hamburgers are seen as a representative everyday dining-out item, sensitivity to price hikes is also high and is being considered.
A dining industry official said, "With recent dining-out inflation, hamburgers have become a value-for-money menu and demand has surged. If prices rise, the potential for customer attrition is high," adding, "This is a market that reacts sensitively even to a 100–200 won increase, so companies are cautious about raising prices despite cost pressures."
◇ Concern over widening price hikes across dining industry
Some worry that burger price hikes will spread across the dining industry. In fact, prices for other dining-out items besides hamburgers are also rising one after another. According to the Korean Statistical Information Service (KOSIS), dining-out prices last month rose 2.9% from a year earlier. That outpaced the overall consumer inflation rate of 2%. The increases were: porridge (6.1%), dosirak boxed meals (5.7%), jajangmyeon (5.4%), pho (4.8%), jjamppong (4.6%), haejangguk (4.5%), coffee out (4.4%), and kimbap (4.2%).
According to the Korea Consumer Agency (KCA) price information portal, the average price of kimbap in Seoul last month was 3,800 won, up 7.4% (262 won) from a year earlier. The average price of jajangmyeon also rose from 7,500 won to 7,654 won over the same period.
A hamburger franchise industry official said, "Cost pressures are so severe that both foreign and domestic franchises are equally considering price hikes," adding, "However, foreign franchises are mainly operated directly, while domestic franchises such as Lotteria and Mom's Touch operate on a franchise basis, so the profitability of franchisees cannot be ignored. The concern over price hikes will be greater."