As high inflation and cost pressures continue, chicken franchise companies are collectively drawing a line against price hikes. At the center is Genesis BBQ Group (BBQ) with its preemptive pledge to freeze prices. The industry sees this not merely as absorbing the expense, but as a judgment that touching prices now poses a greater risk.
On the 24th, according to the restaurant and food industries, major chicken franchises such as BBQ, bhc and Kyochon Chicken say they have no plans to raise prices for the time being. Geopolitical instability from the Middle East sent global oil prices soaring, driving up raw material costs for breeding stock, feed and frying oil in succession. On top of that, packaging, logistics and delivery platform expense have added to the pressure to raise prices, but the chicken industry appears to have entered wait-and-see mode.
BBQ led the move. On the 20th, BBQ said that while it is true that raw and subsidiary material expense have risen and the pressure to raise prices has grown, it will not raise either chicken retail prices or the supply price to franchisees. The company also said the head office will shoulder the increase in expense.
Rival companies then followed by saying they also have no plans to raise prices, spreading a price-freeze stance across the industry. A bhc official said, "There are no plans to raise prices," adding, "From the year before last through last year, the head office has absorbed about 50 billion won in raw material supply price increases. As we are still bearing this, we also have no plan to raise the supply price to franchisees." Kyochon Chicken also says it has no plan to raise chicken prices.
Analysts say the decision reflects awareness of the backlash from past controversies over chicken price hikes. Chicken is a representative national snack and a dining-out substitute, and consumers are particularly sensitive to its price. In fact, after Kyochon F&B, which operates Kyochon Chicken, raised prices on key menu items in Apr. 2023, its sales that year fell to about 445 billion won, down roughly 14% from the previous year. In 2022, BBQ Chairman Yoon Hong-geun also said in a YTN Radio interview that "chicken should cost 30,000 won," drawing heavy criticism from the public.
An industry official said, "Judging by increases in raw and subsidiary material costs alone, there is ample justification for raising prices, but if you go first, you have to accept risks such as demand fleeing and worsening public opinion," adding, "Conversely, if competitors freeze chicken prices and you alone raise them, you inevitably become the 'public punching bag.' In severe cases, boycotts could erupt."
Government policy is also cited as one reason BBQ announced a preemptive price freeze. Recently, the government has continued to urge restraint on price hikes for staple foods such as ramen and bread. In fact, prices for some items, including ramen, have been cut. With price stability emerging as a key policy task, chicken appears to be under the same de facto pressure as a dining-out category with high consumer sensitivity.
A food industry official said, "Even if there were no direct government remarks like with ramen or bread, chicken is strongly perceived as a staple food, so the mood is to see it on the same footing," adding, "Raising prices at this time could be read as running counter to government policy, and companies are unlikely to take that risk just to raise prices."
The industry expects the price-freeze stance to continue for the time being. A franchise industry official said, "Looking only at costs, we are already at a point where price hikes are unavoidable. Right now, we are holding out because it's the wrong timing to raise," but added, "If any one company moves first to raise prices, the current mood could change in an instant."
Lee Eun-hee, a professor of consumer studies at Inha University, said, "With the government strongly committed to stabilizing food prices, categories with high purchase frequency like chicken can't help but be more cautious about price increases," adding, "Even if the supply price to franchisees is frozen, the structure allows different prices by store, so in some regions consumer prices could rise. The head office may also send a message to franchisees asking them to refrain from raising prices."