As Korea's home meal replacement (HMR) market grows, chicken franchises are changing their survival strategies. In the past, the core strategy was to increase the number of franchisees and secure delivery orders, but recently more are fostering HMR items such as dakgalbi and fried rice, as well as meal kits, as new growth engines. They are moving beyond being dining brands that simply sell a whole chicken to expanding distribution sales channels and jumping into the competition for "table share."
According to the Korea Rural Economic Institute (KREI) and others on the 27th, the domestic HMR market grew from 3.4 trillion won in 2017 to 6.8 trillion won last year. It is expected to surpass 7.1 trillion won this year. As high inflation has increased the burden of dining-out costs, combined with a rise in single-person households and the spread of online grocery shopping, demand has grown to easily enjoy restaurant-level flavors at home.
Among those responding most aggressively to this trend is the chicken franchise brand BBQ. According to Genesis BBQ Group (hereinafter BBQ), which operates BBQ, first-quarter sales this year in the HMR-centered distribution business institutional sector roughly doubled from a year earlier. During the same period, the number of products such as dakgalbi rose 56.3%, and distribution sales channels expanded from 11 to 18. It broadened its network to Market Kurly, Lotte Mart, and Hanaro Mart, including its official online mall, BBQ Mall.
ZNFood, which operates Goobne Chicken, is also putting great effort into the HMR business. The "Chibap & fried rice" series sold on "Goobne Mall," a health-focused HMR specialty mall, surpassed a cumulative sales volume of 12 million packs in May. Following meal kit products such as whole-leg grilled chicken, samgyetang, and spicy chicken soup, it is selling nine types of HMR product lines including chibap and fried rice.
Mom's Touch also entered the HMR market by unveiling the HMR brand "TO EAT" in April. Mom's Touch is currently building a product portfolio centered on three HMR chicken products and is reviewing the expansion of online and offline distribution channels. A Mom's Touch official said, "Rather than replacing our existing dining business, we see the HMR business as a complementary growth axis to expand brand experience and broaden consumer touchpoints."
The reason chicken franchises are focusing on the HMR business is not unrelated to the limits of the existing growth model. In the past, the competitiveness of chicken franchises was measured by the number of franchisees and the volume of delivery orders. In fact, when delivery demand surged during the COVID-19 pandemic, major brands grew on the back of store expansion and increased delivery sales. However, as the domestic chicken market has entered a mature stage, room for new openings is shrinking. On top of that, the delivery market's growth is no longer what it used to be, and rising materials and supplies and labor costs have increased the burden on consumer prices, making it necessary to secure new growth engines.
An industry official said, "Compared to competing on store openings and delivery, HMR products that carry a brand and taste already familiar to consumers can be enjoyed conveniently at a relatively low price, so demand is steadily increasing," adding, "Using our know-how to turn products into offerings for large discount stores, convenience stores, and online malls expands distribution sales channels and also yields a strong brand exposure effect."
However, not all chicken franchises have chosen the same strategy. Kyochon F&B, which operates Kyochon Chicken, previously introduced HMR products such as fried rice and dakgalbi and launched the integrated HMR brand "Flaverse," but it is not actively running the related business now. The chicken franchise brand bhc also rolled out convenience foods such as burritos, triangle gimbap, and lunch boxes in collaboration with CU convenience stores, but those products are not currently being sold.
The industry sees the HMR business as settling in as a means to expand brands beyond a simple side business. A food industry official said, "In the past, the number of franchisees equaled franchise competitiveness, but recently it has become more important how widely our products are exposed to consumers across diverse channels by leveraging the brand," adding, "Because HMR allows consumers to experience the brand without visiting stores, corporations are likely to invest aggressively."
Seo Yong-gu, a professor in the School of Business at Sookmyung Women's University, said, "Competition to occupy consumers' refrigerators through HMR products is expanding," but added, "Because HMR products often overlap with existing store sales and demand, cannibalization can occur, so approaches will differ by corporations." He continued, "Even so, as companies expand into adjacent businesses to secure new growth engines, chicken franchises are highly likely to use various businesses, including HMR, as new growth axes."