Genesis BBQ Chairman Yoon Hong-geun gives a speech during the company's 25th anniversary, at one of the company's buildings in Seoul, Sept. 1, 2020. Courtesy of Genesis BBQ

By Kim Jae-heun

Genesis BBQ franchisees are protesting the company's decision to raise the prices of ingredients and other supplies, arguing that the fried chicken firm is trying to maximize profits at the expense of franchisees and consumers, they said Friday.

On Thursday, Korea's third-largest fried chicken franchise said it will raise the prices of fresh chicken, pickled radish, cooking oil and other items supplied to its franchisees on May 2 by an average of 19.8 percent. It said franchisee representatives agreed to the planned hikes during a meeting with the company's management on April 12.

A week ago, BBQ also announced its plan to increase the prices of its fried chicken by 2,000 won ($1.50). At the time, it said it decided to charge consumers more to financially help its franchise operators. However, as they will also have to pay more for the ingredients supplied by the company, the planned 2,000 won price hike is not expected to provide any relief.

"When fried chicken is sold at a restaurant, the company takes 46 percent of the profit, while a franchisee takes 54 percent. Considering the rise in prices of grain and fresh meat around the world, it was inevitable for us to raise our ingredient prices," a BBQ official said.

However, owners of BBQ Smart Kitchen (BSK) restaurants that specialize in takeout and delivery services are opposing the chicken franchise's plan for hiking the prices of raw ingredients.

"If the company increases prices of both fried chicken products and ingredients, franchisees' profit decreases and the headquarters' gains increase," one of the franchisees said. "Raising the price of ingredients to help franchisees is only the company's justification to maximize its profit."

Another franchisee said BBQ should scrap its price hike plan for ingredients provided to franchisees. "We need three boxes of olive oil to fry 200 chickens. If the headquarters charges 40,000 won per box, it means we will have to pay 120,000 won to make 600 fried chickens. The headquarters will take 600 won of profit per menu item sold simply by raising the price of olive oil, and franchisees are the ones who will have to bear the price burden," the BBQ restaurant owner said. "I don't know what our representatives were thinking when they agreed with the company's decision."

BBQ saw its sales increase year-on-year in 2021 by 13 percent to 362.4 billion won, and its operating profit jump 14.5 percent to 60.8 billion won.