[Why] Behind Korea's love for crispy, flavorful fried chicken

Chicken restaurants in Seoul on Aug. 15, 2021 [JOONGANG ILBO]

Walking around the streets of Korea, it's not hard to spot multiple fried chicken restaurants on a single street.

There were more than 27,000 franchise fried chicken restaurants in Korea as of 2020. That number grows further when small merchant restaurants are included.

Koreans' love for crispy fried chicken with an abundance of seasoning options is one reason behind the slew of chicken restaurants in the country, with a population of just 51 million. The low entry barrier for starting such a business doesn't hurt either.

“The entry barrier for opening a chicken restaurant is relatively low because the business is pretty standardized,” said Lee Gyu-min, a professor in the department of foodservice management at Kyung Hee University. “All ingredients are processed before they are supplied to a franchise store, so the owner just has to fry the chicken. Opening other types of restaurants would require the owner to get trained or else hire a chef.”

The number of franchise chicken restaurants jumped 7.7 percent on year to 27,667 in 2020, according to Statistics Korea. It was the third largest type of franchise business by category, after convenience stores and hansik (Korean food) restaurants.

How it began

Korea’s fried chicken restaurant boom dates back to the 1997 Asian financial crisis.

Thousands of people got laid off in the wake of the financial crisis and were suddenly left out on the streets. Many chose to open a fried chicken shop, due to the low entry barriers.

“The number of fried chicken restaurants grew explosively in the aftermath of the 1997 Asian financial turmoil,” said James Lee, a CEO of the Institute of Entrepreneurship & Franchise Management Consulting. “A lot of women joined the workforce to open a chicken restaurant with their husband who lost his job and was only left with severance pay. Young people that couldn’t get employed also jumped on the fried chicken bandwagon. The eased criteria to get a loan from the government fanned the trend.”  

Lee added that it was around this time that fried chicken flavors in Korea, which range from honey garlic to sweet and spicy, started to become more diverse.

“I was accepted to Pelicana in July 1999 as the company was forced to hire new employees due to a massive number of new franchise stores opening at the time,” said 47-year-old Lee Jong-min, who still works at Pelicana, one of the biggest fried chicken franchises in the 1990s. “There were around 430 franchise stores in Seoul, and the raw materials had to be supplied to the stores at least twice a day. New store openings were so frequent that my colleagues and I would work overtime practically every day.”

BB.Q Chicken, the third largest chicken franchise in Korea, was another beneficiary that bloomed during the crisis.

“We grew rapidly following the 1997 financial crisis, opening our thousandth store in 1999 — only four years after our first store opened in 1995,” said Lee Chang-hwan, a spokesperson for Genesis BBQ, that operates the BB.Q Chicken franchise. There are now more than 1,700 BB.Q Chicken restaurants in Korea.

Fried chicken experienced a second wave of growth in 2002, when Korea unprecedentedly took fourth place at the FIFA World Cup.

More than 13,700 fried chicken restaurants opened nationwide in 2002 alone, the largest in a single year over the past 20 years, according to Korea Research Institute for Human Settlements.

“Back in 2002, a lot of people ordered fried chicken to munch on while watching the World Cup games,” said Choi Woo-chang, a spokesperson for Kyochon F&B. “Opening fried chicken restaurants became a trend again as the demand for fried chicken skyrocketed.”

Kyochon F&B, the largest fried chicken franchise in Korea, said it opened more than 700 stores in the two years following the 2002 World Cup.

It was around this time when the word chimaek came about, as people increasingly drank beer to go with their fried chicken while watching games, according to Lee from the consulting firm. Chimaek is a portmanteau of the Korean words for fried chicken and beer, and made it to Oxford English Dictionary last year.

Even two decades following the second boom, fried chicken remains one of the most popular businesses started by small merchants.

The cost of opening a fried chicken restaurant remains relatively lower than other businesses because customers oftentimes opt to get their food delivered rather than dining in, according to Lee from Genesis BBQ. This saves on interior and rent costs because a store doesn’t require much space. And if most orders are for delivery, that also means the restaurant does not have to be located in a prime location to capture peoples' attention.

The average cost of opening a Kyochon Chicken restaurant was 110.28 million won ($88,300) in 2021, according to the Fair Trade Commission, which includes the deposit, membership and training fees. The average cost to open a BHC Chicken shop was 85.44 million won, and 90.79 million won for BBQ Chicken.

The approximate cost to decorate the interior of the fried chicken stores per 3.3 square meters (35.5 square feet) ranged between 2.04 million won and 2.63 million won.

The starting cost is lower than in other sectors.

The cost of opening a Paris Baguette bakery franchise store was 312.45 million won in the same year, with 2.97 million won in interior decorating costs per 3.3 square meters. It cost 299.2 million won to open a Twosome Place, the second-largest coffee chain by sales, with an interior cost of 2.09 million won per 3.3 square meters.

Delivery costs

Along with pizza and jjajangmyeon (noodles with black bean sauce), fried chicken is one of the most common delivery foods in Korea.

But with the surfacing of food delivery apps in the smartphone era, fried chicken restaurant owners are hardly left with any margins, store operators argue. They say delivery costs, along with fierce competition, makes it difficult for small merchants to stay afloat.

“I sell through food delivery apps because it’s something I have to accept in this new era,” one fried chicken franchise store owner in southern Seoul said on the condition of anonymity. “They are extorting our money by using a niche market. When factoring in the delivery fees to the app, raw materials and labor cost, I’m left with only around 1,500 won per chicken for our basic fried chicken.”

“A fried chicken should cost around 30,000 won, not 20,000 won,” said Genesis BBQ Chairman Yoon Hong-geun in a local radio show on March 25.

Baedal Minjok, the largest food delivery app in Korea, charges a 6.8 percent commission on the price of food when a meal is delivered on a one-order-per-delivery basis instead of delivering multiple orders on one run. The app also charges a separate 6,500 won delivery fee. Restaurant owners decide how much of the fee they will pass on to customers.

Coupang Eats, another major food delivery app, charges a 9.8 percent commission and 5,400 won in delivery fees for the same service.

“The primary reasons fried chicken franchises are suffering from reduced profits is due to the increase in the price of food materials, labor costs and rent fees,” said an industry insider from a food delivery app who spoke on the condition of anonymity. “It should be noted that fried chicken restaurants were able to steadily receive orders even during difficult times like the pandemic through food delivery apps. For a food delivery app to continuously offer the premium one-order-per delivery service, the commission rate should be at least 15 percent.”

To save on fees paid to delivery apps, some fried chicken franchises have created their own food delivery apps.

BB.Q Chicken and Kyochon Chicken are a few such cases.

When an order is made through their own app, franchise store owners usually only pay for the cost of delivery riders, omitting commission fees. But delivery fees paid through the in-store app can exceed 10,000 won on days with bad weather.

BB.Q Chicken said its app has been downloaded by 3 million users, while Kyochon Chicken has 3.39 million.

“Despite the difficulties, opening fried chicken restaurants will continue to be popular in the future,” said Lim Chae-un, a business professor at Sogang University. “The restaurant business usually rides the trends, but fried chicken managed to stay popular due to strong demand. Chicken is relatively cheaper than red meat and is served for various purposes, from snacking to a meal and anju [food eaten as a side for drinks], making it easily accessible to people of different ages.”

Reference
Written by JIN MIN-JI [jin.minji@joongang.co.kr]
Provided by Korea JoongAng Daily 

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