Kyochon Chicken Seoul Sookdae branch opened last January. The total area of the store is 214m2 (approximately 65 pyeong) on the first and second floors. Provided by Kyochon F&B
Kyochon F&B, which operates Kyochon Chicken, has achieved the highest performance since its inception last year. The total sales of Kyochon’s affiliated stores exceeded 1 trillion won for the first time ever. Based on the Kyochon headquarters, last year’s consolidated sales reached 4476 billion won, an 18% increase from the previous year. Operating profit increased 4% to 41 billion won.
Promotion of enlargement of stores instead of expansion of affiliated stores
The novel coronavirus infection (Corona 19) has exploded demand for food delivered. The franchise industry, which focuses on delivering chicken and pizza, fought a bleeding competition last year. They made large-scale price discount policies through delivery apps and’time deals’ through various online malls. Although sales increased significantly, the operating profit of the headquarters decreased or increased only slightly.
On the contrary, Kyochon focused on the essence. Instead of rapidly increasing the number of franchisees, the strategy was to convert existing small stores into medium and large stores with an interior area of 50m2 or more. Kyochon has 1269 stores nationwide. It is less than its competitors bhc (1550) and BBQ (1800). However, it is known that the total sales of these affiliated stores exceeded 1 trillion won last year for the first time in the industry. The average of affiliate stores is around 800 million won. The affiliate store closing rate was only 0.08%. It is the lowest level in the franchise industry. In the franchise industry, it is evaluated as an excellent company even if it maintains the closing rate in the 2-5% range.
The percentage of mid- to large-sized stores in Kyochon Chicken in 2019 is 60%. Last year, 106 existing stores were changed to medium and large. The goal is to increase the proportion of mid- to large-sized vehicles to 90% by 2025. An official from Kyochon said, “There were many requests to switch to mid- to large-sized stores, mainly from store owners who have operated stores for more than 10 years. It is explained that the competitiveness to handle orders during peak times between 6 and 9 PM, which is responsible for 80 to 90% of daily sales, has improved significantly.
Two distribution centers completed in the first half
Gyochon F&B Chairman So Jin-se (pictured) followed the management principle of former chairman Kwon Won-gang, the founder, “If you put a signboard on Kyochon, make money unconditionally.” In the 30-year history of Kyochon, the closing rate has never exceeded 1%. Even if there are hundreds of applicants in line, the number has been maintained for over 10 years since 1,000 affiliated stores exceeded. Last year, only one of the Kyochon franchisees closed. There were 112 new stores.
Kyochon will expand its headquarters distribution center in preparation for an increase in the order volume of affiliate stores this year. In the first half of the year, the metropolitan area distribution center and the southern (Gimhae) distribution center will be completed. The metropolitan distribution center in Pyeongtaek can accommodate an average of more than 200 tons per day. This is more than double the previous capacity (about 85 tons). With the expansion of the logistics system, Kyochon plans to lay the groundwork for growth in all business sectors, including new businesses such as home meals (HMR), as well as domestic chicken business.
The overseas expansion is also in full swing. Last year, it posted sales of about 12 billion won in overseas business. Despite the impact of Corona 19, it increased by 35% compared to the previous year. Kyochon, which currently operates 42 stores in 6 countries, plans to enter 9 countries including Singapore, the Middle East, and Africa in the first half of the year. Chairman So said, “This year will be the year to lay the foundation for a second leap forward with the 30th anniversary of the company’s founding, and we will expand a solid infrastructure in Korea and grow as a general food company overseas.”
Reporter Bora Kim [email protected]
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