Kyochon mulls initial public offering

By Park Jae-hyuk

Kyochon F&B, the operator of the nation’s leading fried chicken franchise Kyochon Chicken, is considering an initial public offering (IPO), according to industry officials, Tuesday.

They said the company met several securities firms, including NH Investment & Securities, Korea Investment & Securities and Mirae Asset Daewoo, at the end of last year to consult about its listing on the stock market. Observers expect the firm will be listed next year at the earliest.

If so, Kyochon will be the country’s first listed fried chicken franchise that only focuses on its franchise business. Kyochon Chairman Kwon Won-kang holds 100 percent of the shares of the company.

Since 2015, Kyochon has maintained the top spot in the nation’s fried chicken franchise industry, posting 291.1 billion won ($272.8 million) in sales and 10.3 billion won in net profit in 2016, with an average 10 percent annual growth rate in sales.

The runner-up was BHC with 232.6 billion won, followed by the former champ Genesis BBQ with 219.7 billion won, Goobne Chicken with 146.9 billion won and Nene Chicken with 56.7 billion won.

Due to the poor performances of domestic fried chicken franchises in recent years, however, some securities firms reportedly suggested Kyochon delay its listing. Although consumption of fried chicken has continued to grow here, the number of franchises has skyrocketed even faster.

Plus, other companies dealing with fried chicken have gone through hardship in recovering their stock prices.

Cherrybro, a processed chicken producer known for its chicken franchise Cheogajip Chicken, was listed on the KOSDAQ market in December last year. But since then, its stock price has gone down.

Harim and Maniker, the two leading chicken firms in Korea, have suffered from falling stock prices since the pesticide-contaminated egg scandal in August last year.

Some chicken franchises sought to have IPOs, but they failed to make it work.

When Genesis BBQ owned BHC as its subsidiary in 2012, it pushed ahead with BHC’s KOSDAQ listing, but the stock exchange disapproved of the IPO, citing uncertain growth potential and complex corporate governance of the franchise.

Kyochon has also been struggling to set up a presence in the United States, China and other foreign markets.

The company said it has yet to devise any specific plans for its IPO.