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| Minister of Agriculture, Food and Rural Affairs Chung Hwang-keun addresses the National Assembly's Agriculture, Food, Rural Affairs, Oceans and Fisheries Committee, Tuesday. Korea Times file |
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| An illustration of fried chicken sold by BBQ. Korea Times file |
Yoon Hong-geun, head of Genesis BBQ, one of the country's three major fried chicken franchises, is facing mounting pressure to lower fried chicken prices, a result of his earlier miscalculation seeking to justify the prices backfiring, market watchers said Wednesday.
Minister of Agriculture, Food and Rural Affairs Chung Hwang-keun said during a parliamentary audit, Tuesday, that a bucket of fried chicken costing 30,000 won ($21) is too expensive, criticizing Yoon, who claimed the price hike was needed to "offset the soaring costs of labor and key input materials."
The short-sighted comment is set to trigger a review of the key policy incentives granted to the lucrative franchise businesses, including about 10 billion won in tax deductions for each franchise, low tariffs on imported palm oil and flour, among a host of government assistance programs to stabilize the price of one of the most popular menu items in the country.
The self-inflicted tighter scrutiny could expand to include its two other peers: Kyochon and BHC. The combined sales and net profit generated by the three first exceeded 1 trillion won and 200 billion won in 2020, respectively, and has since climbed.
BHC registered an operating profit of 153.8 billion won and sales of 477.1 billion won last year. Kyochon's sales and operating profit in the same period came to 493.5 billion won and 28 billion won, respectively. Genesis BBQ registered 362.4 billion won in sales and an operating profit of 60.8 billion won.
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| Genesis BBQ head Yoon Hong-geun. Korea Times file |
Chung said the ministry will initiate a full review of the current policy assistance granted to chicken franchises.
"We will closely scrutinize whether the government assistance is properly translating into lower final product prices for the benefit of consumers," he told the Agriculture Food Rural Affairs Oceans and Fisheries Committee. "Included will be the amount of government subsidies and eligibility criteria as well as the degree of import duty exemptions."
This move came in response to a question posed by Rep. An Byung-gil of the ruling People Power Party. The first-term lawmaker said that a "certain franchise owner" had made a comment that many considered "completely out of touch with reality."
The call for a price hike would have been understandable, he said, had it come from restaurant owners out of frustration due to the soaring input material costs and royalties. But the notion of franchise owners making such comments is simply wrong, in his view.
"We need to look into whether tax and policy incentives put in place to stabilize fried chicken prices are being felt by the public," he said.
Consumer rights groups welcomed the minister's move.
"The government is right to take measures to send a signal to franchises to keep their greed in check," the Korea National Council of Consumer Organizations said. "They need to understand that the series of said policy incentives are sustained by taxpayers' money."
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