Korea's antitrust regulator investigates three chicken chains as broiler costs fall by more than a third

The Korea Broiler Council's two prices reproduce the 37.7% in the post the President shared ^[20]. Chains fry No. 9 and No. 10 birds, which weigh roughly 850 grams to 1.05 kilograms ^[3]. At the Sept. 30 price a whole bird costs about 2,812 to 3,473 won, or 12% to 15% of a 23,000-won chicken ^[23]. In March the same bird cost 1,700 to 2,100 won more ^[17]. Passing all of that through would take 7.4% to 9.1% off the menu price ^[18]. Franchisees set that saving against a thin margin. "Once you take out all the costs, the margin on one chicken is about 10 percent," said a Seoul franchise owner surnamed Kim ^[7]. Ten percent of 23,000 won is 2,300 won, so the cheaper bird is worth 74% to 91% of his entire margin ^[19]. He also listed his heaviest costs: "Labor costs, the supply prices headquarters charges and delivery app commissions are as heavy as ever. If we have to cut chicken prices, we might as well close up shop." ^[8] The middle item on that list is where the 2,000 won a kilogram goes if it never reaches stores. A cheaper bird at the Council's quote helps Kim only if headquarters lowers what it charges him ^[8], and the report does not include the three chains' supply prices. "Chicken prices have gone up in a market that the major chicken companies dominate as an oligopoly, so headquarters' supply prices and other factors need to be examined," said Lee Jong-woo, a professor of distribution and marketing at Namseoul University ^[15]. The chains' cost case has numbers behind it. The minimum wage rises 380 won an hour to 10,700 won next year ^[10][21], and naphtha, the main raw material for packaging, cost $903 a ton on Oct. 2, up 68.16% since the start of the year, according to Ministry of Trade, Industry and Resources data ^[9]. Against that, the bird saving on one chicken equals next year's wage rise on about four and a half to five and a half paid hours ^[21], and the cheaper bird is already in the market ^[4]. "Even when broiler prices went up, headquarters absorbed the cost and kept menu prices frozen for two to three years, so this feels unfair," a representative at one chain's headquarters said ^[5]. The profit jumps at BHC and Kyochon in their audit reports ^[14] are last year's books. The broiler decline is measured from March 30 to Sept. 30 ^[4], so none of it has reached a reported profit line. Collusion is a narrower question than margin. Because stores set their own prices under franchise law ^[11], some adding 1,000 to 2,000 won to cover delivery-app commissions ^[12], a case against three chains would have to rest on suggested prices or supply terms. Their last increases were spread over 14 months ^[22]. The FTC is also examining other possible violations of the competition law, according to industry sources cited by Korea JoongAng Daily ^[1], and the consumer council's price-monitoring center has found gaps between listed and actual chicken weights at some stores ^[13]. The case can go three ways: the FTC finds coordination on suggested prices; it finds none and the chains trim suggested prices anyway after the President's post ^[2]; or the chains hold near 23,000 won and point to wages and packaging. I think the saving most likely sits in headquarters' supply margin, since stores price their own menus and the one franchisee quoted says headquarters' supply price is as heavy as ever ^[8]. That view is wrong if headquarters cut supply prices by close to 2,000 won a kilogram since March ^[4]. Then the saving is already with the stores, and Kim's 10% explains why menus have not moved.