[Exclusive] "Selling a Chicken for 23,000 Won Leaves Only 1,000 Won"… Franchise Owner Reveals Cost Structure

Cost Analysis by Chicken Franchise Owners
Profit Varies by Menu—Up to Fivefold Difference
Some Menu Items Lose Money as Sales Increase
Over 30,000 Chicken Franchises; Per-Store Profits Stagnant

A franchise owner of a well-known chicken franchise in Korea has directly calculated and released the cost structure of a single chicken based on the supply price received from the headquarters. While the price of a chicken has approached 30,000 won, the actual earnings that franchisees take home have fallen short of expectations. It is noteworthy that a franchisee has reverse-calculated and revealed the supply structure from headquarters, which is typically not disclosed to the public.

According to the foodservice industry on March 30, a franchise owner of franchise A recently posted a cost analysis reconstructing the profit-and-loss structure for 44 menu items on a franchisee bulletin board. This analysis recalculated, down to the won, the supply price of raw materials announced by headquarters, the quantity of ingredients used per menu according to recipes, as well as packaging, powder, advertising, and promotional costs.

The price of a single chicken is divided among the headquarters' supply price, delivery platform commission, and the franchisee's share. Headquarters and platforms take their portion first, while the franchisee receives what remains at the end.

According to the cost analysis obtained by The Asia Business Daily, after deducting the raw material costs and delivery platform fees, the actual profit left per chicken amounted to only a few thousand won.

Headquarters 50% · Platform 25%, Franchisee Just Over 20%

The selling price of a single chicken ranges from 19,000 to 29,000 won. Of this, raw material costs (based on headquarters’ supply prices) are around 12,000 to 15,000 won. The supply price for a box of 20 fresh chickens and 15 liters of olive oil is 134,000 won and 175,000 won, respectively. This translates to 6,700 won per chicken and 11,667 won per liter of oil. Additionally, advertising costs per chicken are 400 won, and other headquarters-based costs such as packaging and powder are added. Delivery platform fees are also significant. Including payment processing fees, intermediary fees, and delivery charges, the total is about 5,500 to 6,200 won. After accounting for all these, the pre-tax profit per chicken remains between 1,000 and 8,000 won.

There were also large profit differences by menu. For example, in the case of the signature fried chicken (23,000 won), after deducting raw material costs of 11,756 won and a platform fee of 5,729 won, the franchisee’s share is 5,516 won. For ‘Maepsody Whole Chicken’ (24,500 won), the franchisee’s share is 5,775 won. On the other hand, for certain menu items such as Fried Hot Wings, Boneless Crackers, and Basakin Wings, the franchisee’s profit is only in the 1,000 to 2,000 won range. Depending on the menu, profits can differ by more than fivefold even for the same chicken.

Overall, the profit distribution is clear. On average, across 44 menu items, headquarters’ share—including raw material costs—accounts for 50–55% of the selling price, which is the largest portion. Delivery platform fees and delivery charges account for 22–25%. In contrast, the pre-tax profit left for the franchisee is only about 20–25%. More than half flows to headquarters, about a quarter to the platform, and the franchisee receives what remains.

However, it is difficult to assess actual profits based solely on these figures. The analysis does not include fixed costs such as labor, rent, and electricity or gas bills, nor does it factor in platform advertising fees. The real net profit felt by franchisees may be even lower, or, in some cases, they could actually be operating at a loss.

Statistics from the Fair Trade Commission support this. In 2023, the average ‘difference franchise fee’ for chicken franchisees was 35 million won, the highest among all foodservice franchise categories. The difference franchise fee refers to the margin between the actual cost and the supply price of raw and subsidiary materials provided by headquarters. This accounted for 8.6% of franchisees’ total sales.

A franchisee operating a chicken shop in Seoul said, “At a glance, it may seem like I make about 7,000 won per chicken, but after deducting labor and rent, there’s virtually nothing left. The higher the proportion of delivery sales, the more the commission burden squeezes actual profits.”

Headquarters Profit Margin 17–26%, Delivery Platform 14%

Meanwhile, the profitability of headquarters remains relatively high. Genesis BBQ posted an operating margin of 17% in 2024, while Dining Brands Group (bhc) recorded as much as 26%. Woowa Brothers, operator of Baemin, also posted an operating margin of about 14%. The key difference is that headquarters secure stable profits at the sales stage through logistics and brand management, whereas franchisees only take home what remains after all costs are deducted.

This profit structure is also linked to the oversaturation of the chicken market. As the number of stores has rapidly increased, competition has intensified, and franchisees’ pricing and bargaining power has weakened in the process. The number of chicken franchise outlets nationwide has already surpassed 30,000. According to the Ministry of Data and Statistics, as of 2024 there were 31,397 chicken specialty stores, up 5.3% from the previous year. Since surpassing 25,000 stores in 2018, the number has grown by more than 6,000 in just six years.

However, the pace of market growth has not kept up. During the same period, annual sales for chicken specialty stores reached 8.779 trillion won, just a 7.3% increase from the previous year. Average sales per franchisee rose to 279.6 million won, with a growth rate of only 1.9%. The number of employees fell by 2.4% to 65,373. While the number of outlets has increased, both profit per store and staffing have declined.

Calls for alternatives are growing among franchisees. Ideas such as a ‘dual pricing system’ that separates in-store and delivery prices, and building industry-wide joint delivery platforms, are being discussed. Kyochon Chicken has already implemented a dual pricing system, and BBQ has adopted it in some regions. An industry insider said, “The current structure allows headquarters and platforms to take most of the profits, leaving franchisees with only the final share. With almost no means of controlling costs, the more we sell, the heavier our burden becomes.”

This content was produced with the assistance of AI translation services.