Chicken Game (5)
BQQ Chicken had barely raised the price of its fried chicken to 20,000 won when it hiked it again, this time to 22,000 won.
As if they had been waiting for the cue, Hanjeong Chicken and Lulu Chicken announced that they, too, would raise the prices of all their products by 2,000 to 3,000 won.
Public opinion split between those saying chicken had become absurdly expensive and those asking, “If it’s too expensive, why not just stop buying it?” Either way, no one disputed that it was expensive.
In that climate, S Mart raised the banner of half-price chicken and launched Tongtong Chicken.
S Mart Price-Stabilization Project! We’re starting with chicken!
We’ve stripped the grease from chicken prices!
Tongtong Chicken! 6,990 won!
They priced the plain fried chicken at 6,990 won, and the sauced Red King, Gold Castle, and Black Knight chickens at 7,990 won.
Even without advertising on TV or the internet, the public response was explosive.
Watching S Mart’s Tongtong Chicken launch, the franchise industry assumed it would be nothing more than a flash in the pan.
Supermarkets had always sold chicken. Some convenience stores did too. And yet it had never done much to the franchise industry.
The reason was simple: chicken had already been divided, at least to some degree, into a low-end market and a high-end market.
But this time was different.
Tongtong Chicken’s popularity was no ordinary thing. The moment they put it out on the shelves, people snatched it up, and before long a long line had formed inside the mart.
Seeing how hot Tongtong Chicken had become, Chairman Hong In-gyun ordered one of his employees to go buy some at a nearby S Mart.
The employee came back a few hours later.
“Why did it take you so long?”
“The line was incredibly long, so I had to wait ages. They said each person could only buy one chicken, so I called a few other staff members in a hurry and had them line up with me.”
Unlike franchise chicken, which came with pickled radish, cola, and sauce on the side, this was nothing but a box of chicken.
Chairman Hong In-gyun peeled back the packaging and took a bite.
“They did put in some effort, at least.”
Mart chicken was usually simple: a thick, heavy crust and hard meat. And because it was meant to be eaten hours after it was cooked, the oil inevitably ran and the batter went soggy.
Compared with BQQ Chicken, the difference in taste was as stark as imported frozen beef and top-grade Hanwoo.
But this time, it was different.
The batter was thin and crisp. The seasoning was good, too. At this level, you could honestly call it on par with a mid-sized franchise.
When had mart chicken climbed to this level?
But even so, it was still mart chicken. It might be a hit in the low-price chicken market, but it was nowhere near enough to hurt BQQ Chicken.
“This one is supposed to be the most popular,” he said.
Chairman Hong In-gyun tried the Red King Chicken next.
“Ah, no—this flavor!”
Spice, sweetness, tartness, and saltiness blended together and spread across his mouth.
What in the world is this?
They actually had a recipe like this?
This was better than most franchise chickens. No—BQQ Chicken itself wouldn’t be embarrassed to sell this tomorrow.
He hurried through the other chickens as well.
When he bit into the Gold Castle Chicken, he tasted sweetness. When he bit into the Black Knight Chicken, he got a savory saltiness.
At this point, it should at least be 20,000 won.
No, even 30,000 won would still be enough!
And they’re selling this chicken for 7,990 won?
I thought back to the first time around.
Back then, too, once chicken prices crossed 20,000 won, consumers pushed back hard, and the mart’s half-price chicken launched at that time became enormously popular.
But the reaction this time was far more explosive than it had been in the first run.
That was thanks to the sauces I had made.
As expected, K-chicken is all about the sauce.
Mass production meant the recipe had to be adjusted. S Mart handled that part themselves, and they did it successfully.
The problem started now.
Since they had climbed up not only in price competition but also in taste and quality, the upper-tier franchise chains were going to take a hit as well.
Of course, there was no way the chicken-franchise big three would just sit still.
I watched the online reaction for a while, then contacted a famous announcer.
Hi, Miru.
So you’re doing well these days? Busy?
I don’t know about doing well, but I am busy. I can’t even take a vacation. Ah! I want to go somewhere fun.
Your ex-girlfriend was beautiful, bright, and full of energy. Add in the fact that she was Jiyu’s cousin, and she’d been climbing from one success to the next.
I’m listening to your show.
Really? Then don’t just listen—send me a story once in a while. We have an economics segment, you know. Ah! How about coming on the show once? If you don’t want your name out there, I can introduce you as an anonymous private equity insider.
Hmm.
I heard Chairman Hong In-gyun of BQQ Chicken is coming back on Pleasant Radio Life?
Yes. He’ll be on tomorrow. S Mart’s Tongtong Chicken is a huge issue these days, so everyone’s paying attention.
Should I send you some material on that?
Really? What is it?
I’ll send it right now. It should help a lot if you look it over.
SBC Radio’s Pleasant Radio Life.
Chairman Hong In-gyun of BQQ Chicken returned to the program hosted by announcer Jin Se-yeon.
“Today, we’re joined once again by the Chicken King himself, BQQ Chairman Hong In-gyun. Hello, Chairman, and thank you for coming back on our broadcast when you must be so busy.”
“Nice to be here.”
“S Mart’s Tongtong Chicken is drawing enormous attention these days. I’m sure you have a great deal to say about it.”
As if he’d been waiting for the cue, Chairman Hong In-gyun launched into a tirade.
“I’m deeply wronged by the image the mart is trying to build, as though chicken from franchise chains is expensive. Are you really saying the chicken a mart throws together by roughly frying cheap frozen birds is the same as chicken carefully fried from fresh raw birds using a cooking method developed over decades by skilled chefs? Chicken made from frozen birds and chicken made from fresh birds are completely different in taste and in the richness of the meat. They aren’t even on the same level.”
“On that point, we checked with S Mart, and they say they use only 100 percent domestically produced chilled poultry. They also insist there’s no difference in quality from the birds supplied to franchise chains. They say they’re very concerned about malicious rumors claiming that imported or frozen poultry is being used, and that they’ll respond firmly.”
Hong In-gyun’s face fell at that.
“Cough! What I meant wasn’t S Mart, but some marts using frozen birds. I never said S Mart.”
“I see.”
“And anyway, chicken is chicken, but the quality of the oil matters a great deal, too. Unlike franchise shops, which fry according to regulations, marts keep using old, rancid oil without replacing it. That lowers the taste and creates hygiene problems as well.”
“S Mart says they only use fresh oil from the same day and replace it on a regular schedule. They even released CCTV footage from the kitchen, and there wasn’t the slightest hygiene issue. So when you just said mart chicken is fried in rancid oil, you were also referring to some other mart, not S Mart, correct?”
“Yes. Well. That’s right.”
When his attempts to belittle Tongtong Chicken by attacking the ingredients and hygiene failed to land, Hong In-gyun moved on to something else.
“Tongtong Chicken is a loss leader designed to draw people into the mart. They sell chicken at a loss and make up for it by pushing overspending on other products. I did the cost calculation myself, and there’s no way that price can be right. Large supermarkets run by conglomerates can afford to sell at a loss, but small operators like us simply can’t. This is a clear violation of the Fair Trade Act.”
“Since we knew you were coming on today, our production team asked S Mart about the cost price. But there’s a big gap between what you’re saying and what they told us. According to S Mart, the wholesale price of trimmed raw chicken is 3,500 won, and oil plus other ingredients come to 1,500 won. For seasoned chicken, they say it’s 1,000 won more than that. After tax, they say they’re left with roughly 1,000 to 1,500 won in margin.”
“What? No, that can’t be—”
They’re publicly disclosing the cost price like that?
Hong In-gyun immediately tried to push back.
“But that doesn’t include labor or rent, does it?”
“That’s true. Rent can be excluded anyway since it’s a product sold inside the mart, but if you include labor, the margin would shrink even more.”
“Exactly!”
“But one thing I’m curious about is the price of the raw chicken. In BQQ Chicken’s case, the supply price to franchisees is 5,200 won—no, you recently raised it, so 5,700 won. That’s a huge difference for the same chicken. Is there a reason for that?”
“BQQ Chicken uses a special proprietary brining method, so direct comparison is difficult.”
“You’re saying the brining alone costs 2,000 won? What kind of ingredients are you using that it’s so expensive? Compared with S Mart’s brining cost, that’s several times higher.”
“...That’s a trade secret.”
The reason he had gone on the radio was to drag Tongtong Chicken down and stir up public opinion against large supermarkets entering the chicken market.
He had tried to find fault any way he could, and yet he had never imagined they would hand over the data in advance.
Chairman Hong In-gyun cleared his throat and said, “Anyway, chicken is a food for ordinary people. But do we really want big corporations entering even that ordinary food and the local-market business, just to stir everything up? If they crush all the competitors and then raise the prices, the consumers will be the ones who suffer in the end. Our franchise industry will fight to the very end for its right to survive.”
Jin Se-yeon asked, sounding puzzled. “Didn’t you say last time that chicken wasn’t a food for ordinary people? And now you’re saying it is. Which is it?”
“That is…”
“So when you raise the price, it isn’t a food for ordinary people, but when a major corporation enters and competition gets more intense, it suddenly becomes one?”
“…”