Goobne Chicken Faces Scrutiny Over Delivery Platform's Proposed '1km Pricing Plan'

As delivery platforms propose a win-win strategy to lower fees and delivery costs for short distances (around 1km), franchisee profits for some chicken brands could see changes. This plan involves reducing costs by shortening delivery distances, and attention is focused on whether the burden of these discounted costs will fall on the headquarters or the franchisees.

Baemin (Baedal Minjok) and Coupang Eats proposed a pricing system during discussions at the social dialogue body, applying a commission rate in the 5% range and delivery fees in the high 2,000 won range for nearby deliveries. This is an attempt to lower fee burdens by limiting the delivery radius to within 1km, compared to the current radius of around 4km. Five organizations, including the Small Merchants Federation, adopted a joint win-win proposal last month on the 29th, discussing a plan to reduce the delivery radius to 1-1.5km and apply a commission rate in the 5% range with delivery fees in the 2,000 won range.

Some organizations, such as the National Franchisee Association, have opposed the plan, citing the reduction in delivery zones and lack of effectiveness. The second discussion, scheduled for the 27th of last month, was canceled, and the resumption date for meetings remains uncertain.

Chicken franchises are an industry highly dependent on delivery. High-density commercial areas with sufficient customer base within 1km could benefit from lower commission rates, but the situation differs for regions where a wide delivery radius is essential. Opting for the nearby zone pricing means a reduced orderable area, while maintaining the existing pricing means bearing the full cost of commissions and delivery fees. Goobne Chicken has maintained the same prices for delivery app sales and in-store sales, and has not officially adopted a dual-pricing system.

Goobne Chicken franchisees have expressed concerns that the 1km pricing plan could widen profitability gaps by region and that franchisees might have to shoulder the reduced profits without headquarters support. It has been pointed out that except for some areas like densely populated residential zones in the Seoul metropolitan area with sufficient demand within 1km, most stores would inevitably incur losses. Stores in areas with wide delivery zones have stated they have virtually no choice.

The increase in chicken prices this year further burdens franchisees. With rising raw material costs increasing the cost of chicken supply and purchase burdens, franchisee margins are bound to thin further when delivery app commissions and fees are added. Although Goobne Chicken has officially refrained from adopting a dual-pricing system on delivery apps, it is important to establish separate safeguards for franchisee profitability.

The burden felt by franchisees could vary significantly depending on whether the headquarters engages in separate negotiations with platforms, adjusts criteria for franchise price adjustments, or subsidizes a portion of delivery app commissions or raw material costs. Goobne Chicken has not issued a separate statement, citing event preparations, so the headquarters' specific response direction and the standards for franchisee cost sharing remain unconfirmed.