Fowl play? Poultry costs fall by a third, but fried chicken prices stay put.

Poultry prices in Korea have fallen by more than a third since spring, but fried chicken prices at the country's biggest franchises are as hot as ever. Are they cooking up a scheme? The antitrust regulator is digging in to find out.

The Fair Trade Commission (FTC) is investigating BHC, BBQ and Kyochon Chicken — three of Korea's largest fried chicken franchises — over possible price fixing and other violations of the Monopoly Regulation and Fair Trade Act, industry sources said Wednesday.

Even President Lee Jae Myung weighed in on X on Sept. 30 by sharing an article saying broiler prices had fallen 37.7 percent over six months while major chains kept prices at around 23,000 won ($17).

As complaints that fried chicken prices haven't moved with poultry costs roll in, the chains and franchisees counter that their prices reflect far more than the cost of the bird.

Fried chicken chains mostly use No. 9 and No. 10 broilers, grades that cover birds weighing roughly 850 grams to 1.05 kilograms (1.9 to 2.3 pounds). Those birds sold for 3,308 won per kilogram ($1.15 per pound) on Sept. 30, down 2,000 won from 5,308 won on March 30, according to data from the Korea Broiler Council.

Prices fell as chicken supply recovered from last winter, when an outbreak of highly pathogenic avian influenza had cut production.

Franchise headquarters and franchisees claim that cheaper birds can't automatically produce a price cut, arguing that other costs have gone up instead, including chicken processing and logistics; labor and rent; packaging and other supplies; and the commissions charged by delivery platforms.

"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 the headquarters of one franchise chain said.

Kyochon last raised its prices in April 2023, BHC in December of that year and BBQ in June 2024.

"Once you take out all the costs, the margin on one chicken is about 10 percent," said a franchise owner surnamed Kim, who runs a store in Seoul. "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."

Some of those costs have indeed risen with high inflation and oil prices. Naphtha, the main raw material for packaging, cost $903 per ton on the Japanese spot market as of Oct. 2, up 68.16 percent from the start of the year, according to raw materials price data from the Ministry of Trade, Industry and Resources.

On top of that, next year's minimum wage will rise 3.7 percent to 10,700 won an hour from this year's 10,320 won.

Regarding the FTC probe, some in the industry point out that headquarters cannot directly control what franchisees charge. The Fair Transactions in Franchise Business Act bars franchisors from unfairly imposing pricing on their franchisees.

Major chains therefore suggest a retail price and let each store set its own. A franchisee might charge 1,000 to 2,000 won above the suggested price, for example, to cover delivery app commissions.

But Critics push back just as hard.

"Fried chicken used to be food for ordinary people, but some menu items at chicken franchises now cost more than 30,000 won once the delivery fee is added," said an office worker named Kim Jeong-min. "These days I buy [raw] chicken for less than 20,000 won at the market."

Others say certain chains have kept prices unchanged while cutting portions. The Korea National Council of Consumer Organizations' price-monitoring center found gaps between the listed and actual weights of chicken at some stores, the council said Tuesday. Under labeling rules, the chains list chicken by weight before cooking.

The chains, on their part, cite rising costs as the reason they cannot lower prices. But BHC's operating profit rose 23 percent last year and Kyochon's more than doubled, according to their audit reports. BBQ's fell 19.4 percent.

"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," Lee Jong-woo, a professor of distribution and marketing at Namseoul University, said. "Still, it is regrettable that there was no effort before the investigation to hear from the industry through meetings and other means and to come up with alternatives."

BY LIM SUN-YOUNG [[email protected]]