Theborn Korea to raise prices across brands as budget chains feel squeeze

Food and beverage franchises are raising prices as external factors prove to be too much for chains to bear.

Theborn Korea, a food and beverage company led by celebrity chef and entrepreneur Paik Jong-won, is set to raise menu prices across several restaurant brands, with price hikes averaging 11 percent starting Tuesday, according to industry sources on Friday. Some menu items are likely to see a price hike of up to 20 percent.

The move will affect 11 brands under Theborn Korea. Yet its low-cost coffee brand, Paik's Coffee, is excluded from the price hike as it had already increased prices on some items in February.

“The burden of rising costs has become increasingly difficult to absorb internally," Theborn Korea said. “To protect franchisees’ profitability, we decided to adjust the prices on a limited number of menu items where increases were deemed unavoidable after holding discussions with each brand’s representatives.”

Under the new pricing scheme, the barbecue chain Saemaeul Sikdang will raise prices on three meat items, with the consumer price of Korean pork belly rising by 6.3 percent.

The group's Korean pub-style brand, Hanshin Pocha, will increase prices on 15 items by 11.2 percent, including charcoal-grilled boneless chicken feet. Paik Boy Pizza will raise pizza prices by 20.2 percent.

Mega MGC Coffee, one of Korea’s largest budget coffee brands, is set to increase the prices of three beverages by 200 won (15 cents) starting June 19. The company said the move was driven by continued increases in the cost of freeze-dried coffee.

Several other restaurant brands already hiked prices last month.

Subway raised prices on its 15-centimeter sandwiches by about 2.8 percent on May 7, while Lotteria, a burger chain operated by Lotte GRS, increased prices on 22 burger items by an average of 2.9 percent on May 28.

Major coffee franchises, including TheVenti, Ediya Coffee and Coffee Bean Korea, also raised prices for made-to-order beverages and instant coffee sticks.

Some companies have opted to reduce portion sizes instead of raising prices outright. GN Food, the operator of Goobne Chicken, announced that it would reduce the precooked weight of its boneless chicken thigh servings from 800 grams (28 ounces) to 700 grams on June 1. The company also cut the weight of its wing and drumstick servings by between 80 and 100 grams.

Industry sources say price adjustments have been limited because companies remain mindful of the government’s inflation-control efforts and potential consumer backlash.

“Persistent pressure from a depreciated won and rising costs left us with little choice but to raise prices on some menu items from last year,” an industry source said. “While consumer prices across entire menus would normally need to rise, considering how much prime costs have soared, companies are approaching the issue cautiously as consumers are already feeling significant financial pressure.”

Food manufacturers, including Binggrae, Samyang Foods and Maeil, have yet to show any notable signs of price increases.

However, analysts say price hikes are increasingly likely later this year as the impact of the Iran war begins to be reflected in second quarter earnings.

“Imported raw materials such as sugar and flour are highly sensitive to how international affairs unfold, and there is usually a lag before higher costs are reflected in retail prices,” said Lee Jung-hee, a professor of economics at Chung-Ang University. “Even companies that are currently holding off on price increases will ultimately have little choice but to pass those costs on to consumers if uncertainties from the war and other [inflation-triggering] factors persist."

BY NOH YU-RIM [[email protected]]