Business

Gap Between Top and Bottom Franchises Widens

By Choi Jong-seok | May 07, 2021 12:47

Convenience stores, fried-chicken chains and cheap American-style pizza restaurants were among the most successful franchises in Korea in 2019, but many languish as the gap between the top and bottom widened significantly.

The top-ranked franchises were GS25 (convenience store), Kyochon (fried chicken), Domino's Pizza, A Twosome Place (coffee shop), KFC (fast food) and Paris Baguette (bakery). The findings are based on data of 7,092 franchises provided by the Korea Fair Trade Commission.

Among convenience stores, GS25 boasted per-store sales of W665 million a year, followed by rivals Ministop (W590 million), CU (590 million), 7-Eleven (482 million), and E-Mart 24 (407 million) (US$1=W1,123).

But the number of outlets did not ensure greater success. BBQ was the top-ranked fried-chicken franchise in terms of store numbers, followed by BHC and Kyochon. But Kyochon had much better per-store sales at 653 million, up 44 percent compared to four years ago, than BBQ (W578 million) and 60 Gye Chicken (527 million). BHC's per-store earnings stood at just W435 million.

The most successful coffee franchise was A Twosome Place with 545 million, followed by The Coffee Bean & Tea Leaf (545 million), Caffè Pascucci (393 million), Hollys Coffee (378 million) and Tom N Toms (325 million). The Coffee Bean & Tea Leaf ranked first in 2015 with per-store sales of W590 million, but they fell significantly.

Starbucks is not a franchise in Korea but a directly owned chain, so it was not counted.

At the other end of the scale, per-outlet sales of Angel-in-us Coffee were lower at W281 million and at Caffè Bene W196 million. Cheap-and-cheerful Ediya Coffee outlets raked in on average W217 million a year.

Among bakeries, the gaps between the top and bottom also widened. Market leader Paris Baguette was way ahead of second-ranked Tous les Jours with sales growing from W640 million in 2015 to W666 million in 2019, while Tous les Jours' fell from W470 million to W463 million.

Domino's Pizza ranked at the top in the sector with annual per-store sales of W748 million, and second-ranked Pizza Hut's resurgence was impressive with sales rising from W480 million in 2015 to W717 million. A Pizza Hut staffer said, "We realigned our operations by cutting down on offline stores and boosting the number of delivery and takeout stores."

KFC ruled the fast-food roost in terms of per-store sales (991 million), followed by Burger King (W981 million), Lotteria (W677 million), Subway (633 million) and Quiznos (255 million). But Subway saved on rent because almost nobody eats in, making W26 million per 3.3 sq. m of store space, twice as much as Lotteria and 1.5 times more than KFC.

McDonald's stopped running franchise outlets in Korea and was not included.

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