So Jin-se's Innovation Bears Fruit... 'Unrivaled' Chicken No.1 Kyochon Surpasses 30 Billion KRW Operating Profit, Up 61%

Operating Profit of 31.9 Billion KRW Last Year, Record High... 61% Increase YoY
Focus on ERP System Improvement, QSC Enhancement, and Metropolitan Logistics Center Establishment
New Management System Established This Year... Growth Through Strengthening Core Business Capabilities

[Asia Economy Reporter Lee Seon-ae] Kyochon has once again proven itself as the unbeatable number one brand in the chicken franchise industry. Last year, it posted an operating profit in the 30 billion KRW range for the first time, boasting its best-ever performance.

According to the electronic disclosure system on the 1st, Kyochon F&B recorded sales of 369.25258 billion KRW and an operating profit of 31.9204 billion KRW last year. Sales increased by 11.7% compared to 2018, and operating profit rose by 61.2% year-on-year. Net profit for the year reached 21.045 billion KRW, an 83% increase from the previous year.

Industry insiders evaluate that Chairman So Jin-se’s efforts to improve Kyochon F&B’s organizational structure have borne fruit. A '40-year Lotte man' who held key distribution positions within the Lotte Group, he took office as chairman on April 22 last year and immediately decided that everything must change to find growth opportunities amid crisis, focusing on structural reform.

The first area he tackled was the improvement of the ERP system (Enterprise Resource Planning system). ERP refers to integrating systems such as production, finance, and human resources within a company to manage them as one, which can enhance work speed and maximize management efficiency. Kyochon plans to strengthen its ability to respond to external environmental changes through a major overhaul of its ERP system.

Additionally, it expanded the foundation for strengthening QSC (Quality, Service, Cleanliness). To this end, it newly opened an R&D and education center near its headquarters, a four-story building with a total floor area of 3,719㎡ (approximately 1,125 pyeong). In particular, the franchisee training facility replicates the actual franchise environment, enabling more professional and realistic training. An organizational restructuring was also carried out to strengthen related organizations so that R&D and QSC-related teams can perform more systematic and specialized roles.

Following the expansion of the Eastern Logistics Center (Gyeongbuk) and Western Logistics Center (Gwangju) completed a few years ago, a new metropolitan logistics center is also being established. Chairman So believes that expanding logistics centers will serve as a foundation for securing core competitiveness in the franchise business.

Along with investments to improve infrastructure, inefficient areas were boldly improved. Food service brands judged difficult to expand through franchise business (Damgimssam, Sookseong72) were phased out, and underperforming affiliates (Suhyun F&B, KC Way) were merged. The company decided to focus more on strengthening its core chicken business capabilities and to pursue new business challenges only after improving the management system. It is expected that Kyochon’s profitability will improve further through these improvements in inefficient areas.

His goal for this year is to perfectly establish the new management system and strengthen Kyochon’s unique position. To this end, he plans to secure new growth engines through overseas and distribution businesses. The overseas business will officially enter the Taiwanese market, where an MOU was signed last year. The Malaysian franchise business approved last year will also be actively promoted this year, with expectations for its successful establishment. The distribution business will diversify HMR (Home Meal Replacement) products, building on the encouraging performance of the 'Dakgalbi Fried Rice' HMR product launched last year, and plans to establish its own online mall in the second half of the year. Furthermore, Kyochon plans to focus on successfully completing its IPO this year. A Kyochon official explained, "We are currently conducting an employee stock ownership plan and preparing for listing. If the IPO succeeds this year, it will set a record as the first direct listing case in the franchise industry."