[Distribution Hot People] 'No Brand Burger' Franchise Sailing Smoothly... "Noted as the Second Bucksquare"

Interview with Lee Seung-woo, Head of FC Development Team at Shinsegae Food No Brand Burger
Over 2,200 Franchise Consultation Requests in 5 Months
"We Will Achieve a Total of 200 Direct and Franchise Stores by Next Year"

Lee Seung-woo, Head of FC Development Team at No Brand Burger

[Asia Economy Reporter Choi Saeng-hye] A few years ago, the term "Beoksegwon" (Starbucks + station area) became popular. It means that places with Starbucks attract customers and become prime commercial areas. Recently, a hamburger brand has emerged as the second Beoksegwon by word of mouth. It is "No Brand Burger," operated by Shinsegae Food. No Brand Burger, which boasts high cost-effectiveness, surpassed 60 stores just 1 year and 3 months after its launch in August last year, establishing itself as a hot spot in each area where it opens, with continuous inquiries about franchise startups.

Especially after Shinsegae Food announced on July 2 that it would start franchising No Brand Burger, it has received explosive interest from prospective franchisees. In just over five months since the announcement, the number of franchise consultation requests has exceeded 2,200. The industry evaluates this as an unusual surge in startup and franchise inquiries amid the overall downturn in the dining-out market due to the COVID-19 pandemic.

Lee Seung-woo, team leader of the FC (Franchise) Development Team in charge of No Brand Burger’s franchise business, said, "No Brand Burger has high recognition among young people as a ‘cost-effective burger,’ and since there are not many dining franchises actively opening stores amid the recent recession, franchise inquiries are flooding in. Also, because the franchise business is run by a large corporation, the headquarters can be trusted more, which seems to be another reason for its popularity."

Despite the high interest, the expansion speed of No Brand Burger franchise stores is not very fast. This is because the focus is not on the number of stores or business expansion unconditionally. The franchise business started only after one year since the first directly operated store opened. Until then, Shinsegae Food operated directly managed stores in various commercial areas such as university districts, offices, residential areas, and complex shopping malls to test the feasibility of franchising. They have completed reviews on taste, staffing, training, systems, and profitability for the franchise business.

Shinsegae Food first opened a total of 10 franchise stores among about 2,000 consultation inquiries received until last month, including Ansan Jungang Branch, Bupyeong Station Branch, Pyeongtaek Station Branch, Siheung Jeongwang Branch, Geumchon Rotary Branch, Busan National University Branch, Seongnam Taepyeong Branch, Yongin Yeokbuk Branch, Songpa Intersection Branch, and Busan Hwamyung Branch, where brand awareness is high and stable profits are expected. The goal is to increase the number of franchise stores to about 20 by the end of the year.

Team Leader Lee explained, "We focus on finding the optimal sites capable of generating profits based on thorough commercial area verification and market research. Before signing contracts, the most important factors we look at are the commercial area and market, the prospective franchisee’s experience in similar businesses, and their attitude." He added, "In particular, it is important to assess the attitude regarding the willingness to do business and whether they can faithfully comply with hygiene rules and other requirements."

Meanwhile, Shinsegae Food has adopted the royalty (trademark usage fee) model, an advanced franchise model, for the No Brand Burger franchise business structure. The headquarters receives 8% of the franchise store’s sales as royalties. In contrast, most franchise industries operate by earning profits (logistics margins) through royalties and supplying various ingredients. Team Leader Lee said, "We provide ingredients based on the cost price purchased by the headquarters. We emphasize creating a transparent profit structure that allows the headquarters and franchisees to coexist."

Meanwhile, No Brand Burger also emphasizes cost-effectiveness in its franchise business. Among franchises, the hamburger business generally requires relatively high initial costs compared to delivery-specialized sectors like chicken. However, No Brand Burger considers a smaller area of 30~35 pyeong (99~116㎡) as ideal, resulting in lower initial costs. Instead, it focuses on simplifying kitchen workflows and streamlining store operations to increase profitability. The cooking manual is also simply structured, allowing the operation staff to be relatively fewer than other brands. Additionally, costs for equipment were reduced by lowering coffee machine prices, and investment costs were cut by improving interior materials, significantly reducing the burden on franchisees.

Team Leader Lee said, "We will nurture No Brand Burger as a leading domestic franchise model that achieves stable profits and coexistence with franchisees. By next year, we aim to reach 200 stores, including directly operated and franchise stores, and expand customer touchpoints."