Amid the recent surge in dining-out prices increasing the lunch expenses burden for office workers, a citizen is seen carrying fast food while walking in Myeongdong, Jung-gu, Seoul on the 28th of last month. Photo by Jinhyung Kang aymsdream@
[Asia Economy Reporter Moon Hyewon] Food and beverage franchises such as burger, pizza, and coffee chains that implemented price increases earlier this year are continuing to raise prices again in the second half, increasing the financial burden on consumers dining out.
According to the franchise industry on the 22nd, McDonald's will raise the prices of major menu items by an average of 4.8% starting from the 25th.
Price increases per menu item range from a minimum of 100 KRW to a maximum of 400 KRW. The ‘Double Bulgogi Burger’ single item will increase from 4,400 KRW to 4,500 KRW (100 KRW increase), and the ‘Big Mac’ single item will rise from 4,600 KRW to 4,900 KRW (300 KRW increase).
This comes just six months after raising prices by 100 to 300 KRW on about 30 products in February. As a result, all six major burger franchise brands in Korea have raised prices twice within one year this year.
No Brand Burger by Shinsegae Food, which had promoted a cost-effectiveness (performance relative to price) strategy with low prices, also succumbed to the pressure of rising raw material costs and raised prices on the 18th. Prices of about 40 items including burgers, side menus, and beverages were increased by an average of 5.5% (268 KRW), adjusting the price of the representative menu ‘NBB Signature’ from 3,700 KRW to 4,000 KRW, and ‘Grilled Bulgogi’ from 2,200 KRW to 2,500 KRW.
Momstouch raised prices on 37 menu items in February this year and then increased prices on 50 products about six months later on the 4th.
Burger King raised prices on some products by an average of 2.9% in January and then increased prices on 46 menu items, including 36 burger items, by an average of 4.5% last month. Lotteria also raised product prices twice, in December last year and June this year.
KFC raised prices on some products by 100 to 200 KRW in January and then implemented a second price increase in July on some burger and chicken products, including the flagship Zinger Burger.
The pizza industry has been raising prices one after another since early this year, citing reasons such as rising international wheat prices. Domino's Pizza raised prices on 16 types of pizza (6 premium, 10 classic), 5 side dishes, and 6 beverages by 200 to 1,000 KRW starting from the 12th. This is the second price increase this year following a 1,000 KRW increase on 10 types of pizza in January.
Pizza Hut raised prices on some menu items by 1,000 KRW in March, and Papa John's Pizza adjusted prices on regular and large products by 1,000 KRW and 2,000 KRW respectively in the same month. Pizza Alvolo raised prices by 1,000 to 2,000 KRW in February, and Mr. Pizza raised prices on all products by 2,000 KRW.
Low-priced pizzas are no exception. Ogu Rice Pizza raised product prices by about 1,000 to 3,000 KRW starting in June, adjusting the regular size of Combination Pizza and Pepperoni Pizza from 7,900 KRW to 9,900 KRW, and the large size from 10,900 KRW to 12,900 KRW. Pizza Maru raised product prices by 1,000 KRW in January this year.
Coffee specialty stores, which have been raising prices one after another since the beginning of the year, are also highly likely to implement additional price increases in the second half of this year. Starbucks raised prices on 46 types of beverages, including Americano and Caffe Latte, by up to 400 KRW earlier this year. Large coffee franchises such as Twosome Place, Hollys Coffee, Tom N Toms, Coffee Bean Korea, Paul Bassett, and Angel-in-us have also successively raised coffee prices. Coffee Bean Korea raised beverage prices twice in February and May.
Low-priced coffee franchise brands competing on cost-effectiveness, such as Mega Coffee, Compose Coffee, and Mammoth Express, also raised prices on major products.
Most of these price increases were decisions due to rising raw material costs, including international coffee bean prices, but with recent increases in crude oil prices, coffee specialty stores that make lattes are also leaving the possibility open for additional price increases in the second half of this year.
An industry insider said, "Even if menu prices are raised, raw material prices continue to soar beyond the price increase amount, so additional price increases by companies are inevitable until the end of this year."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
