"Chicken, Not Baemin, but This App" ... User Numbers Soared, But What Was the Result?

Three Major Chicken Brands Focus on Strengthening Their Own Apps
Promotions Include Discount Coupons and Free Side Menus
Membership Numbers Continue to Grow, but Marketing Costs Remain a Dilemma
Competitiveness Still Lags Behind Delivery Platforms

Domestic chicken franchise brands are strengthening their own applications (apps). Their strategy is to reduce reliance on delivery apps by offering a variety of promotions through their own apps, such as discount coupons and free product giveaways. In fact, major chicken franchise brands are achieving results, such as expanding the number of members in their own apps. However, there are concerns that excessive promotions to increase membership inevitably lead to a decline in profit margins, highlighting the need for a long-term strategy.

Kyochon Advertisement Capture

According to the industry on May 10, as of the first quarter of this year, Kyochon Chicken's own app had a cumulative membership of 6.5 million, an increase of 300,000 from 6.2 million at the end of last year. The proportion of orders placed through Kyochon's app out of total orders (by number of orders) also rose to 13%, a 3 percentage point increase from the previous year. BBQ also increased its number of app subscribers to 4 million as of the end of last year. BHC, which launched a newly revamped app in February, surpassed 500,000 subscribers within just two months of opening. BHC had previously allowed non-members to place orders through a simple ordering system, but since February, it has shifted to a membership-based service.

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Chicken franchises are expanding promotions through their own apps by offering free side menu items such as cheese balls and tteokbokki or price discounts when customers order chicken through the app.

BBQ is running a 'Black Pride Day' promotion throughout May, offering a 4,000 won discount coupon every Friday for orders of the Golden Olive Chicken series placed through the BBQ app and website. BHC provides a 3,000 won discount coupon immediately upon new registration, and membership members receive an additional regular coupon once a month. Kyochon is holding events for app customers, such as organizing a fan meet-up with their brand model Byun Wooseok.

The reason chicken franchises are strengthening their own apps is that it can reduce the commission burden on franchisees. Sales through their own apps do not require paying delivery brokerage fees. In the case of Baemin (Baedal Minjok), the delivery brokerage fee ranges from 2.0% to 7.8% of the transaction amount. Their own apps also make it easier to collect data for marketing purposes. Through their own apps, companies can obtain customer information to develop customized products, test new products, conduct market research, and gauge customer reactions.

Kyochon Chicken App Members Exclusive Brand Model Byun Wooseok 'Fan Meet-Up Invitation Event'. Kyochon Chicken

However, since promotions to attract new consumers are essential for their own apps, the resulting decrease in profit margins for both franchisees and headquarters is a concern for the franchise industry. In fact, Genesis BBQ, which offers the most price discounts, spent 20,375,170,000 won on promotions last year, an increase of 104.63% from 9,957,010,000 won the previous year. BHC also saw its discount sales promotion costs, which are recorded as deductions from sales, more than triple from the previous year, resulting in sales of 512.7 billion won, a 4.3% decrease from the previous year.

An industry official stated, "The expansion of our own apps is carried out with the goal of co-prosperity with franchise owners, so we are willing to bear the increased promotion costs," adding, "We maintain the principle that the headquarters can only thrive if the franchisees thrive."

From the consumer's perspective, using the franchise's own app for delivery is also burdensome. Even with the app discount applied, the price is often not much different from what is paid through delivery apps. Currently, when orders are placed through the franchise's own app, store owners and consumers share the total delivery fee by using third-party delivery services. The delivery fee for orders through the franchise's own app is about 2,000 to 5,000 won on weekdays in Seoul. In contrast, Baemin or Coupang Eats offers free or 1,000 won delivery for paid members. Furthermore, delivery platforms frequently issue discount coupons even for non-members, so delivery platforms are often cheaper.

An industry official explained, "The franchise's own app is advantageous for franchise owners, but for consumers, the delivery fee may make them hesitate to use it," adding, "If delivery fees are fixed, franchise owners may have to bear even greater delivery service costs due to surcharges that vary by region and time, which is a significant concern."

Some argue that rather than simply expanding the user base, there is a need for system improvements that can secure loyal customers while also reducing the burden on store owners. Since franchisees are highly sensitive to delivery fees, there are calls to consider operational methods that address this issue within their own apps.

Another industry official said, "Most franchise stores are still registered with major delivery apps, and consumer awareness is still much higher for delivery apps, so delivery platforms remain dominant in the market," adding, "Rather than relying solely on discount promotions, new ways to utilize apps to build long-term competitiveness must be developed."