Chicken prices under scrutiny as Lee vows review, industry pushes back

President Lee Jae Myung has signaled he will review franchise fried chicken prices after criticism that chains have kept prices unchanged despite a recent drop in broiler costs. The industry is pushing back, saying it has held off on price increases for more than two years despite rising costs across the board — and that factors beyond raw chicken make an immediate price cut unrealistic.

Lee shared a news article about chicken prices on his X account on Wednesday, writing that he would "take a look." The article said franchise chicken chains had not lowered menu prices even as broiler prices declined.

Chicken prices have indeed been falling as supply stabilizes. According to the Korea Broiler Association, the factory price of size-9 and size-10 broilers — the cuts most commonly used for fried chicken — averaged 3,529 won per kilogram last month, down 5.6 percent from a year earlier. The drop was particularly sharp month-on-month, falling 17.2 percent in a single month.

The industry points out that broiler prices surged through the first half of this year due to supply disruptions caused by highly pathogenic avian influenza. The factory price, which stood at 3,490 won in October last year, climbed rapidly to 4,047 won in January, 4,370 won in February and 5,092 won in March, peaking at 5,172 won in April.

The war in the Middle East has also added to cost pressures. Freight rates rose, pushing up the price of cooking oil procured by franchise headquarters, while naphtha supply instability drove up the cost of packaging materials such as plastic wrap and containers.

Despite those pressures, the three major chicken franchise chains — BBQ, bhc and Kyochon — have not raised prices. BBQ announced in April that it would absorb rising raw material costs at the headquarters level, freezing both retail prices and the supply prices charged to franchisees. bhc and Kyochon have also refrained from announcing any price hike plans. BBQ last raised prices in June 2024, bhc in December 2023 and Kyochon in April 2023.

Even without a headquarters-level price increase, consumers have felt prices creep up, largely because of a "flexible pricing" system that allows individual franchisees to set their own prices on online food delivery platforms. Stores that have adopted the system sell chicken at up to 3,000 won above the official retail price set by headquarters.

Some brands have also turned to workarounds — reducing portion sizes or raising prices on side dishes rather than increasing the price of chicken itself. Goobne Chicken cut the pre-cooked weight of its boneless chicken thigh menu from 800 grams to 700 grams in June, citing supply instability, and in July raised prices on side dishes such as spicy chicken feet and pasta by up to 12.5 percent.

The industry is also watching a separate tax probe running alongside Lee's public remarks, with some observers suggesting it may be an indirect signal to lower prices. bhc and Puraidak are currently under unscheduled tax investigations by the fourth investigation unit of the Seoul Regional Tax Office. The probes follow the National Tax Service's Sept. 14 announcement that it would investigate 41 businesses — spanning agricultural products, processed foods and restaurant franchises — on suspicion of tax evasion linked to stoking price instability.

The industry says the criticism puts it in an awkward position. "From the start of the year, headquarters absorbed the cost increases caused by avian influenza on behalf of franchisees," an industry official said. "Chicken prices reflect processing and transportation costs on top of the broiler price, so a drop in broiler prices cannot be passed on to consumers right away." The official added that the sudden scrutiny felt unfair given the industry's efforts to support the government's price-stability drive. "We have been holding prices precisely to cooperate with the government's inflation-control efforts, so the sudden criticism feels unjust," the official said.

A separate official at a chicken franchise company said the price of fried chicken reflects many raw and subsidiary materials beyond the cost of fresh chicken. "We raised prices three years ago to protect franchisee margins from the growing burden of online food delivery platform commissions and delivery fees, and have held prices since then despite significant cost increases," the official said.