Korea’s leading chicken brand BHC Chicken is embroiled in controversy for replacing its boneless chicken menu with cheap Brazilian chicken and at the same time raising its price.
BHC Chicken switched its source of boneless chicken to Brazil in May 2023, according to industry sources on Feb. 22. However, its retail price has been raised similarly to those of other brands’ boneless chicken menus made with Korean chicken.
BHC Chicken said at the time that it went for Brazilian chicken due to difficulties in securing Korean chicken. Half a year later, the fried chicken company still uses Brazilian chicken.
Previously, BHC Chicken began charging 500 to 3,000 won more than the recommended consumer prices for 85 menu items at the end of December 2023. It raised the average price by 12.4 percent, citing the rising prices of ingredients, labor, and rent. At the same time, it also raised the prices of its menu items for which it used Brazilian chicken.
Imported frozen chicken from Brazil is one-third to half the price of Korean chicken. The Korean government currently applies a zero percent duty on imported chicken.
According to BHC Chicken’s audit report, its sales grew 16.9 percent on average from 2018 to 2022. Its operating profit margin averaged 30.1 percent per year during the same period. These business results outweighed those of other companies. Its net profit grew at an average annualized rate of 23.0 percent over the five-year period. Compared to 2018, its cost of goods sold increased by about 5.7 percentage points in 2022, but its net profit margin moved up by about 31.8 percentage points.
A BHC Chicken official said, “BHC Chicken will switch to Korean chicken when the contract period ends,” but consumers have criticized the company for deceiving consumers.
Under these circumstances, the Korean Fair Trade Commission announced on Feb. 22 that it will launch an ex officio investigation in the first half of this year of franchises run by private equity funds, including BHC Chicken, Burger King, and Mom’s Touch, over their abuse of power.