Profitability in the self-employed market is declining as ingredient and labor costs continue to rise. In particular, food-service franchises are focusing on survival strategies as overheated competition and sluggish consumer spending add to the pressure. According to the Ministry of Data and Statistics, South Korea's consumer price inflation rate jumped to 3.1% in May. It was the first time in two years and two months that inflation in the country had exceeded the 3% range, since 3.1% in March 2024. A weaker won is also making it harder to secure ingredient supplies.
Yoon In-cheol, a professor in the Department of Entrepreneurship at Gwangju University, said the strengths of a franchise include operating know-how, menu development, and support for franchisees. He added that its biggest advantage is a stable supply of ingredients and marketing that keeps pace with consumer trends. He also noted that real-time communication through mobile apps and programs allows franchises to pursue sales-maximizing strategies tailored to changing conditions.
Damga Hwarogui has improved store management efficiency through its logistics system. The company delivers meat after trimming and aging it at headquarters, reducing waste at stores. That also makes it possible to offer a 50% discount on additional orders. By applying a direct-purchase system for side ingredients, industrial goods, grills, charcoal, and side dishes, it has minimized unnecessary costs for franchise owners.
Manghyang Bibim Guksu operates a HACCP-certified factory to secure stable logistics. It produces vegetable broth, white kimchi, and noodles. To boost the local economy and secure high-quality ingredients, the company sources only specialty products from Yeoncheon County, maintaining quality while keeping prices stable.
Coffee Bay is expanding management strategies aimed at mutual growth with franchisees. These include lower supply prices for raw and auxiliary materials, as well as headquarters covering expensive marketing costs that are difficult for franchisees to handle directly. A Coffee Bay official said, "To strengthen franchisees' competitiveness, headquarters is preparing alternatives, and in the end, we are working to build a structure in which both franchisees and the franchisor grow together."
Logistics supply sometimes requires immediate feedback. A representative from LEAD PLANET, which provides franchise ERP services, said, "We need to understand sales conditions at each franchise location nationwide in order to establish marketing and operational strategies that fit those conditions." The representative added, "Using Lead Data, an integrated sales management system for franchisees, can improve efficiency and convenience." That is why franchisors have recently been turning to franchise ERP systems.
Professor Yoon said one of the characteristics of a franchise is that it has strategies that can withstand sudden external economic shocks. He added, "Success begins with not only analyzing a brand's characteristics and strengths, but also examining how well it can respond in a crisis before making a choice."
Kim Se-hyung
