Kyochon Chicken, ranked third in the chicken industry, will be removed from the delivery app Coupang Eats starting next month. Kyochon Chicken accepted the commission reduction conditions set by the number one delivery app Baedal Minjok (hereinafter referred to as Baemin) and signed a 'Baemin only' agreement. There are predictions in the delivery and franchise industry that a competition for 'large franchise recruitment' might begin following the fierce competition over free delivery and subscriptions.
According to related industries on the 25th, Baemin's operator Woowa Brothers and KYOCHON F&B will soon sign a 'Baemin Only' memorandum of understanding (MOU). The agreement includes provisions where Baemin lowers the commission fees that Kyochon Chicken franchisees bear in exchange for withdrawing from Coupang Eats. They can continue to be listed on Yogiyo and the public delivery app Ddaenggyeoyo (operated by Shinhan Bank), as well as the Kyochon own app.
Currently, franchisees listed on Baemin and Coupang Eats with a revenue ranking in the top 35% are paying a commission fee of 7.8%. The decision to be listed on delivery apps is up to the Kyochon Chicken franchisees. They can either take advantage of the commission reduction benefit and withdraw from Coupang Eats or maintain their listing on Coupang Eats without the reduction benefit.
According to this agreement, Baemin will benefit from consumer attraction by Kyochon Chicken leaving its competitor Coupang Eats. Kyochon Chicken can receive benefits from reducing the commission fees that franchisees bear. Reports indicate that most of the franchisees of the more than 1,300 locations across the country have agreed to the contents of this agreement.
The two companies plan to implement the Baemin Only agreement as early as next month. They plan to maintain the agreement for the next 2 to 3 years. However, both companies have not disclosed the specific commission reduction rates. An industry source noted, "It is presumed to be a drastic reduction rate that franchisees can accept," adding, "If it were not, the majority of franchisees would not have decided to withdraw from Coupang Eats."
This is the first time that a delivery app has offered preferential treatment to a specific franchise under the condition of 'withdrawing from the listing.' Analysts suggest that Woowa Brothers may have recruited Kyochon Chicken, one of the franchises with large revenue, to secure a clear advantage in the market competition against Coupang Eats. According to the Financial Supervisory Service's electronic disclosure system, KYOCHON F&B's revenue for the first quarter was 124.6 billion won, a 10% increase compared to the same period last year. Last year's annual revenue was also 480.6 billion won, an 8% increase from the previous year.
An industry source stated, "Although Kyochon Chicken, once ranked first in the industry, has now slipped to third, its status and potential cannot be overlooked," adding, "Coupang Eats is conscious of the narrowing gap in delivery app market share as it closely pursues Baemin."
According to mobile app analysis firm Mobile Index, as of last April, Coupang Eats had 10.44 million monthly active users (MAU). Considering that its MAU was 5.53 million in January of last year, it has nearly doubled in about 1 year and 3 months. During the same period, Baemin's MAU was 21.75 million, slightly down from the previous year's MAU of 21.74 million.
There are also prospects that the competition for 'exclusive franchise recruitment' among delivery apps will intensify as a result of this case. An industry source remarked, "To attract consumers, the best strategy is to recruit brands that are only available on 'our app,'" adding, "The competition to contract exclusively with large franchises that have many stores nationwide and a guaranteed level of revenue is expected to become even more intense."
Lee Jong-woo, a professor at Ajou University, stated, "For Kyochon Chicken franchisees, the reduced commission fees are bound to be an attractive factor." He added, "As Coupang Eats, a competitor, is expected to devise a response strategy, competition will become even more intense."