[THE INVESTOR] Kentucky Fried Chicken Korea is set to regain its market footing by doubling its number of local branches and strengthening online-to-offline services, the company said on Aug. 11.
KFC Korea held a conference in Seoul to share its new vision and future business goals after the takeover of the company by Korea’s KG Group earlier this year.
Along with KG Group’s investment, KFC Korea said it hopes to recover earnings that have been on a downward spiral since 2013.
The company’s operating profit was 11.5 billion won ($9.87 million) in 2013, but plunged to 6.8 billion won in 2014 and 1.1 billion won in 2015. It posted an operating loss of 12 billion won in 2016.
Its market value has also plummeted along with the decrease in operating profits. In 2014, CVC Capital Partners acquired a 100 percent share in SRS Korea, the sole owner of KFC Korea, for 100 billion won, but decided to sell the share for 50 billion won to KG Group this year.
The downfall of the chicken franchise came with growing competition in the market in Korea, the company said. Customers’ perceptions of fast food have also changed and affected the business.
“KFC Korea posted losses every month this year, but the company hopes to make a turnaround later this year,” CEO Eom Ik-soo said.
“KFC Korea also financially suffered while it was trying to push ahead to increase its number of branches without considering the conditions of locations.”
To boost its business, KFC Korea aims to reinvent its brand, with plans to make branches “fast casual restaurants,” not fast-food outlets as previously perceived. It will continue to exercise direct control over local branches to ensure food safety and quality, it said.
KFC Korea currently runs an inspection team and ensures its branches keep to a food safety guide, the company said.
The company only uses domestically produced chicken, and all food management procedures are processed at local branches, Eom emphasized.
Meanwhile, the company plans to more than double its number of local branches to 500 by 2023, Eom said, while relocating branches that are underperforming. KFC Korea currently operates 211 branches here.
Along with the expansion, KFC Korea pledged to hire some 1,000 more employees by 2030. It will employ some 200 new workers throughout this year.
For customers’ convenience, KFC Korea will also lay out smart payment systems as well as kiosks developed by KG Group’s wired and wireless payment service units KG Mobilians and KG Inicis, Eom said.
In September, the company will launch its own smartphone application to allow customers to order and pay ahead of their arrivals at restaurants.
The amount of investment for the expansion of branches was not disclosed by the company.
By Shim Woo-hyun/The Korea Herald (firstname.lastname@example.org)