Posted January. 02, 2018 08:06,
Updated January. 02, 2018 08:21
In the New Year, the aftermaths of the rise of minimum wage, grocery prices rising and business hours decreasing are becoming reality. The minimum wage of 2018 is 7,530 won per hour, which has increased by 16.4 percent compared to that of 2017.
According to the related industry Monday, KFC increased the prices of its 24 items, including fried chickens and hamburgers, by average of 5.9 percent in December 2017 and Lotteria increased the prices of its items, by average of 5.8 percent in November 2017. Nolboo and Sinseon Seolnongtang, the dining franchise companies, also increased the prices of major menus recently.
Paris Baguette and Dunkin’ Donuts are also expected to increase prices. “If employment cost rises, we cannot help but sell items with the price higher than the suggested retail price set by the head office,” said a franchise store operator of Paris Baguette.
The fried chicken franchise industry also has the air that price increase is inevitable. Though they withdrew an increase plan last year after being attacked by the public, the business proprietors claim that they cannot hold it any longer this year. “The pressure on the rise of costs, such as employment cost, has reached the limits,” said a business insider. “We have been enduring it by reducing the margins of the head office, but we can no longer ignore the demands for the price increase by franchise store operators.”
The convenience store industry, which has a high employment rate of part-time employees, is reducing nighttime operations and expanding unattended convenience stores, in order to reduce the burdens on employment costs. While the government supports some of the employment costs this year, it would not be effective in the convenience store industry, which has low insurance purchase rate. “More store operators are considering closing the store due to the cost burden following the rise of the minimum wage,” said a convenience store operator.