BBQ chicken mysteries

BBQ, the largest fried chicken franchise, has decided not to raise prices after the government threatened to call in the National Tax Service and the Fair Trade Commission.

The Ministry of Agriculture, Food and Rural Affairs opposed the price rise hikes as inflationary, but came under fire for acting like a bully pestering honest entrepreneurs.

This has by and large spared BBQ from consumer anger.

But there remain a couple of mysteries over why the franchise chickened out.

First, does its decision have anything to do with the covering up of any accounting or irregularities in its modus operandi? On this account, it may demand the benefit of doubt, considering that a tax audit, for instance, puts companies — honest or dishonest — under a great deal of duress.

Second, does the decision mean that BBQ’s claim that the increases were pivotal to its franchisees’ survival is less than honest? The cancelling of the increases would not make sense because it should decimate the franchisees.

Both situations are worth considering in relation to the puzzling process that results in a 12-fold price rise from one kilo- gram of live chickens to BBQ products that consumers buy.

According to the Maeil Economic Daily, 1,600 won per one kilogram of live chickens rises to 4,460 won, including related fees, after the birds are slaughtered for franchisee. The chickens are provided at 10,431 won to franchisees, and rise to 16,000-18,000 won when delivery and other expenses are thrown in.

When value-added taxes are factored in, it can be said that the more the franchisees sell, the deeper the hole they are in.

Is this true? This is doubtful, when there are franchises that sell products at two-thirds of BBQ’s prices and still make a decent profit. In 2010, Lotte Mart, a big retail network, introduced 5,000 won fried chickens but stopped in the face of interest groups’ protests that this price was killing small businesses.

The likelihood is that there are some along the production-to-sale stream hogging profits; or franchises and franchisees are not fully honest or are running their businesses badly.

Considering that chicken is people’s favorite snack and chicken franchisees are the No. 1 business for the self-employed, it is time to look closely at what is going on, even if it requires a government investigation.