To pay higher wages, fast food chains raise prices

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To pay higher wages, fast food chains raise prices

In anticipation of a new minimum wage that went into effect at the start of 2018, fast food chains have been raising prices since late last year to cover higher wages for their workers.

It started with Lotteria. The burger chain raised prices on 12 burgers, including the popular bulgogi and shrimp burgers, 16 sets and five beverages by as much as 5.9 percent in November.

The bulgogi burger now costs 3,500 won, up from 3,400 won ($3.20), and the shrimp burger’s price went up by 200 won to 3,600 won.

The price adjustment at Lotteria was the first since February 2015, and the company cited a triple whammy of rising rent, labor costs and raw material prices.

At the start of the new year, the hourly minimum wage went up by 16.4 percent, the largest increase in nearly two decades, to 7,350 won.

In anticipation of the hike, KFC raised the price of 24 menu items on Dec. 29.

“We are having trouble conducting business due to external factors like consistent raw materials and labor cost hikes,” the company said in a statement. “We have imposed a minimal price hike while administering a price drop for some products at the same time.”

The price of hot crispy chicken and original chicken went up by 100 won to 2,300 won, and its signature Zinger Burger now costs 4,300 won, up 300 won.

The chicken bowl, however, is cheaper by 400 won at 2,400 won, and the price of the Zinger Double Down Maxi also went down by 100 won to 6,000 won.

McDonald’s, the market leader, has yet to implement any price hikes, but on Dec. 30, it raised the ceiling for delivery service from 8,000 won to 10,000 won, saying the measure was in anticipation of the higher minimum wage.

Japanese burger chain MOS Burger jumped on the bandwagon on Jan. 2, raising prices by up to 10.3 percent. The price of its teriyaki chicken burger went up 400 won to 4,300 won, and the Wagyu cheeseburger price jumped 200 won to 6,200 won.

On the other hand, sets like the teriyaki burger set and MOS burger set became cheaper by 1,000 won.

Fried chicken restaurants were planning to pursue similar price increases, but hit a snag when the government warned against such moves.

In a meeting last Thursday, Koh Hyoung-kwon, first vice minister of strategy and finance, said the government would launch a special investigation into restaurants to see if any chicken, burger and gimbap (rice roll) joints raise prices on “unfair grounds,” suggesting that some businesses have passed the higher labor cost onto consumers.

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