Rising bean prices, franchisee pushback on margins means trouble brewing for Korea's coffee outlets
Published: 16 Jan. 2026, 18:48
Updated: 19 Jan. 2026, 14:02
![A cafe employee sorts plastic cups of cofee at a cafe in Seoul on Dec. 18, 2025. [NEWS1]](https://koreajoongangdaily.joins.com/data/photo/2026/01/19/81b467c9-621d-438f-a6f8-a6b24e23c874.jpg)
A cafe employee sorts plastic cups of cofee at a cafe in Seoul on Dec. 18, 2025. [NEWS1]
Korea’s coffee franchise industry is under mounting pressure as the cost of imported coffee beans continues to surge while the won weakens, driving up operating costs.
On top of that, a recent court ruling ordering Pizza Hut Korea to return rebate margins to franchisees has sparked fears of a wave of lawsuits that could reach coffee brands.
The average international price of arabica coffee beans traded this month was $7,994 per ton, according to data from the Korea Agro-Fisheries & Food Trade Corporation (aT) on Friday.
At an exchange rate of 1,470 won to the dollar, that amounts to about 11.75 million won per ton, up 7.82 percent from the average of $7,414 in January 2025.
International coffee bean prices have now been rising for three consecutive years. In 2024, the average price of arabica beans rose 57.37 percent on year to $8,116 per ton, compared to $5,157 in 2023.
As Korea relies heavily on imports for coffee beans, the continued high exchange rate has become a growing burden for the industry.
![A shopper looks around shelves of coffee beans at a large supermarket in Seoul on Jan. 6. [NEWS1]](https://koreajoongangdaily.joins.com/data/photo/2026/01/19/48d65f78-ca06-4bcd-a904-dec48b326262.jpg)
A shopper looks around shelves of coffee beans at a large supermarket in Seoul on Jan. 6. [NEWS1]
“With the won-dollar exchange rate surging and bean prices continuing to rise, we expect to see widespread coffee price hikes in the first half of the year if this trend continues,” said a coffee franchise industry official.
Some brands have already raised prices. The Coffee Bean increased the price of its small and regular-sized drip coffee by 300 won ($0.20) each on Jan. 5. The additional fee for switching to decaffeinated beans also went up from 300 won to 500 won.
Budget coffee franchises like Banapresso and Mega MGC Coffee raised prices of some drinks by 200 to 300 won. Ediya Coffee increased the base volume of 31 menu items from 14 ounces to 18 ounces in December last year, while raising prices by around 300 won.
Beyond rising costs, coffee franchises are now facing growing concerns over possible lawsuits from franchisees seeking refunds on rebate margins.
![An employee is seen working at a cafe in Seoul on Dec. 18, 2025. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2026/01/19/6a82b3d4-9c46-4e14-b167-8c2f75afdbd8.jpg)
An employee is seen working at a cafe in Seoul on Dec. 18, 2025. [YONHAP]
Law firm Doah, representing Mega MGC Coffee franchise owners, announced it is preparing a lawsuit to reclaim unfair gains from the company. The core argument is that, prior to the 2024 amendment to the Fair Franchise Transactions Act, there was no clear legal basis for Mega MGC Coffee to collect such margins.
“There has been an explosive number of inquiries from franchisees seeking to reclaim unjust profits,” said Park Jong-myung, head attorney at Doah. “We expect about 1,000 franchise owners to join the lawsuit, and the scale could grow further.”
Traditionally, food and beverage franchise headquarters in Korea have not charged fixed royalties but instead included markup margins in the prices of supplies sold to franchisees.
These “rebate margins” refer to the difference between what franchisees pay and the fair wholesale price — essentially a distribution markup.
A Fair Trade Commission study last year of the 10 largest coffee franchises by number of outlets found that none of them relied solely on fixed royalties between 2020 and 2024 — all incorporated rebate margins, which have long been accepted as industry custom.
![A cafe employee puts ice into a plastic cup full of coffee at a cafe in Seoul on Dec. 18, 2025. [YONHAP]](https://koreajoongangdaily.joins.com/data/photo/2026/01/19/2df712db-1381-4f80-a6eb-c41eea95e6a3.jpg)
A cafe employee puts ice into a plastic cup full of coffee at a cafe in Seoul on Dec. 18, 2025. [YONHAP]
But that custom was challenged when the Supreme Court ruled on Thursday that Pizza Hut Korea must return about 21.5 billion won in rebate margins collected from franchisees between 2016 and 2022, deeming them unjust enrichment. The court noted that although such practices were common, they were not explicitly stated in franchise contracts.
“This ruling could set a precedent, prompting more franchisees to speak out about rebate margins they’ve paid,” said Lee Hong-joo, a professor of consumer economics at Sookmyung Women’s University. “It could also lead to a rise in class-action lawsuits.”
As of 2023, the average rebate margin per coffee franchise store in Korea was about 22 million won. If legal battles escalate, some believe franchise headquarters may begin to offset potential losses by raising prices further.
Franchisees of other brands, including Ediya Coffee and Twosome Place, are reportedly also preparing similar lawsuits to reclaim rebate margins.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NOH YU-RIM [[email protected]]
with the Korea JoongAng Daily
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