The move comes in response to Baemin’s recent increase in commission rates from 6.8% to 9.8%. (Image courtesy of Yonhap)
SEOUL, Aug. 20 (Korea Bizwire) – Small business owners in South Korea are preparing to differentiate prices between in-store and delivery orders, a move triggered by a recent increase in commission fees by Baemin, the country’s largest food delivery platform.
This collective action, set to begin on August 22, is raising concerns about potential inflationary pressures on the cost of eating out.
The Association for Fair Platforms, representing about 650 small business owners, announced the plan on August 18.
While this number may seem small compared to the total number of restaurants in South Korea, industry experts believe it could spark a wider trend of price differentiation between in-store and delivery orders.
“This price increase is an unavoidable response to the unfair practices of delivery apps,” said Kim Young-myung, the association’s representative.
He expects most members to participate and believes the actual number of participating businesses could be much higher, based on the hundreds of supportive comments seen in online forums for small business owners.
The move comes in response to Baemin’s recent increase in commission rates from 6.8% to 9.8%. Restaurant owners argue that maintaining identical prices for in-store and delivery orders has become untenable under the new fee structure.
“The delivery platform expenses have shifted from fixed to variable costs due to Baemin’s insistence on percentage-based fees,” Kim explained. “There’s a consensus among business owners that the increased commission burden makes it difficult to sustain operations.”
Some franchise owners are taking matters into their own hands. The National Mom’s Touch Franchise Owners Association recently sent a certified letter to their headquarters demanding differentiated pricing. In a vote on the issue, 280 out of 296 franchise owners supported the move.
Hwang Sung-gu, the association’s president, stated, “Platform fees now account for about 15% of sales. Maintaining the same prices for delivery and in-store orders makes it virtually impossible to generate profit.”
Some companies have already responded to the changing landscape. Lotteria, a major fast-food chain, implemented an across-the-board price increase of 3.3% on burgers and desserts this month, citing rising delivery service costs.
Popeyes Korea applied a 5% premium on delivery menu items in April.
As the delivery market continues to expand, this price differentiation trend could contribute to overall dining-out inflation.
While the exact inflationary impact hasn’t been measured, the Statistics Korea’s experimental “dining-out delivery cost index” showed a 4.3% year-on-year increase as of December 2023. This figure is expected to rise further in the current year.
Ashley Song (ashley@koreabizwire.com)
