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| Kwon Won-kang, Kyochon Chicken chairman |
Kyochon Chicken has been struggling to set up a presence in the United States, China and other foreign markets as it has failed to appeal to consumers there.
One of Korea's largest fried chicken franchises also has often run into trouble with foreign business partners.
Over the past few years, Kyochon, BBQ and other franchises made inroads into foreign markets to find new sources of income as the domestic market approaches saturation point. But it turned out to be easier said than done because they failed to make profits while investing millions of dollars to set up ventures with foreign partners.
Kyochon, founded in 1991, opened its first overseas store in the U.S. in 2007 and once operated as many as four shops in New York and Los Angeles. But it now runs only one store in Los Angeles as its U.S. operations continue to incur losses.
During the 2007 to 2016 period, the firm's U.S. business never made a profit. In 2016, Kyochon lost 3.9 billion won ($3.4 million) in the U.S., equivalent to nearly 35 percent of its 10.3 billion won operating profit.
"We tried hard to run a successful business in the U.S. but things did not turn out to the way we hoped," a Kyochon official said. "Even though we downsized our presence, it is only temporary. We will soon draw up new business plans to expand in the world's largest economy."
The company also suffered a setback in Japan as it had to close its store in Tokyo last September, only nine months after the opening, because its local partner went bankrupt. It plans to open new shops in the world's third-largest economy but the officials have remained silent about the timing.
Kyochon is also having a difficult time in China because of the continued dispute with its Chinese partner. In 2012, it signed a master franchise contract with a Chinese company based in Shanghai, allowing it to open and run fried chicken stores in the city under the Kyochon brand.
Under the master franchise contract, Kyochon handed over control of the franchising activities in China to its partner, and in return, it receives a certain percentage of revenue from its partner.
But according to Kyochon, the Chinese firm did not pay due fees and the two often disagreed over how the stores should be run.
However, the fried chicken franchise said things have been running quite smoothly in Southeast Asia. It has entered Thailand, Indonesia, Malaysia, the Philippines and Cambodia by signing the master franchise deal with local partners.
"Despite minor setbacks, we will continue to expand our overseas ventures" the official said. "We are currently restructuring our business abroad and when it is done, we can do much better. In particular, we will focus more on opening stores in Southeast Asia."
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