KFC may be looking over its shoulder as Bonchon, a restaurant chain specializing in Korean fried chicken, is rapidly gaining popularity. Bonchon’s turnover in 2017 increased by 35% according to the Technomic ranking of the 500 largest restaurant chains in the country.
Bonchon now has 336 points of sale around the world, including 87 units in operation in the United States, including around 36 to come in 2019. In 2018, it expanded to 25 stores. Most Bonchon are franchisees including 84 out of 87 in the United States
Bonchon was launched in Busan, South Korea in 2002, but quickly spread overseas. He opened his first US outlet in Fort Lee, New Jersey in 2006, then moved to Manhattan soon after. Then it spread to Massachusetts, Virginia, California, Texas, and others.
Besides Korea, the Bonchon are widespread throughout Asia in Singapore, Vietnam and Myanmar.
He is known for his signature fried chicken and prepared using a double frying method which was concocted by its founder Jinduk Seh.
At Bonchon in Manhattan’s Chelsea neighborhood, its host Tony Vega highlighted the bar area where patrons can choose one of eight beers on tap and watch sports on TV or on local news. It offers sit-down meals and take-out meals in a pragmatic atmosphere.
Franchisees take 4 weeks of training in New York City, and opening a store costs $ 510,000 and can go as high as $ 935,000.
Here’s what Bonchon executives have said about its growth, including Victor Chang, Marketing Associate, Eason Li, Operations Team Leader, and Hank Balle, Business Leader.
Describe the main factors explaining why Bonchon’s turnover soared 35% last year.
Chang: First of all, we are opening a number of new franchise stores. We were lucky to have a loyal following, who spread our brand by word of mouth in cities where there is no Bonchon. We have a unique product and don’t have a lot of competition that comes with our flavors.
What sets Bonchon’s style of fried chicken apart?
Chang: The first is the exclusive exclusive sauce shipped from Korea. We have a special technique for applying the sauce that no other chain uses. We have better quality chicken than most franchise chains on offer, and finally, we fry our chicken twice, which gives us a crispier outer layer.
What else does Bonchon specialize in?
Balle: We’re also known for traditional Korean dishes, including fried rice, bibimbap, rice bowl with vegetables and protein, and bulgogi, a thin-cut marinated sirloin steak.
How well does the menu in the United States suit American tastes?
Bullet: Tacos are more popular here than in Asia, but our main menu of fried chicken, wings, and fried rice is international. We offer popcorn shrimp, fried zucchini, and fried pickles only in the United States
Describe the atmosphere that each Bonchon tries to create?
Chang: We want to create a fun place for friends and family to come together for a meal. We offer great service, music and atmosphere with drinks including draft beers and soju, a traditional Korean rice liquor, which looks like sake.
How much of your business is sales of fried chicken?
Chang: Iconic fried chicken dishes, including wings, drumsticks, and combos, account for around 43% of sales. However, 60% of our customers order a dish in addition to the fried chicken, such as a side or a traditional Korean dish.
But many Americans are moving away from fried foods. How does this affect your business?
Belle: We’re seeing strong growth in our sales of fried chicken, but we’re looking to offer healthier items. For example, we are seeing strong growth in salads such as salmon salad, crispy tofu chicken, avocado bowl, and udon.
Describe your franchise strategy?
Chang: Bonchon is doing mostly well on the east and west coasts, but we’re expanding into newly developed cities, such as Denver, Minneapolis, and Austin. These are cities with many higher incomes and a large millennial population. We find they are open to trying new cuisines an important factor for us in choosing where to open.
Do you have private equity funds or are you self-financing your expansion?
Chang: Usually we are funded by franchisees.
When you open a new outlet, how do you market it and promote it?
Chang: First, we are fortunate to have a fair amount of press every time we open in a new location. We advertise on social media on Facebook, and third, we work with influencers to promote new locations.
Who is Bonchon’s target audience?
Chang: Our main customer is 25 to 34 year olds, middle class to upper middle class millennials. The bottom line is that millennials like to eat in restaurants that feel less like a chain. . We are seeing a downward trend at Applebee’s and Chili’s. We see ourselves as a ‘chain of unrest’, providing a more authentic experience.
What is the average check?
Li: The average check is $ 31 per person, but can include two people on the ticket. We appeal to families and friends who come together to enjoy the atmosphere and come to where we serve beer and wine.
Repeat business is the key. What are you doing to attract them to a second meal?
Chang: We have data that shows we have an extremely high retention rate. A consulting firm said we have 81% loyal customers. The main thing is the taste. People get addicted to Bonchon and will pay a premium to get the best chicken possible.
You plan to open 36 new points of sale in 2019. How to avoid the trap of too rapid growth?
Bullet: This is like evaluating new locations and choosing developers who can handle multiple locations.
Chang: We want to open as many locations as possible; this increases brand awareness.
Considerations for becoming public?
Chang: At the moment, we have no plan.
Describe the key factors for Bonchon’s future growth.
Chang: 1) Adapt to technology, create a digital-focused strategy, facilitate online orders, 2) Build strong brand loyalty, 3) Open more express restaurants.
Future growth plans beyond 2019?
Chang: Over the next five years, we plan to reach 300 to 400 stores in the United States, which would take us to almost 700 worldwide.
How much of a threat is Bonchon to KFC?
Chang: It’s not a direct threat because Bonchon is at a different price. As we open more express models in the future, we should be able to compete more. We want to be in busier areas – office destinations, city centers, and food halls.