A delivery rider waits outside a Burger King store in Seoul, Thursday. Yonhap
From left are smartphone apps for Baedal Minjok, Yogiyo and Coupang Eats.
Independent and franchise restaurants are adding extra charges to delivery orders without notifying customers, raising concerns about transparency among consumer advocates and industry experts.
The backlash against the practice followed delivery fee rate hikes by major online food delivery platforms in the country, such as Baedal Minjok, Coupang Eats, and Yogiyo. In response, independent and franchise restaurants have chosen to pass on these costs to consumers by raising the prices of their menu items.
Major quick service restaurant (QSR) franchise firms have been using dual pricing for years. For example, McDonald's Korea raised the price of its Big Mac set by 300 won ($0.23) to 7,200 won in May, but this increase only applied to in-store customers. Delivery orders for the same menu items were priced higher at 8,500 won.
Burger King charges even more for delivery. Those ordering a Whopper set menu for delivery must pay 1,400 won more. Popeye's introduced dual pricing in April and KFC revived the policy in March after two years.
The practice is also used by major coffee and beverage franchise companies in the country, as well as smaller franchise operations.
Mega MGC Coffee, the country's biggest low-cost coffee franchise firm, is charging 500 won more for delivery orders. Frank Burger charges 700 won more and fried chicken firm Hosigi last month raised prices for delivery by 500 won to 2,000 won. Even non-franchise restaurants have started adopting this practice by charging delivery customers several hundred won more.
The restaurant operators said that dual pricing is inevitable to cover the costs generated due to the hiked online platform fees. Furthermore, to prevent their store-visiting customers from having to pay more for the hiked operational costs, restaurants are passing on the costs to delivery customers.
“We're setting up prices for delivery menus differently,” a McDonald's Korea official said. “We didn't want our store visitors to burden our additional costs which come from the hiked delivery operation costs.”
For non-major franchise companies that have a smaller network of stores than major firms, dual pricing is more of a desperate measure to deal with the same problem.
A Hosigi official said that the increased platform fees “are posing a serious threat to our revenue structures.” A Frank Burger representative noted that an increasing number of franchisees are urging the company to raise product prices to offset the increased fees from online platforms.
Last month Baedal Minjok raised its platform usage fees for member restaurants to 9.8 percent from 6.8 percent for each delivery order. Coupang Eats and Yogiyo have already raised their fees to the same figure. The increase in fee rates angered franchisees and other restaurateurs, leading them to protest against the platform operators' challenging policies.
The Korea Consumer Agency said that, in addition to the businesses choosing to run dual pricing, many of them have failed to inform consumers about such price gaps. The authority has found that only a few businesses, including Burger King, have notified customers that “delivery menu prices may be different from those at stores.”
The agency said that in 2021, it advised food businesses to make dual pricing more transparent to customers, but these recommendations have not been fully implemented. It also recommended that online platforms clearly display delivery fees separately to keep consumers better informed.
“Even when customers see ‘free delivery' on their online food ordering apps, the service fees are often hidden inside the menu prices shown online, a trick used by businesses to transfer the burden to customers,” an agency official said.
“Menu item prices and delivery fees need to be separately stated so that customers don't misunderstand their receipts.”