[News Space=Reporter seungwon lee] Kyochon F&B saw its operating profit drop by nearly 40% last year despite a slight increase in sales. In addition, its net profit plummeted by 95.8% to 500 million won. There are observations that a decline in the stock price and overall financial performance will inevitably be a blow.

Kyochon F&B announced on the 12th that its consolidated sales for last year increased by 8% year-on-year to KRW 480.6 billion. The company explained that consumer demand is recovering and its global business is doing well through continuous strengthening of overseas business.

On the other hand, operating profit decreased by 38.6% over the same period to KRW 15.2 billion. This was because a one-time cost of KRW 22.9 billion was incurred due to the conversion to direct management by the franchise headquarters. 

A Kyochon F&B official explained the 2024 performance, saying, “Consumer demand is fully recovering, and sales increased due to favorable global business through continuous strengthening of overseas business,” adding, “However, annual operating profit decreased due to the reflection of one-time expenses (KRW 22.9 billion) resulting from the conversion of franchise regional headquarters to direct management.”

Kyochon Chicken franchisees are currently suing Kyochon Chicken for the difference in franchise fees. They are primarily pointing out Chairman Kwon Won-kang’s high stake and high dividend policy as the background.

Chairman Kwon's stake in Kyochon F&B is 69.2% (17,287,554 shares), and he received about 5.2 billion won out of the approximately 7.5 billion won in dividends in 2021. He also received 4 billion won in dividends in 2023. There have been claims that the owner's profiteering was due to taking a significant amount of dividends at a time when the company's profitability was deteriorating.

The profitability of franchisees is also not as good as in previous years. Considering the increase in chicken prices and delivery fees over the past two years, the deterioration in profitability felt by franchisees is bound to be even greater.

Meanwhile, Kyochon F&B will implement differential dividends this year as well. The dividend per common share is 200 won, a decrease of 100 won (33%) from the previous year. The largest shareholder, Chairman Kwon Won-kang, has decreased by 100 won (50%) from 200 won last year to 100 won per share.