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FDD Talk 2015: The Bonchon Franchise Opportunity (Financial Performance Analysis, Estimated Costs, and Other Important Stuff You Need to Know)

by Franchise Chatter on June 11, 2015

in Chicken Franchises, Chicken Wings Franchise, Fast Casual Restaurant Franchise, FDD Talk 2017: Food Franchises, Franchise Earnings

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BonChon Chicken Photo by HawBone

In this FDD Talk 2015 post, you’ll learn the following:

  • Section I – Background information on the Bonchon franchise opportunity, including relevant news updates
  • Section II – Estimated initial investment for a Bonchon franchise, based on Item 7 of the company’s 2015 FDD
  • Section III – Presentation and analysis of Bonchon’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
  • fiscal year 2014 gross revenue for the Bonchon Restaurant in New York, New York owned and operated by the franchisor’s affiliate, Bon Chon USA, Inc. (the “Company-Owned and Operated Restaurant”)
  • 2014 average gross revenue for the 17 franchised Bonchon Restaurants that have been open and operating for at least 12 months before December 31, 2014 (“Mature Franchised Restaurants”)

Section I – Background Information

There’s a new KFC on the block and it’s Korean fried chicken. Most people don’t realize just how big fried chicken is in South Korea – there’s literally a mom-and-pop chicken joint on what feels like just about every corner in Seoul. The style of fried chicken that has garnered a huge cult following over the last decade, though, is quite different from the American KFC version.

Jinduk Seh was convinced the recent Korean take on fried chicken would be a hit around the world. First he perfected his recipe for fried chicken, and then created the restaurant concept to go with it. The result can be seen at Bonchon, which is a Korean word meaning “my hometown.”

The first one opened in the coastal city of Busan in South Korea. The first U.S. location came in 2006 to Leonia, New Jersey. Now the chain has 26 locations in the U.S. and more scattered across the globe. Here’s how the other KFC is frying things up in the restaurant world:

Not Your Mama’s Fried Chicken

If what you’re used to is the American-style KFC, you’re in for a real surprise. In the U.S., the crunch of fried chicken comes from a thick, highly-seasoned crust. The problem with this approach is that the crust is often cooked before the meat.

The Korean approach takes away the crust and uses a frying technique the takes the fat out of the skin, leaving it in a thin, nearly-transparent, crackly state that the Chinese call “paper fried chicken.” No seasoning, just a bit of flour and very thin batter are applied before frying.

Worth the Wait?

A surprisingly low oil temperature of 350°F and a two-stage frying process means this chicken can’t be prepared super-fast. After the first 10 minutes in the fryer, the chicken comes out for a good shaking and two minutes of rest before going back in for another 10 minutes to be done properly.

Served with simple salt and pepper for seasoning, if any sauce is applied, it’s very thin and is able to soak into the crust without making it soggy.

A Winning Combination

In South Korea, what you eat and drink with your chicken makes a huge difference. They serve it with cubes of pickled radish and lots of beer or soju – the most popular alcoholic beverage in South Korea, it is a distilled beverage containing ethanol and water.

The repetition of salt/spice, cold/hot, briny/sweet, and crunchy/tender quickly becomes addictive.

Global Presence From the Start

Starting in South Korea, Bonchon quickly spread from there to the Philippines, Thailand, Indonesia, Singapore, and Cambodia, with plans to add at least seven more countries in 2015, including China, Bahrain, Myanmar, Saudi Arabia, United Arab Emirates, Vietnam, and Malaysia.

Flexible Site Plans

Franchisees can choose from among three varieties of restaurant concepts, including the sports bar, traditional sit-down, and quick service. Take-out and delivery options can also be added in.

Section II – Estimated Costs

  • Please click here for detailed estimates of Bonchon franchise costs, based on Item 7 of the company’s 2015 FDD.

Section III – Financial Performance Representations (Item 19, 2015 FDD) and Analysis

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