South Korean Bonchon Crests 100 U.S. Locations
10 Jan 2020 - Not many international brands get beyond a few locations in big, global markets. But Bonchon, the South Korean fast-casual restaurant with fried chicken at the center of the menu, has proven successful where many others have failed.
The company just inched over the 100-location mark with its Pleasanton, California, location. It quickly followed up with No. 101, the first of about 20 planned for 2020 to keep up with the 20 percent growth rate.
So what’s driving the U.S. surge for Bonchon? CEO Flynn Dekker said it’s growth-minded operators, but the demand side of the equation is just as strong.
“To be honest, the word has come to us if you will. Millennials and Gen Z have grown up with a more worldly mindset,” said Dekker. “You see the proliferation of K-pop, so they’re more adventurous with their food and their culture.”
But fried chicken is also easy to wrap your head around. While Bonchon has plenty of more exotic cuisine such as bibimbap, japchae and bulgogi, the star in marketing and in the restaurant is the fried chicken. By hitting both ends of the market with exciting and understandable items, the concept can avoid the veto vote on both ends of the spectrum.
“We bring something unique,” said Dekker. “But we have chicken at the center of the table with all these satellite flavors.”
Even at 100, though, there’s plenty of work to do to enhance the brand. Right now, the restaurants see about $1.3 million in average unit volume, but it’s not a well-known brand outside the nearby trade areas where operators have restaurants.
“I think, like anyone else, brand awareness is hard for us; we’re loved in the neighborhoods that we’re in. It’s a really cool secret if you know about Bonchon and you’re not in that area,” said Dekker. “We have this really intense awareness where we are, so our challenge is to go beyond that to make sure there is a welcome wagon around it.”
There’s also some work around profitability and fundamentals to do now that this initial surge in growth has them at the 100-plus mark. One key differentiator is the supply chain. All of Bonchon’s sauces are made in South Korea, which keeps the offering authentic and keeps a moat around operations, as does the hand-battered and double fried, but both bring added costs and complexity to the store level.
“I think my main focus is on perfecting the fundamentals of the business. Because it’s grown organically, we have to get to the one way of doing things that is most right,” said Dekker. “I’m focused on how do we put in a technology backbone, to rely on our own digital assets instead of third parties and putting a supply chain in place that makes it more profitable for franchisees and easier to manage.”
While that work gets done, he said the company expects further same-store sales growth in tandem with the location growth toward a projected 500 locations by 2025. In 2019, the company saw about 6 percent same-store sales growth compared to the industry at large that saw largely flat sales growth with negative traffic.