Shinsegae’s No Brand Burger stores dominating Korean market
The No Brand Burger from Shinsegae Food, the food manufacturing arm of South Korean retail giant Shinsegae, are dominating the South Korean hamburger market.
Analysts say that Shinsegae’s cost-effectiveness strategy for its new No Brand Burger restaurants is behind such growth.
The company managed to lower the price by more than 1000 won (US$0.84) compared to its competitors while maintaining similar quality.
Driving on without a stop, Shinsegae Food is planning to expand its stores and even pursue a franchise business. As of the end of last month, sales at No Brand Burger exceeded 350,000 units.
In other words, four stores have sold more than 100,000 burgers a month on average, including the first No Brand Burger store in Seoul, which opened in August. Each store has between 1000 and 1500 daily sales.
In particular, the Hongdae branch has become a popular place with customers waiting in line for more than an hour before eating, as No Brand hamburger has proven to be a draw among younger customers.
The secret to the popularity of No Brand Burger is reasonable prices combined with good taste and quality. The company focused extensively on research and development of the menu. Some 20 chefs from the affiliated food research institute developed the company’s burger offerings over a period of three years.
In addition, the company made the most of its know-how in distributing and manufacturing food products to the fullest extent possible to lower the price.
The price of the No Brand Burger is between 1900-5300 won for a burger and 3900-6900 won for a ‘set’ that includes fried potatoes and a beverage.
Its flagship burger, NBB Signature, which costs 3500 won (US$2.93) for the burger alone and 5300 won for a set, is also cheaper than the 6200 won cheeseburger set at Lotteria, the nation’s number one hamburger franchise.
What is making such prices possible is so-called ‘joint orders’.
Considering that it is not easy to secure a competitive edge in price by placing individual orders for each ingredient, Shinsegae Food placed orders for of all the ingredients at once with the food ingredients managers of each business unit and lowered the prices of the most basic ingredients.
Moreover, it also used its own ingredient factory to secure hamburger patties and pre-prepared vegetables, cleaned and chopped, reducing unnecessary distribution costs.
- Original reporting by D M Park of Korea Bizwire.