What Is the Dual Pricing System? The Battle with Delivery App Fees

Recently, the demand for food delivery has decreased, leading many franchise businesses to adopt a 'dual pricing system.'

Recently, the demand for food delivery has decreased, leading many franchise businesses to adopt a 'dual pricing system.' This system sets different prices for delivery and in-store dining to cope with delivery app fees. This article explores the background and current situation regarding the dual pricing system.

What is the Dual Pricing System?

The dual pricing system involves charging higher prices for food delivery compared to dining in-store. Franchises such as 'Frank Burger,' 'KFC Korea,' and 'Popeyes' have recently implemented this system. Frank Burger, for instance, increases the delivery price by 200 to 700 won compared to in-store prices. KFC Korea applies a 300 won price difference for individual burgers and 100 won for chicken and side items, leading to up to 800 won in price differences. Popeyes has set delivery prices about 5% higher than in-store prices.

The Reason: Delivery App Fees

The main reason for implementing the dual pricing system is the burden of delivery app fees. Franchises are forced to set different prices for delivery and in-store dining due to high fees charged by delivery platforms. This has led to many franchises adopting the dual pricing system along with price increases.

Regulation and Response

Consumer dissatisfaction with the dual pricing system is growing, but effective regulatory measures are lacking. The Fair Trade Act considers price discrimination as an unfair practice, but there is no clear regulation for dual pricing. Currently, the best option is to recommend informing consumers about price differences between delivery and in-store prices. The Korea Franchise Industry Association has reported delivery app monopolistic practices to the Fair Trade Commission and is seeking joint action.

Conflict with Consumers

Dual pricing is not exclusive to franchises. A recent survey showed that 58.8% of self-employed businesses set different prices for in-store and delivery orders, and this ratio is expected to have increased due to the delivery app fee controversy. Even with free delivery, higher food prices ultimately burden consumers. It is hoped that a satisfactory resolution to this fee issue will be found to benefit both consumers and businesses.

The dual pricing system, introduced in response to delivery app fees, is causing conflict between consumers and franchise businesses. Effective regulation and fair pricing are needed to address this issue. It is hoped that a solution satisfying all parties will be reached.