SPC, which runs the nation’s largest bakery franchise Paris Baguette and makes Shany and Samlip brand bread, on Tuesday retracted its price hikes for 66 Samlip products amid the government’s high vigilance on processed food prices.

Having raised the prices of products such as chocolate roll cakes and chestnut manju supplied to supermarket chains by 100 won or 200 won ($.09, $.18) on Feb. 21, SPC decided to take it back less than two weeks later upon negative news coverage.

“We concluded that this wasn’t the right time to raise prices,” SPC spokesman Park Kyong-bae said.

The company said it will reimburse the differences for products that were already delivered to the supermarkets.

The fuss over 100 won or 200 won has left many industry observers wondering if the government’s initiative to get food prices under control has put too much pressure on companies or if SPC was overreacting. Bakery franchises last month were barred from opening new stores within 500 meters from each other.

The Fair Trade Commission and the National Tax Service vowed last week to act upon price hikes by food processing companies deemed to be exorbitant, a day after President Park Geun-hye warned against unfair price increases of daily necessities in her first meeting with top aides.

Flour producers including DongA One Corp., CJ CheilJedang, Daehan Flour Mills and Samyang have raised flour prices by between 8 and 9 percent since December.

The increased flour price, however, was not a major factor for the product price hikes since flour takes up only about 14 percent of bread production costs, according to Park.

“We had raised the prices of 66 out of 466 Samlip products, because most of them were posting losses,” Park said.

“The most popular products such as white bread and cream buns were excluded from the price hikes. We also deferred raising prices of products sold at convenience stores and large discount stores.”

SPC is expected to hold price increases for bread it supplies to catering companies such as Our Home, fast food chains and coffee shops as well.

“Despite falling profitability due to surging prices of ingredients, labor costs and fuel costs, SPC had refrained from raising prices in consideration of the burden on consumers and government efforts to keep food prices under control,” Park said.

“But with our operating profit-to-sales ratio marking only 1.5 percent last year, we reached our limits and had no choice.”

SPC has not raised the factory prices for Paris Baguette products, but prices at several stores inched up in January.

SPC gives out a guideline on prices, but the franchised store owners, who face different operational costs depending on their locations, decide their own product prices.

By Kim So-hyun (sophie@heraldcorp.com)