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Key Points

South Korea's vibrant food service sector is experiencing an unexpected contraction in the first quarter of 2024. The number of coffee shops has declined for the first time since 2018, signaling potential economic challenges. Convenience stores, restaurants, and other food-related businesses are also seeing reduced numbers due to market saturation and sluggish domestic demand. Economists are anticipating a potential downward revision of GDP growth, reflecting the broader economic pressures facing small business owners.

Key Points: S. Korea Coffee Shops Decline First Time Since 2018

  • Coffee shops dropped 743 stores in Q1, first decline since record-keeping began
  • Convenience stores and restaurants also see significant reduction
  • Average small business sales decreased 0.72% year-on-year
2 min read

Coffee shops, eateries shrinks in Q1 amid sluggish consumption in S. Korea

South Korean coffee shops and eateries shrink amid economic slowdown, marking a significant market shift in Q1 2024

"Market saturation and slowing domestic demand are driving business closures - Industry Official"

Seoul, May 25

The number of coffee shops, eateries and convenience stores in South Korea is on the wane amid a prolonged economic slowdown and sluggish domestic demand, data showed on Sunday.

According to data compiled by the National Tax Service (NTS), 95,337 cafes were in service in the first quarter, down 743 stores from the same period last year, reports Yonhap news agency.

It marks the first time the number of coffee shops has declined since record-keeping began in 2018.

That year, there were 45,203 cafes before the figure jumped to 53,102 in 2019, 62,916 in 2020, 72,847 in 2021, 85,609 in 2022 and 93,913 in 2023.

The number of coffee shops peaked at 96,080 last year before falling this year.

The downward trend also applied to restaurant businesses in general, with the number of fast food chains coming to 47,803 in the first quarter, down 180 shops from a year earlier.

Korean food eateries and Chinese restaurants saw their numbers shrink by 484 and 268, respectively.

The number of convenience stores also slipped 455 on-year to 53,101 shops as of end-March.

Industry officials say a large number of retirees who have jumped into various self-employed businesses are closing down their shops due to market saturation and slowing domestic demand. Some also point to large commission fees for delivery platforms as factors burdening business owners.

The average sales of small business owners in the first quarter were approximately 41.79 million won (US$30,558), down 0.72 percent from a year earlier, according to the Korea Credit Data (KCD).

Meanwhile, the Bank of Korea (BOK) is likely to revise down its gross domestic product (GDP) growth forecast from the current 1.5 percent to around 1 percent or lower at its upcoming rate-setting meeting Thursday, according to a recent Yonhap News Agency survey of seven economists.

—IANS

- IANS

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Reader Comments

R
Rahul K.
Interesting to see this trend in South Korea. In India, we're seeing the opposite - coffee chains and eateries are expanding rapidly in metro cities. But I wonder if we'll face similar saturation soon. The delivery app commissions are killing small businesses here too. 🧐
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Priya M.
This shows how global economic slowdown is affecting even developed nations. In India, our local tea stalls and dhabas continue to thrive while fancy cafes struggle. Maybe Korea should learn from our street food culture that's more affordable and sustainable!
A
Arjun S.
The data shows how quickly markets can change. From rapid expansion to contraction in just 5 years! Indian entrepreneurs should take note - don't just follow trends blindly. Also, 30k USD average sales for small businesses seems quite high compared to India's scenario.
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Neha T.
I visited Seoul last year and was amazed by their cafe culture. Sad to see this decline. Maybe they should promote more budget-friendly options like our chai tapris. Also, their convenience stores (like 7-Eleven) are so much better organized than ours! 😅
V
Vikram J.
This is concerning. South Korea is one of India's important trade partners in electronics and automobiles. If their domestic consumption is slowing, it might affect exports to India too. Hope their economy recovers soon for mutual benefit.
S
Sneha R.
While the article focuses on negatives, let's not forget South Korea still has nearly 1 lakh coffee shops for 5 crore population! That's one cafe per 500 people. In comparison, India has much room for growth in organized F&B sector. Opportunity for Indian brands?

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