Broadcaster Jung Joon-ha has said that even while running a sushi restaurant in Seoul’s Gangnam district with monthly sales of around 400 million won (approximately $300,000), fixed costs and raw-material expenses mean his actual profit is not large. With high inflation and shrinking consumption converging, profitability across South Korea’s restaurant industry is deteriorating rapidly, and the delinquency rate on loans to the self-employed has climbed to its highest level in 13 years.<\/p>\n
Jung recently appeared on a YouTube channel run by Kiwoom Securities and advised those preparing to start a business to make careful judgments. “I tell people who think, ‘Should I quit my job and run a business?’ not to make the decision rashly,” he said. “Things don’t always go well.” He explained that while the Gangnam store’s monthly sales reach about 400 million won, once fixed costs such as 32 million won (approximately $24,000) in monthly rent and 45 million won (approximately $34,000) in labor costs and the burden of raw-material prices are subtracted, not much profit remains. “When the weather is as hot as it was this summer, who wants to eat raw fish?” he said. “Then you can run a loss for months at a time.”<\/p>\n
The problem is that this is not a phenomenon confined to a particular sector or to large stores. According to the “Restaurant Industry Management Survey Report” by the Korea Foodservice Industry Association, the Ministry of Agriculture, Food and Rural Affairs, and the Korea Rural Economic Institute, food-ingredient and labor costs at South Korean general restaurants came to 71.6% of sales in 2024. It is the first time the figure has exceeded the 70% line since the survey began. The share, which was 58.8% in 2015, rose every year\u2014to 63.6% in 2019, 66.8% in 2022, and 69.8% in 2023. The restaurant industry generally holds that basic costs should be around 60% of sales for stable operation. Once they exceed 70%, the remaining sales make it hard to cover rent, utilities, and card-processing fees.<\/p>\n
Costs have risen far faster than sales. Average food-ingredient costs at general restaurants rose about 1.8-fold, from 58.73 million won (approximately $44,000) in 2015 to 103.77 million won (approximately $78,000) in 2024, while labor costs over the same period jumped 2.7-fold, from 28.73 million won (approximately $22,000) to 78.98 million won (approximately $60,000). Average sales, by contrast, grew only 1.7-fold, from 148.83 million won (approximately $110,000) to 255.26 million won (approximately $190,000).<\/p>\n
Category20152024IncreaseAverage sales148.83 million won255.26 million won1.7xAverage food-ingredient costs58.73 million won103.77 million won1.8xAverage labor costs28.73 million won78.98 million won2.7xOperating margin25.4%8.7%-<\/p>\n
Note: Based on the “Restaurant Industry Management Survey Report” by the Korea Foodservice Industry Association, the Ministry of Agriculture, Food and Rural Affairs, and the Korea Rural Economic Institute. Operating margin is the 2024 figure.<\/p>\n
Profitability indicators have also retreated sharply. The average operating margin at general restaurants slid from 11.6% in 2022 to 8.9% in 2023 and 8.7% in 2024. Compared with 25.4% in 2015, it has shrunk to about one-third. Kim Seung-il, head of the win-win cooperation team at the Korea Foodservice Industry Association, said, “This year the restaurant industry’s average operating margin will be in the 7% range at best,” adding, “A considerable number of members say their operating profit fell 20\u201330% from last year.” He added, “Even with the same sales, inflation is eating into profits, leaving businesses with less room to hold on.”<\/p>\n
Finances are deteriorating rapidly as well. According to the Financial Supervisory Service’s data on won-denominated loan delinquency rates at South Korean banks as of the end of August, the delinquency rate on loans to the self-employed stood at 0.86%, up 0.09 percentage point from the previous month. Measured on a basis of principal or interest overdue by one month or more, the figure is the highest in 13 years and three months, since 0.92% at the end of May 2013. It is read as a signal that more self-employed people are seeing their cash flow worsen because of cost burdens even when sales hold up.<\/p>\n
Jung’s own business history encapsulates the industry’s changes. He said he opened an indoor street-food stall during the 1997 Asian financial crisis with 20 million won (approximately $15,000) in deposit money and recorded monthly sales of 60 million won (approximately $45,000) at the time. He later expanded into a sushi restaurant, a wine bar, and a raw-fish restaurant, and most recently opened the first South Korean branch of a U.S. Seattle yogurt brand in Godeok-dong, Gangdong-gu, Seoul. He has declared, however, that the yogurt store will be his last new restaurant brand. He had earlier said on a television program that he discouraged a chef considering a business in Gangnam, telling him, “The restaurant business is not easy these days.”<\/p>\n
The restaurant industry is calling for tailored support to prevent further deterioration in profitability. Kim Seung-il pointed to the problem of consumption coupons being concentrated in certain sectors and proposed limiting the scope of support to purchases of agricultural, livestock, and fishery products. He also questioned the effectiveness of support for delivery apps. According to him, of the roughly 780,000 restaurants nationwide, only 220,000 (28%) have used a delivery app even once. Regarding the Ministry of SMEs and Startups’ review of a plan to allocate 120 billion won (approximately $90.5 million) in budget to win-win delivery apps, he urged that benefits reach more self-employed people. Lee Hee-chan, an emeritus professor at Sejong University, stressed the need for policies to prevent overconcentration in self-employment, improvements to the food-ingredient distribution network, and discussion of labor-cost standards suited to the realities of the restaurant industry.<\/p>\n
The restaurant industry is a representative domestic-demand sector that underpins employment and local commercial districts. When cost burdens exceed 70% of sales, almost no net profit remains after rent and utilities, leaving even stores with steady sales exposed to the risk of closure. Rising delinquency rates on loans to the self-employed can also weigh on household debt and the soundness of financial institutions. Industry officials warn that a wave of closures could become reality unless the food-ingredient distribution structure is improved and labor-cost standards reflecting the characteristics of each sector are established.<\/p>\n","protected":false},"excerpt":{"rendered":"
Broadcaster Jung Joon-ha has said that even while running a sushi restaurant in Seoul’s Gangnam district with monthly sales of around 400 million won (approximately $300,000), fixed costs and raw-material expenses mean his actual profit is not large. With high inflation and shrinking consumption converging, profitability across South Korea’s restaurant industry is deteriorating rapidly, and<\/p>\n","protected":false},"author":2,"featured_media":11607,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[9,10,11359,11360,11355,11352,11357,11353,11356,11358,11354],"class_list":["post-11606","post","type-post","status-publish","format-standard","has-post-thumbnail","category-celebrity-chefs","tag-celebrity-chef","tag-celebrity-chefs","tag-delinquency-rate-on-loans-to-the-self-employed","tag-financial-supervisory-service","tag-food-and-rural-affairs","tag-jung-joon-ha","tag-kim-seung-il","tag-korea-foodservice-industry-association","tag-korea-rural-economic-institute","tag-lee-hee-chan","tag-ministry-of-agriculture"],"share_on_mastodon":{"url":"https:\/\/vive.im\/@dnc\/117495728963858156","error":""},"_links":{"self":[{"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/posts\/11606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/comments?post=11606"}],"version-history":[{"count":0,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/posts\/11606\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/media\/11607"}],"wp:attachment":[{"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/media?parent=11606"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/categories?post=11606"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.diningandcooking.com\/chefs\/wp-json\/wp\/v2\/tags?post=11606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}