Lotte GRS’ SKY31 Food Avenue. (Yonhap)
SEOUL, Jun. 24 (Korea Bizwire) — The sluggish food service industry in South Korea is eyeing the newly rising concession market.
A concession refers to the service of providing food and beverages at a multi-purpose facility leased by a certain company.
Hotels and restaurants run by a subcontractor and highway service stations are forms of concessions.
The US$5.1 billion concession market in South Korea is known to have reached an average of 8 percent annual growth. More than 50 percent of the market share is owned by shopping malls and highway service stations.
Drawn by the market’s potential, various companies are scrambling to strengthen their presence in the concession market.
CJ Freshway Corp., CJ Group’s food distribution and catering affiliate, currently runs food and beverage facilities at major country clubs, the National Museum of Korea, and Daemyung Resort, based on the company’s experience of operating resorts, golf courses, and other leisure facilities.
Lotte GRS Co., Lotte Group’s restaurant franchise, has also been growing rapidly in the concession market, expanding sales by 228 percent in 2017, and 121 percent in 2018.
Experts argue that the expansion of the concession market is based largely on the decline ofthe food service industry as well as other outside factors.
“Hospitals and leisure facilities are turning to subcontractors to save labor costs,” said one expert.
“In the meantime, buildings with offices prefer to have restaurants in the basement floor to raise real estate value. There is also larger demand for food and beverages at airports and service stations as the number of travelers is increasing every year.”
The concession market is attractive since it enjoys a special status among other shops for being the only available food and beverage shops in the area.
For instance, it is difficult to find restaurants at airports or service stations besides the designated food and beverage vendors.
“Changes in consumer behavior, however, have led many concession attempts to fail. Exorbitant lease costs may also serve as an obstacle to making concessions,” said one expert.
H. M. Kang (hmkang@koreabizwire.com)
