SEOUL, Dec. 5 (Korea Bizwire) – South Korea’s restaurant industry is suffering from worsening business conditions due to market saturation and a prolonged economic slowdown, government data showed Monday.
The number of restaurants and pubs in Asia’s fourth-largest economy stood at 650,000 as of end-2014, up 2.4 percent from a year earlier, according to Statistics Korea.
Given the nation’s population of slightly over 50 million, that translates into one restaurant per 78 South Koreans, with nearly 88 percent employing fewer than five workers.
Market watchers attributed the overcrowded market mainly to a jump in the number of retirees entering the restaurant business. Another factor is food franchises’ push to increase affiliated stores.
The overcrowded market has made competition fiercer, driving a large number of restaurants out of the market. According to the statistical agency, 23 percent of the nation’s eateries closed shop in 2014, the highest failure rate among self-employed business areas.
The country’s longstanding economic weakness is also taking a toll on local restaurants as consumers are more unwilling to eat out because of falling income.
In addition, the restaurant industry has been stung by the implementation of a draconian anti-graft law and a snowballing corruption and influence-peddling scandal involving President Park Geun-hye and her longtime confidante.
The law, which took effect on Sept. 28, bans public servants, educators and journalists from receiving free meals valued over 30,000 won (US$26), gifts worth more than 50,000 won or congratulatory or condolence money of more than 100,000 won.
According to a government survey announced in October, the business outlook index for the restaurant industry came to 71 for the fourth quarter of this year, well below the level a year earlier.
Industry experts paint a gloomy picture of the industry for next year. “Influenced by the implementation of the anti-graft law and other negative factors, sales of local restaurants are feared to fall at a steeper click in the coming year,” said an industry watcher.