Shared kitchens are known as a breakthrough business model with higher advantages in a niche market using minimum capital, with a higher chance of success. (image: SIMPLE PROJECT & Co.)
SEOUL, Oct. 28 (Korea Bizwire) — Experts are concerned that shared kitchen services will only maximize profits for delivery businesses, while undermining the overall competitiveness of the food service industry.
According to a study commissioned by the Korea Agro-Fisheries & Food Trade Corporation and conducted by the Korea Food Service Industry Management Institute (KFIM), the shared kitchen service market in South Korea, combining both public and private sectors, has reached 1 trillion won (US$854 million) in size.
Experts estimate that there are around 30 shared kitchen services in South Korea. Approximately 10 to 20 new stores are expected to enter the market this year.
Once 20 more stores open in the next two years, the number of founders in the shared kitchen service industry is expected to reach 13,000 people.
However, obstacles remain for shared kitchen services to settle in.
The South Korean government plans to conduct an overall review of the existing legislation on food and sanitation to allow B2B businesses, which may bring about strong opposition from restaurants and other food vendors that have been leading South Korea’s food service industry.
Since most shared kitchen services are run based on delivery services, some experts are calling for the creation of realistic standards for the cost of using delivery apps and services.
Currently, delivery fees account for roughly 22 or 23 percent of a single order, which comes as a heavy financial burden for a lot of shared kitchen services.
Shared kitchen users are concerned that, as much as it is easy to start a shared kitchen, entrepreneurs stand little chance of success, and that the market may fall into the traps of quantitative, not qualitative, expansion.
They also complain that profit margins typically fall short of expectations, despite high satisfaction with the low investment costs and other services provided by shared kitchen services.
“The shared kitchen market is still in its infancy, and we have to focus our efforts on building durable infrastructure so that shared kitchens can grow to form a healthy industry that has positive impacts on the food service industry in general,” said a researcher from the KFIM.
H. M. Kang (hmkang@koreabizwire.com)
