Soaring Electricity Bills and ‘Cafe Squatters’ Squeeze South Korean Coffee Shop Owners

SEOUL, Aug. 12 (Korea Bizwire) – As the summer heat intensifies in South Korea, cafe owners are feeling a different kind of burn: skyrocketing electricity bills and diminishing profits due to lingering customers. 

Yeo, the 30-year-old owner of a small cafe in Seoul’s Dongjak district, was taken aback after receiving the shop’s latest electricity bill. The 66-square-meter shop, with just seven tables, saw its monthly power costs nearly double from 300,000 won to 570,000 won as temperatures soared. 

“I’m already dreading next month’s bill,” said Kim, 48, who runs a two-story cafe in Yangcheon district. The electricity costs at the cafe exceeded 1 million won last month, eating up a quarter of Kim’s 4 million won take-home pay after rent, franchise fees, ingredients, and labor costs. 

The heatwave, with temperatures hovering around 35°C, has forced cafe owners to crank up their air conditioning. “Cafes need to be cool for customers to come in, and even a slight increase in temperature leads to complaints,” Kim explained.

 

While summer is typically peak season for cafes as people seek refuge from the heat, the rising costs are offsetting potential gains.

The government offers electricity subsidies to small business owners with annual sales below 60 million won, but the maximum 200,000 won yearly support barely makes a dent. 

Adding to their woes is the influx of students on summer break, who often occupy tables for hours while nursing a single, cheap drink. This phenomenon of ‘cafe squatters’ is straining businesses already on tight margins.

A 2019 study by the Korea Foodservice Industry Research Institute found that a cafe starts losing money on a 4,100 won coffee if a customer stays longer than 1 hour and 42 minutes. With students often camping out all day, sometimes even leaving belongings to reserve spots during meal times, cafe owners are in a bind.

“If we block power outlets, students won’t come, and we lose sales. If we allow it, our turnover rate and hourly sales decrease,” lamented one cafe owner. “It’s a lose-lose situation.” 

Some cafes have resorted to posting signs requesting additional orders for stays beyond three hours, but enforcement is challenging. “We can’t just kick them out for not complying,” said one owner, fearing negative reviews. 

The situation is particularly dire for independent cafes relying on regulars and local patrons. Unlike larger chains, they find it difficult to implement stricter policies without risking their reputation for hospitality.

Kim, a 22-year-old part-timer at one such cafe, noted, “It’s common to see one person spread out over a four-person table to study. Often, larger groups come in, look around, and leave because there’s nowhere to sit.” 

As cafe owners grapple with these challenges, some customers are becoming more aware of the issue. “I think patrons should consider their duration of stay and order appropriately,” said one cafe-goer. “It’s the way for cafes and customers to coexist harmoniously.”

M. H. Lee (mhlee@koreabizwire.com)