Despite a sluggish restaurant market, food companies are launching new dining brands and expanding their presence. As consumer sentiment tightens and commercial districts shrink, the food industry is focusing on overcoming declining profitability in manufacturing and securing new growth drivers, leading to renewed interest in the restaurant business.
According to industry sources, CJ Foodville has been aggressively opening locations since launching its Italian bistro brand, Olifepe, in December. Starting with its first store in Gwanghwamun, it has opened additional locations in Yeouido and Pangyo, with the latest store in Gangnam, marking its fourth outlet.
Ourhome's buffet brand, TAKE, is also ramping up its expansion. The Jonggak location, which opened in May, has averaged 750 visitors per day, surpassing 60,000 total visitors within 80 days of opening. Buoyed by this success, Ourhome plans to open a second location in October at the underground space of Lotte World Adventure in Jamsil, featuring over 240 seats.
Efforts to introduce global brands and establish premium platforms are ongoing. Sangmidang Holdings is set to open the first Asian location of the American Mexican brand Chipotle near Gangnam Station, with a second location planned at Shinsegae Department Store in Gangnam, currently undergoing interior renovations. Hanwha FoodTech has introduced a premium dining complex, The Plaza Dining, in Gwanghwamun and recently launched a consolidated membership program, The Platinum Dining, which bundles benefits from its 14 restaurant brands to enhance customer engagement.
The resurgence of the restaurant business among food companies is rooted in the limitations of their manufacturing-centric business structures. Rising costs for raw materials, packaging, and logistics have pushed the cost of sales to 70-80%, but due to price stability and competitive discounting in the retail sector, it has become challenging to reflect these cost increases in product prices.
In contrast, the restaurant sector offers a larger market size than food manufacturing and allows for more flexible adjustments to prices and menus based on market conditions. According to the Korea Rural Economic Institute, the restaurant market was valued at approximately 192 trillion won last year, surpassing the food manufacturing market, which was around 159 trillion won. The ability to create synergies with existing businesses, such as meal services and food distribution, is also seen as an advantage.
In fact, the contribution of the restaurant business to overall performance is increasing. In the first quarter of this year, CJ Foodville's restaurant sales reached 63.5 billion won, a 5.1% increase from the same period last year, accounting for 24.8% of total sales. MZ Seed, a subsidiary of Maeil Holdings that operates coffee brand Paul Bassett and restaurant brands The Kitchen Il Porrno and Crystal Jade, recorded sales of 213.6 billion won last year, marking its first time surpassing 200 billion won. This represents more than double its size since exceeding 100 billion won in 2021, now accounting for about 10% of Maeil Holdings' total sales.
However, there are cautious views on whether the restaurant sector can serve as a long-term profitability shield and breakthrough. The burden of fixed operating costs, such as rent and labor, is significant, and the sector is sensitive to economic fluctuations. Without meticulous cost management and sustained brand competitiveness, the expansion could become detrimental.
Moreover, the recovery of the restaurant market remains unclear. According to the National Data Agency, the restaurant industry business trend index for the second quarter of this year was 78.82, falling below the baseline of 100. The Seoul Business Analysis Service reported that 5,747 restaurants closed in the first quarter of this year, significantly outpacing the 4,701 new openings.
An industry insider stated, "While food manufacturers are strengthening their restaurant businesses to overcome stagnant profitability, the restaurant sector is also directly impacted by high inflation and consumer recession. To achieve stable growth, it is essential to focus on brand differentiation and thorough profitability management rather than merely expanding the number of locations."
* This article has been translated by AI.
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