Photo = Yonhap News
Last year, it was found that Starbucks and other major franchises (including directly managed) coffee shops had a closing rate of around 1%. Due to the new coronavirus infection (Corona 19), large franchises were only given take-out measures, but they were relatively less hit by quarantine regulations.
On the other hand, the so-called’town cafe’, which is not part of a major franchise, had a closing rate of 13%. In particular, small cafes with a relatively large proportion of fixed costs were hit directly by the corona crisis. Still, the polarization of cafes is intensifying with the coronavirus incident in a situation where the closing rate is increasing.
Starbucks closing rate of 1.3%… 12.8% of neighborhood cafes
Among the coffee shops that closed last year,’Other’, which is a neighborhood café, had a closing rate of 12.8%, above the average. This is in contrast to the 1% closing rate of major franchise cafés such as Starbucks. Graph = Reporter Shin Hyun-bo, Hankyung.com
Percentage of coffee shop closures by city and province. Last year, the total proportion of business closures in the metropolitan areas such as Seoul, Gyeonggi, and Incheon was 52.6%, an increase of 1 percentage point from the previous year. /Graph = Reporter Shin Hyun-bo, Hankyung.com
On the 3rd, Hankyung.com News Lab analyzed data on local administrative licenses from the Ministry of Public Administration and Security. As a result, last year’s coffee shop closure rate (number of closed stores/total stores) was 11.6%, down 1.2 percentage points from the previous year. At first glance, the situation at coffee shops seems to have improved, but looking at each company, the heebi are mixed.
Among the representative franchises last year, the place with the lowest closing rate was Mega Coffee. Mega Coffee’s closing rate was 0.7%, down 0.3 percentage points from the previous year. Only seven of the 986 stores were closed.
It was followed by Starbucks. The closing rate was 1.3%, down 0.2 percentage points from the previous year. Baekdabang (1.3%) and Twosome Place (1.7%) also recorded closeout rates of 1%. This was followed by Idiya (2.1%), Hollis (5.7%), Tom & Toms Pascucci (6.9% each), Paul Bassett (8.7%), and Yogurpresso (10.8%). Of these, the only place where the closing rate increased from the previous year was Idiya.
The place where the business closure rate has risen the most is coffee beans. The coffee bean closing rate was 43.8%, up 29.6 percentage points from the previous year. A whopping 57 of the 130 stores were closed. On the other hand, there were only 5 openings.
Excluding major franchises, the closing rate of cafes in the neighborhood corresponding to’Other’ was 12.8%, exceeding the average (11.6%). In terms of proportion, the proportion of’Other’, excluding major franchises, reached 94.1%. Compared to the previous year (94.2%), it was down 0.1 percentage points, but compared to 2018 (92.5%), the closing rate is believed to be on the rise.
The proportion of business closures by province and city is Seoul (22.8%), Gyeonggi (24.2%), and Incheon (5.6%), exceeding 50% in the metropolitan area alone. The total number of metropolitan areas increased by 1 percentage point from the previous year. It is confirmed that the damage to cafes in the metropolitan area increased as a result of the strengthened social distancing conducted in the metropolitan area last year.
There are fewer and fewer customers… Competition is fierce… The fixed cost increases
Experts point out that the business environment deteriorated as the burden of labor costs, reduced working hours, and shortened business hours overlapped, and the relatively weak neighborhood cafes were shaken as the rent rose.
In 2019, just before the coronavirus, small business owners found that due to management difficulties △declining commercial districts (45.1%) △ intensifying competition (43.3%) △ raw material cost (30.2%) △ minimum wage (18.0%) △ rent (16.2%) I picked it up.
In the midst of this, it is pointed out that when the corona crisis broke out last year, the number of places that could not endure and close the door increased sharply.
On the other hand, it is evaluated that large-scale franchises were able to manage costs efficiently through an enterprise resource management system, and absorbed the shock through various innovations. Korea’s Starbucks introduced the world’s first smart ordering system,’Siren Order’, to reduce waiting time during congestion.
Although the floating population has decreased, coffee demand has rather increased, mainly among the Zipkok, which is an analysis that it is an opportunity for large-scale franchises such as Mega Coffee with a relatively diverse menu, low prices, and a solid delivery network.
Choi Seong-il, chairman of the Korean Coffee Roaster Association, said, “It is necessary to select and support companies that have suffered severe damage as the scale of damage varies from store to store depending on factors such as franchise or non-franchise, and whether takeout or delivery business was possible.”
The Institute of Land, Infrastructure and Transport said, “In spite of the various policies of the government, the damage to most commercial districts is worsening.” “I said.
Shin Hyun-bo, Hankyung.com reporter [email protected]