Input 2021.04.05 17:46
Standards for providing meals and work, expanding beyond group affiliates to family-owned companies
LG·LS “open from next year”… Inevitable hitting our home
The ability to participate in cafeteria bidding for other group companies is a new opportunity factor, but tensions are growing in the catering industry as it may be necessary to give up the existing cafeteria business rights, which have been in business for a long time, to competitors. In particular, catering companies, which have only received jobs from affiliates for decades without entering into new businesses or developing food, are in a situation of uncertain survival.
On this day, the FTC and large corporations reached an agreement to open the group meal service to the outside, and expanded the standard for companies that provide work to family members, not limited to group affiliates.
The FTC said, “Our Home is a company established separately by Chairman Koo Ja-hak, the third son of LG Group’s late Chairman Gu In-hoe, and is not affiliated with a large corporate group.” Separation of affiliates) and for a long period of time through private contracts, he pointed out. He also criticized Hyundai Green Food, a subsidiary of the Hyundai Department Store Group, that “Hyundai Motors, Hyundai Heavy Industries, and Hyundai Department Store, etc. have been responsible for group catering in Pan-Hyundai.”
Samsung Welstory is the first in the food service industry. Samsung Welstory’s food service sales in 2019 amounted to 1.2 trillion won. Among them, the amount of contract signed with Samsung Electronics was 3736 billion won, which is 30.6% of total sales.
Our second place is also expected to be hit hard. Our Home has been given the right to serve food service from Pan-LG Group through a voluntary contract. Our Home’s 2019 lunch contract with LG Group was 203.8 billion won, and LS Group’s lunch contract amount was 21.4 billion won, which is 29.4% of the total food service sales in 2019 (765.8 billion won).
At the proclamation ceremony on this day, LG Group announced that it will sequentially attach group meal jobs to competitive bidding in accordance with the principle of full opening from next year. LS Group also plans to introduce competitive bidding sequentially from the business site where the contract ends. With Our Home, sales of 2252 billion won (as of 2019) can disappear only with the contract size. Our Home also has a restaurant business such as Shinkai and seasonal flavors (formerly Kisara), but it is in an atmosphere of shrinking due to poor performance. They are in a situation where they have to find new growth engines.
Third place, affiliated company of Hyundai Department Store Group Hyundai Green Food (005440)Even instep fire fell. Hyundai Green Food’s sales of group meals in 2019 amounted to KRW 31.8 billion, which was only 5.1% of the group meal sales of KRW 6287 billion. It increases to 75.5%.
CJ Freshway, ranked fourth, accounted for 8.4% of the 2019 meal sales of 4678 billion won in private contracts with CJ Group affiliates (393 billion won). Shinsegae Food, ranked fifth, posted 72.3 billion won in sales of 30.9 billion won in food service sales in 2019 through private contracts with affiliates of the group. It means that 24.3% of the total sales of catering is from the number of affiliates.
Catering companies will have an opportunity to participate in open bidding for the catering business of other group companies, but the government’s intention is to support small and medium-sized businesses.
An industry official who requested anonymity said, “It is not a blueprint drawn by the government that Samsung Welstory feeds at Samsung business sites and Hyundai Green Food feeds at Hyundai business sites,” and said, “The scale of the catering business of subsidiaries of large corporations will be reduced.” did.
“The decision to open work opens the door to opportunities for independent companies, small and medium-sized businesses, and small business owners engaged in the group catering industry,” said Cho Sung-wook, chairman of the Fair Trade Commission, at the declaration ceremony. “Sharing work is an ESG (environmental environment that improves social contribution and governance) ·Social·Governing Structure) “The cornerstone of management” was emphasized.
There are also concerns that profitability may deteriorate or the quality of meals may deteriorate due to excessive price competition among companies. This is because it is practically not easy for SMEs to introduce the know-how and IT systems that large corporations have accumulated over the years in the catering business. For example, to build a fresh food cold chain system that maintains the entire distribution process from goods receipt to delivery at a constant temperature, significant investment is required, because SMEs do not have the capacity to invest in large-scale facilities.
An official from a catering company said, “The catering business itself has a low entry barrier, but economies of scale are needed to efficiently purchase raw materials for price competitiveness and to efficiently manage logistics and inventory of fresh food, but it will be a difficult area for small and medium-sized businesses.” Said.