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South Korea Foodservice Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

South Korea Foodservice Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

  • January 2022
  • 109 pages
  • ID: 6227789
  • Format: PDF
  • Mordor Intelligence LLP

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The South Korea foodservice market is expected to witness a CAGR of 3.47% during the forecast period, 2021 – 2026.

The COVID-19 pandemic has resulted in a devastating impact in South Korea as the number of people eating out decreased, causing sharp declines in sales. However, the country has witnessed an increase of over 90% in online food product transactions during the COVID-19 pandemic outbreak, but it continues to face trade-related challenges. According to a statement by the country’s Ministry of Trade, Industry and Energy (MOTIE), the online sales of food products rose by 92.5% in February when COVID-19 infections were at their peak in South Korea.

However, the restaurants have reopened their dine-in sections to customers after closure for few months as part of the lockdown imposed by the government to limit the spread of COVID-19. In addition, restaurants are undertaking massive efforts to counteract the negative effects of the virus on their businesses. Restaurants have also started taking stricter precautionary measures regarding health to ensure cleanliness and safety within their outlets. Such factors are likely to change the market scenario, driving it at a significant pace during the study period.

Over the long term, the increasing Western influence has prompted South Korean consumers to opt for fusion foods and exotic blends of cuisines. The restaurants and cafes have quickly captured this trend and have modified their offerings to suit the evolving palates of consumers. The restaurant sector in the country includes a wide variety of operators, ranging from American-style fast-food chains to more traditional family-owned, single-outlet restaurants.

Consumers’ shift toward Western cuisines and increased online food orders are the key factors driving the South Korea foodservice market. This is increasing the demand in the 100% home delivery/takeaway segment, as it is highly associated with the convenience factor.

Furthermore, capitalizing on the growing demand for home delivery, many quick-service operators, such as Starbucks, have entered the online delivery market by forming partnerships with online delivery applications, like Woowa Brothers.

Key Market Trends

Growing Demand for Online Delivery Services of Meals

Single-person households increased at a faster pace, from 5.2 million in 2015 to 5.62 million in 2017 (survey by KOSIS), resulting in switching to out-of-home meal consumption more frequently in the past couple of years. Convenience and busy lifestyles are important factors driving the eating habits of South Koreans. The foodservice operators and other food manufacturers are focusing on developing more convenient and healthier food products. Such evolving factors have led to the emergence of several food delivery applications in the country, as consumers have registered a burgeoning demand for online delivery of meals at their respective workplace or home.

This, in turn, has created a great opportunity for online food delivery applications to provide differentiated order experiences to the consumers by adopting various strategies, such as offering discounts and others. The food delivery app space is majorly dominated by Woowa Brothers, followed by Delivery Hero. Consumer trends depict a fair hike in the penetration of food delivery apps in the last couple of years, which is driving the foodservice market in the country.

Surge in Demand For Fast Food Among Consumers

The market for fast food was recorded as one of the fastest-growing segments in the foodservice market of South Korea. The increase in demand in the fast food segment is highly associated with the convenience factor. As Koreans are working for longer hours, they are increasingly valuing the convenience of fast food while also incorporating healthy eating habits. The fast-food outlets in South Korea and other quick foodservice restaurants that offer a diverse range of menus at lower prices registered faster sales growth than other consumer foodservice outlets. The South Korean foodservice market is growing due to fast-food operators who are actively launching set-meal menus at competitive prices and constantly offering diverse promotional discounts throughout the year. The expansion of international chains in the country is influencing more young consumers, who are inclined toward Western trends, to visit the outlets.

Competitive Landscape

The South Korea foodservice market is highly competitive, with the dominance of independent restaurants by volume, as they offer the local cuisine. Local restaurants are trying to expand their presence by opening chain restaurants, wherein global players hold a significant market share by value and are trying to gain a competitive advantage by increasing the number of restaurants. Furthermore, in order to attract a higher number of consumers, an increasing number of foodservice providers are actively developing new products and launching innovative services, like online food ordering and customizing meal options.

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