Korea HRI foodservice overview
18 February 2016
The Korean Hotel, Restaurant and Institutional (HRI) foodservice sector was examined by the US Department of Agriculture (USDA) in a recent GAIN report. The report shows a growing industry with improving demand for new products.
The growing number of dual-income households and single person households has contributed to the expansion in consumer spending outside the home relative to retail purchases for in-home consumption. Dual income houses result in higher disposable income, and less time for home cooking, while single person households often find it more efficient to eat outside the home.
The USDA report indicates that HRI sector sales lifted 5.4% in 2014, to 83.8 trillion won (around US$79.6 billion), while expansion is mostly in large-scale and franchised restaurants and large distributors, rather than in independent businesses. The distribution sector is expected to consolidate further in coming years – the 12 largest distribution companies currently account for around 10% of sales, which is expected to grow to 15% by 2020.
The foodservice sector is reportedly oversaturated, with around one restaurant for every 100 consumers in Korea, while over 60% of restaurants make less than 10 million won (US$90,000) in sales each year. Extra pressure is applied to the sector by the expansion of home meal replacements from major retailers. These factors are resulting in a greater need for economies of scale in the foodservice sector, which is contributing to the consolidation mentioned above.
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