Closed restaurant next to a snack bar firing part-timers next to a coffee shop with lights off

Restaurants Facing Closure Crisis Due to Rent, Labor Costs, and COVID-19 Variables
Part-Time Worker Layoffs Continue... Daily Worker Hiring Market Cools

Due to the impact of the novel coronavirus disease (COVID-19), a temporary closure notice is posted at a restaurant in Jung-gu, Seoul on the 4th. Photo by Kim Hyun-min kimhyun81@

[Asia Economy Reporter Lee Seon-ae] Kim, who runs a restaurant in Pildong, Jung-gu, recently decided to close his business. Facing the burden of rent and labor costs, combined with the variable of the novel coronavirus disease (COVID-19) this year, he judged that he could no longer continue his business. He tearfully said, "After the 31st confirmed case appeared, it was like a lie?there wasn't a single customer," adding, "I went to get a small business loan, but was told that support was impossible due to the large loan amount, and now I have no choice but to close the restaurant."

As 50 days approach since the first confirmed COVID-19 case, self-employed workers are taking a direct hit, which is directly affecting the part-time and daily labor hiring market.

According to a survey conducted by Flea Market on the 7th targeting 2,851 job seekers, 81.9% responded that they "feel the contraction of the hiring market due to the spread of COVID-19." Among them, 49.8% said planned recruitments were postponed or canceled, and 12.2% reported worsening hiring conditions such as wages.

In particular, job postings have significantly decreased in sectors that hire many daily workers, such as restaurants, delivery, and sales. According to Albamon, restaurant-related job postings last month decreased by 10.8% compared to the same period last year, while driving and delivery jobs dropped by 7.7%. Retail and sales job postings also declined by 5.4%.

Lee, the owner of a baekban (set meal) restaurant in Pildong, Seoul, lamented, "After the 31st confirmed case appeared, business was cut in half, and now it's hard to even serve three tables a day," adding, "Daily earnings are only about 50,000 won, so I had no choice but to let go of the part-time server." He further said, "If sales don't recover, I think the only option left is to file for closure."

Lee, who runs a snack bar in Incheon, also said, "It's not just me; most self-employed people are already pushed to the brink," adding, "I think it will be hard to endure until COVID-19 ends, so I reduced the working hours of Lee, who has worked with me for three years, and let go of the serving friend."

The dining-out market has been utterly devastated, and self-employed people facing livelihood crises are enduring by reducing their workforce. According to four survey results released by the Korea Foodservice Industry Research Institute, customer numbers at dining establishments have steadily declined since the first confirmed case on January 20. In a survey conducted over four days from the 25th to the 28th of last month targeting 600 member establishments of the Korea Foodservice Association, the customer decrease rate reached 59.2%. Among the participating foodservice businesses, 95.2% responded that customers decreased after the first confirmed case.

In the third survey conducted over four days from the 18th to the 21st of last month, the number of customers decreased by 32.7%. In the second survey conducted from the 11th to the 14th of last month, 83.0% of restaurants responded that customer numbers had decreased over the past three weeks. In the first survey conducted from the 4th to the 7th of last month, 85.7% of respondents said customers had decreased. The institute explained, "The average customer decrease rates after confirmed cases were 29.1% in the first survey, 26.1% in the second, 32.7% in the third, and 59.2% in the fourth," adding, "Since the announcement of the 31st confirmed case in Daegu on February 18, dining usage rates have significantly worsened."

As more places close temporarily or shorten business hours, the part-time hiring market is also affected. Ediya Coffee recently adjusted the operating hours of its 'Ediya Coffee Lab,' which used to operate until dawn, to ensure the safety of employees and customers amid the rapid increase in COVID-19 cases. Operating hours were shortened from 7:30 AM to 2 AM to closing at 11 PM. Franchisees can adjust their business hours as they wish. Support is provided for temporary closures and shortened hours regardless of franchise contracts. Currently, it is difficult to accurately grasp the status of stores with shortened hours as it is left to the discretion of franchise owners. However, most stores in Daegu and Gyeongbuk are struggling to operate. As of the 6th, 57 stores are temporarily closed.

Coffee Bean Korea also closed two stores in Daegu and shortened operating hours by 1 to 3 hours at about 140 stores in Seoul and about 20 stores in Yeongnam and Honam regions. Starbucks Coffee Korea is also shortening operating hours by an average of one hour at about 400 stores.

Not only franchises but also individually operated cafes are closing one after another. Choi, who quit a cafe in Pildong, Jung-gu, said, "I had no choice but to say I would leave first after hearing that the owner couldn't afford labor costs," adding, "The owner also temporarily closed the cafe, so it is currently closed." He added, "Besides our store, most nearby cafes have adjusted their opening and closing times to shorten business hours, and many have temporarily closed for a month."

Due to the impact of the novel coronavirus disease (COVID-19), a temporary notice of shortened business hours is posted at a coffee shop in Jung-gu, Seoul on the 4th. Photo by Hyunmin Kim kimhyun81@

Self-employed people are worried about the reality of closures. Currently, the closure rate in the foodservice industry is higher than the average closure rate across all industries. The Korea Foodservice Industry Research Institute stated, "As of 2017, it reached 23.1%, nearly twice the average closure rate of 12.6% across all industries," urging, "The government should promptly prepare and implement effective and concrete support measures for frontline foodservice businesses." According to the '2019 Franchise Industry Status' released by the Fair Trade Commission last month, the average lifespan of franchise brands was shortest in the foodservice industry at 6 years and 5 months, and the closure rate was also highest in foodservice (10.8%). After the Middle East Respiratory Syndrome (MERS) outbreak ended, the number of self-employed people in 2015 decreased by 98,000 compared to the previous year, marking the largest decline since the global financial crisis in 2009 (-256,000) and 2010 (-107,000). Kim, who runs a sashimi restaurant in Daerim-dong, Geumcheon-gu, raised his voice, saying, "I doubt we can endure until COVID-19 ends, and closures will surge more than during the MERS outbreak."

Accordingly, the conclusion is that the daily labor hiring market will inevitably freeze. The Ministry of Employment and Labor has eased the requirements for employment retention subsidies for companies affected by COVID-19. However, there are no specific measures for general daily workers. Lee, who recently quit a part-time job at a performance venue, said, "I had to quit because the venue temporarily closed due to the impact of COVID-19," adding, "I have to work part-time while attending school to maintain my livelihood, but honestly, it's very bleak."

This content was produced with the assistance of AI translation services.