Late-Night Closing Convenience Stores Increase... Unmanned Conversion Also on the Rise

[Asia Economy Reporter Yuri Kim] Nearly one in five convenience stores does not operate during late-night hours. Every time the minimum wage rises, stores close at night or switch to unmanned operations due to labor cost burdens. Recently, the number of '24-hour convenience stores' has been decreasing annually as customer traffic has also declined due to the impact of COVID-19.

◆About 20% Close During Late Night

According to the convenience store industry on the 14th, the proportion of GS25 stores not operating during late-night hours increased annually from 13.6% in 2018 to 14.7% in 2019 and 16.4% in 2020. As of the first half of this year, it rose to 18.1%. Seven Eleven also showed an increasing trend, with the percentage of stores not operating during late-night hours at 17.6% in 2018, 18.4% in 2019, and 21% in 2020. CU's proportion of stores closing or operating unmanned during late-night hours was 19% in 2018, 20% in 2019, and 20% in 2020.

The number of 'hybrid stores' that switch to unmanned operations only at night is also increasing. The number of unmanned stores among the four major convenience store chains in the first half of the year was 990, accounting for about 2.19% of the total 45,277 stores (as of the end of last year). GS25's unmanned stores surged from 16 in 2019 to 181 last year and 430 in the first half of this year. CU also increased significantly from 90 in 2019 to 200 last year and 280 in the first half of this year. Seven Eleven's unmanned stores also grew substantially from 17 in 2019 and 46 last year to about 130 in the first half of this year.

◆Late-Night Unmanned Operations Due to Labor Cost Burden

The industry says the rapid increase in the minimum wage is behind the rise in late-night unmanned stores. Labor costs for late-night part-time workers working about 10 hours reach around 3 million KRW per month, meaning the profits earned from operations must be paid entirely as wages. An industry official said, "When the cost-to-profit ratio deteriorates significantly, decisions such as closing during late-night hours are made in consultation with headquarters," adding, "There is an analysis that customers will not return to a store if it is closed on their third visit, so options to operate unmanned while remaining open are being considered on a store-by-store basis."

The number of stores closing or switching to unmanned operations at night is expected to increase further. The Korea Convenience Store Owners Association issued a statement yesterday after the 2022 hourly minimum wage was set at 9,160 KRW, saying, "20% of convenience stores are loss-making stores that cannot pay labor costs and rent," and explained, "The average net profit of franchise stores is just over 2 million KRW. Until now, store owners have been reducing labor costs by increasing working hours, but with the increased minimum wage applied next year, the number of such franchise stores will increase."

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