"6 out of 10 Small Business Owners in Accommodation and Food Services Are Considering Temporary or Permanent Closure"

Korea Federation of SMEs Surveys 300 Small Businesses in Accommodation and Food Service Industries
58.6% of Small Businesses in the Capital Area and 55.8% in Provinces Contemplate Temporary Closure or Shutdown
Expected Sales Improvement in July-August Dashed... Majority Forecast Decline After Level 4 Restrictions Raised

[Asia Economy Reporter Kim Bo-kyung] Recently, due to the escalation of social distancing measures, 6 out of 10 small business owners in the lodging and restaurant industries are considering temporary closure or permanent shutdown.

The Korea Federation of SMEs announced the results of an 'Emergency Survey on the 4th Wave of COVID-19' conducted from the 12th to the 15th, targeting 300 small business owners in the lodging and restaurant sectors, on the 18th.

Due to difficulties in business operations following the recent escalation of social distancing levels, 57.3% of small business owners reported considering temporary closure or permanent shutdown. Among them, 24.0% responded that they are 'seriously considering it,' and 33.3% said they are 'considering it.'

By region, 58.6% of small business owners in the Seoul metropolitan area and 55.8% in other regions answered that they are contemplating temporary closure or permanent shutdown.

The combined sales of small business owners in July and August averaged 79.19 million KRW in 2019, before the outbreak of COVID-19, but dropped to an average of 42.34 million KRW last year, a 46.5% decrease compared to the previous year.

Before the spread of the 4th wave, due to the easing of quarantine rules and expanded vaccination, small business owners in the Seoul metropolitan area initially expected their sales in July and August this year to increase by 16.4% compared to the previous year, reaching 45.94 million KRW, while those in other regions expected a 12.5% increase to 51.43 million KRW.

However, as the situation changed and the 4th level of social distancing was applied in the Seoul metropolitan area, 67.3% of small business owners there forecasted that their sales in July and August this year would decrease by more than 40% compared to initial expectations. Among them, 33.3% expected a decrease of '40% or more but less than 60%', and 34% expected a decrease of '60% or more.'

Small business owners in other regions anticipated that if the social distancing level were raised by one step from the current level, 42.8% of respondents expected their July and August sales to decrease by '20% or more but less than 40%' compared to expectations. Additionally, 27.5% predicted a decrease of '40% or more but less than 60%.'

The biggest factor negatively affecting sales was 'COVID-19 resurgence,' cited by 89.6%. Following that were reduced consumer sentiment (6.0%) and minimum wage increases (3.7%) as factors negatively impacting sales.

When asked about difficulties due to the prolonged COVID-19 situation and improvements needed in support measures for small business owners, 'support policies such as tax and four major social insurance reductions' received the highest number of mentions with 122 cases.

Related suggestions included 'tax reductions and utility bill relief,' 'strengthening and extending the period of small business loans,' and 'expanding and reinforcing small business support funds.'

Choo Moon-gap, Director of Economic Policy at the Korea Federation of SMEs, stated, "With the intensification of social distancing due to the full-scale 4th wave of COVID-19, a sharp decline in sales for self-employed and small business owners is inevitable."

He added, "We must expand loss compensation to support those facing a sales cliff and worrying about daily survival."

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