"No More 'Chicken and Beer After Work?'... Thinning Wallets, Company Dinners Disappear"

Prolonged High Inflation in the Food Service Industry Deepens 'Pub Sector Slump'

As consumer spending decreases due to the economic recession and inflation (rising prices), the dining-out industry has fallen into a slump. Analysts say it has returned to the pre-COVID-19 pandemic era. In particular, the decline in the pub industry is prominent.

According to the 2nd quarter dining-out industry business condition index surveyed by the Ministry of Agriculture, Food and Rural Affairs and the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 11th, the 2nd quarter dining-out industry business condition index fell by 3.68 points to 75.60 compared to 79.28 in the 1st quarter.

This index has been stagnant in the 70-point range since the 4th quarter of last year. It has been steadily declining since recording 89.84 in the 3rd quarter of 2022. An index below 100 means that the number of businesses with decreased sales compared to the same period last year exceeds those with increased sales.

(This photo is not directly related to the article.) [Photo source=Pixabay]

The report analyzed, "The dining-out industry has returned to a recession phase prior to the spread of COVID-19."

It added, "Due to the overall national economic recession and worsening employment, more people are considering self-employment such as dining-out businesses, which has intensified competition within the dining-out industry. This phenomenon leads to reduced profits for individual businesses."

Looking at the current index by industry, the business condition index declined in all dining-out industry sectors compared to the 1st quarter. In particular, the decline in the pub industry is notable. By major sector, the pub industry’s 2nd quarter index was 70.93, down 1.25 points from 72.18 in the 1st quarter. Since the 2nd quarter of last year, the pub industry has maintained the lowest index among detailed dining-out industry sectors.

Korean cuisine restaurants also showed a low current index of 73.13 in the 2nd quarter. Chinese cuisine restaurants recorded a 2nd quarter index of 70.74, showing a low level among all detailed dining-out sectors. However, chicken specialty stores had an index of 75.99, slightly higher than the overall dining-out industry index of 75.60. The index for gimbap and other simple food restaurants fell to 74.01. This is interpreted as being influenced by the cost burden due to high prices of key ingredients such as seaweed and vegetables.

(This photo is not directly related to the article.) [Photo source=Pixabay]

The institutional cafeteria sector also recorded the highest current index of 99.11 in the 2nd quarter. As restaurants raised prices due to rising food material costs and labor costs, consumers appear to have started visiting cafeterias.

The decrease in dining-out sales since last year is analyzed to be due to economic uncertainty and inflation reducing consumer spending. As restaurants raised prices due to rising food material and labor costs, this led to a decrease in consumer visits.

Last year, the closure rate of dining-out businesses by city and province nationwide was 10%, up 1.2 percentage points from the previous year. Recording a nationwide closure rate of 10% is the first time since 2005.

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