South Korea Foodservice Market - Growth, Trend and Forecast (2021 - 2026)

 The South Korean foodservice market is expected to witness a CAGR of 3.47% during the forecast period (2021 - 2026)

The COVID-19 has resulted in a devastating impact in South Korea as the number of people eating out decreased, causing sharp declines in sales. However, the country has witnessed an increase of over 90% in online food product transactions during the COVID-19 pandemic outbreak, but continues to face trade-related challenges. According to a statement by the country’s Ministry of Trade, Industry and Energy (MOTIE), the online sales of food products rose 92.5% in February when COVID-19 infections were at its peak in South Korea.

However, as the restaurants have reopened their dine-in sections to customers after closure for few months as a part of the lockdown imposed by the government to limit the spread of coronavirus disease (COVID-19). In addition, restaurants are undertaking massive efforts to counteract the negative effects of the virus on their businesses. Restaurants have also started to make stricter precautionary measures with regards to health, to ensure cleanliness and safety within their outlets. Such factors are likely to change the market scenario and grow at a significant pace during the study period.

Over long term, the increasing western influence has prompted the Korean consumers to opt for fusion foods and exotic blends of cuisines. The restaurants and cafes have quickly captured this trend and have modified their offerings to suit the evolving palates of the consumers. The restaurant sector in the country includes a wide variety of operators, ranging from American-style fast food chains to more traditional family-owned, single-outlet restaurants.

Key Market Trends

Growing Demand for Online Delivery Services of Meals

Single-person households are increasing at a faster pace, from 5.2 million in 2015 to 5.62 million in 2017 (survey by KOSIS), resulting in switching to out-of-home meal consumption more frequently, in the past couple of years. As convenience remains, an important factor driving the eating habits of South Korean is busy lifestyles. The foodservice operators and other food manufacturers are focusing on developing more convenient and healthier food products. Such evolving factors have led to the emergence of several food delivery applications in the country, as consumers have registered a burgeoning demand for online delivery of meals at their respective workplace or home.

This, in turn, has created a great opportunity for online food delivery applications to provide differentiated order experience to the consumers by adopting various strategies, such as offering discounts and others. The food delivery app is majorly dominated by Woowa Brothers controls, followed by Delivery Hero in the country. Consumer trends depict there has been a fair hike in the penetration of food delivery apps in the last couple of years, which is driving the foodservice market in the country.

Surge in Demand For Fast Food Among Consumers

The market for fast food was recorded as one of the fastest-growing segments in the foodservice market of South Korea. The increase in the demand for the fast-food segment is highly associated with the convenience factor. As Koreans are working for longer hours, they are increasingly valuing the convenience of fast food, while also incorporating healthy eating habits. 

Competitive Landscape

The South Korean foodservice market is highly competitive, with the dominance of independent restaurants by volume, as they offer local cuisine. Local restaurants are trying to expand their presence by opening chain restaurants, wherein global players hold a significant market share by value and are trying to gain a competitive advantage by increasing the number of restaurants. Furthermore, in order attract a higher number of consumers an increasing number of foodservice providers are actively developing new products and launching innovative services, like online food ordering and customizing meal options.

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