Why do coffee shops keep popping up?
By Lee Hyo-sik
Restaurants, and other self-run retail businesses are struggling to make ends meet as households tighten their purse strings to cope with slower income growth and a sluggish job market. But one retail sector has been immune to this prevailing trend.
Riding high on Koreans’ increasing appetite for freshly-brewed, premium coffee, both foreign and local coffee franchises have expanded at an explosive pace across the country over the past few years. Additionally, an increasing number of retirees and those having a hard time finding jobs have opened unaffiliated shops to cater to the growing number of coffee drinkers.
While a few industry watchers say the market has already reached saturation point, most are convinced that the number of franchised and independent coffee houses will continue to draw an upward curve for the foreseeable future. They also expect more baby boomers to open new shops as their post-retirement cash cow.
According to the KB Research Institute, the number of coffee houses reached 12,381 nationwide as of the end of 2011, up 54 percent from 8,038 a year ago. Their combined revenue also increased 60 percent to 2.48 trillion won from 1.55 trillion won over the one-year period.
Korea imported coffee beans, both roasted and unroasted, worth $564.8 million in the first 11 months of 2011, up 70 percent from $332 million the same period a year earlier.
Among the top six coffee franchises, Caffe Bene operated a total of 720 outlets across the country as of last year, with its revenue rising 66 percent to 166 billion won from 101 billion won in 2010.
Angle-in-us came second as the Lotte Group subsidiary operated 555 affiliated coffee houses, followed by Starbucks at 400 and Coffee Bean at 230.
Starting coffee houses has been regarded as one of the easiest self-employed businesses for people of any age. In particular, financially-affluent retirees who need a new source of income have shown growing interest in entering the sector, according to a researcher at the KB Research Institute.
He said investors are also attracted to opening cafes because of its relatively low entry barrier, projecting that more shops will continue to sprout up.
Kim Heuy-il, spokesman for Caffe Bene, echoed the KB researcher’s view, saying that more new coffee houses will open their doors.
``When we thought of drinking coffee in the past, we conjured up a cup of instant coffee coming out of a vending machine or an old teahouse called `dabang.’ But these days, coffee houses are a place of luxury,’’ Kim said.
The spokesman said a cafe is not a place only for drinking coffee. ``It has become the most popular social venue where people interact with friends and family members over a cup of coffee. Or coffee drinkers can read books, surf the Internet or study and work. Our outlets and similar coffee shops have become a leisure and cultural hub for Koreans, both young and old,’’ Kim said.