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Why do Western premium burgers struggle in Korea?
Burger, fries and a milkshake from Five Guys are seen in this 2023 file photo. Korea Times photo by Lee Seo-hyun
By Park Ung
Experts and consumers cite steep prices as primary hurdle
American hamburgers became a staple for Lee U-chan, a 29-year-old office worker, during his 18-day journey across the United States from the East Coast to the West Coast in 2023.
Back in Korea, however, he finds U.S. chain burgers too expensive to enjoy.
“In Korea, the difference in taste between U.S. chain burgers and Korean brands isn’t big enough to justify the price gap,” Lee told The Korea Times. “If I’m going to spend that much, I’d rather go to an independent restaurant that serves really good food.”
At Lotteria, one of Korea’s largest homegrown burger chains, single burgers typically cost about 6,000 won ($4.06) to 9,000 won. At Five Guys, a U.S. burger chain, prices in Korea are twice as expensive, ranging from about 13,000 to 17,000 won.
Lee’s viewpoint is one explanation for the limited success of Western burger chains in Korea, with many consumers regarding their higher prices as burdensome amid rising living costs.
On Wednesday, Hanwha Galleria, the operator of Five Guys in Korea, agreed to sell the business to a private equity firm, just two and a half years after the brand’s local launch, as it shifts its focus back to department stores.
It is not the first time a Western burger brand has been put up for sale or exited the Korean market.
Super Duper, a San Francisco-based gourmet burger chain, opened its first Seoul outlet in 2022. The company posted a net loss of 1.7 billion won the following year and exited the Korean market this March.
JK Enterprise, which operated Gordon Ramsay Burger — a brand founded by and named after the British celebrity chef — in Korea, sold the business last year after its parent company posted an operating loss of 1.9 billion won in 2023.
The former’s burgers were priced between 8,300 won and 13,900 won in Korea, while most of the latter’s single items were priced in the 30,000-won range, with top-priced menu items reaching 140,000 won.
Burgers, fries and milkshakes from Super Duper are seen in this 2023 file photo. Korea Times photo by Lee Seo-hyun
Western burger brands remain under strain in Korea. Last year, Shake Shack, an American burger chain, recorded an operating loss of 1.9 billion won in Korea, according to the Financial Supervisory Service’s disclosure system.
Other foreign burger chains have faced similar outcomes in the past. Wendy’s, a U.S. brand, entered the Korean market in 1984 and expanded to about 40 outlets, but ultimately exited in 1998, in the aftermath of the Asian financial crisis.
By contrast, domestic burger chains are delivering solid results. Mom’s Touch posted record sales of 417.9 billion won last year, up 14.7 percent from a year earlier. Lotte GRS, which operates Lotteria, reported sales of 536.3 billion won in the first half of this year, up 11 percent from a year earlier.
McDonald’s, an American brand that prices its burgers at levels comparable to domestic chains, also posted strong results in Korea. Its local unit posted record sales of 1.25 trillion won last year, up 11.8 percent from a year earlier.
Choi Chul, a professor of consumer economics at Sookmyung Women’s University, said the Western brands’ struggles reflect a common perception among Korean consumers that burgers are not typically food people pay high prices for.
Choi added that high inflation and a sluggish economy are making consumers more price-sensitive.
“Even younger consumers, who tend to prefer burgers more than other generations, feel the burden when purchasing power is weak,” he said. “In the postpandemic slowdown, there is simply less room in consumers’ wallets.”