Why is Compose Coffee adding tteokbokki to its menu?

The country's big-three low-budget coffee brands — Mega MGC Coffee, Compose Coffee and Paik's Coffee — run stores next to each other in Seoul, Nov. 6. 2025. Yonhap

Tteokbokki / gettyimagesbank

Rising costs and intensifying competition among low-budget coffee franchise firms in Korea are forcing companies to expand their non-coffee offerings to stay afloat in the market.

The most drastic measure is Compose Coffee’s plan to introduce tteokbokki (rice cake simmered with red pepper paste) to its menu starting next month. The company said last week it has prepared the launch across more than 3,000 franchisee locations nationwide.

The planned tteokbokki launch by Compose Coffee, one of the country’s three major low-budget coffee brands alongside Mega MGC Coffee and Paik’s Coffee, indicates the company’s current menus may not be sustainable in a competitive market. Compose Coffee has been selling food items like pastries and cookies, but tteokbokki, a popular street food here, is almost an unprecedented venture by any coffee brand.

Low-budget coffee brands, currently selling a cup of hot americano for 1,500 won ($1.03) to 1,700 won, are still major draws for the country’s massive volume of coffee drinkers. The problem is the rise in production costs, which has made it difficult to earn profits.

According to the Korea Agro-Fisheries & Food Trade Corp. on Sunday, Korea last year imported a record $1.86 billion’s worth of coffee beans, a 35 percent increase from previous year when the figure was $1.38 billion.

During the same period, total imports fell by 46 tons to 215,792 tons, indicating that the cost of making a cup of coffee has risen.

Due to worsening climate conditions for coffee bean production in major export countries like Brazil and Vietnam, overall supply declined and bean prices jumped. Last September, ground coffee in the United States reached a record $9.14 per pound, a 41 percent increase from the previous year.

The weakening Korean won is also believed to have contributed to the rising costs here, with the average won-to-dollar exchange rate last year standing at 1,422, weakening from 1,364 from a year earlier.

With low-budget coffee chains already competing in a saturated market, rising costs leave them with less room to compete on price. Major players including Compose, Mega and Paik’s all have raised prices last year.

“With costs continuing to rise, companies have little choice but to diversify into non-coffee menu items that can offer higher margins, as relying solely on coffee sales is no longer enough to protect franchisees’ profits,” an industry official said. “Adding items such as tteokbokki, which does not require a complex cooking process, has become necessary to secure revenue.”

Brands had previously introduced eye-catching dessert menus to attract visitors, including cup bingsu (shaved ice with toppings), waffles and ice cream.

The country’s coffee market is currently considered saturated, with the total number of coffee houses in Korea surpassing 100,000 as of 2022. A quarter of them are operated by franchisees under major brands.