Coffee nation: No. of cafes in Korea exceeds 100,000 as low-cost franchises expand rapidly

Mega MGC Coffee, Compose Coffee and Paik's Coffee shops are seen next to each other in central Seoul, Sunday. Yonhap

The number of coffee shops in Korea has surpassed 100,000 as low-cost franchise brands become increasingly popular, with more people getting into the business, according to Statistics Korea and market observers, Sunday.

The figure is nearly double the combined number of the four major convenience store chains here, some 55,000, and the number of coffeehouse franchise brands, 886, is more than that of fried chicken brands, 669.

According to statistics, Korea had 100,729 coffee shops as of the end of 2022, up 4.5 percent from the previous year and almost double the figure from 2016.

Among them, 84,000 were small businesses, with four or less employees, while the rest were franchise shops.

The shops registered 15.5 trillion won ($11.2 billion) in sales combined as of 2022 and employed 270,000 workers.

The market growth has been backed largely by the rapidly growing popularity of low-cost coffee franchise brands in the past few years. Mega MGC Coffee, the most popular brand among the country’s big three low-cost coffee franchise brands, surpassed its 3,000th store in May. Compose Coffee has launched over 2,570 shops as of May and Paik’s Coffee, has over 1,220.

These brands promote themselves as being convenient and accessible, with affordable prices and large-sized drinks. Such features distinguish the brands from previous top sellers in the local coffee shop industry such as Starbucks, A Twosome Place, The Coffee Bean as well as more premium brands like Paul Bassett.

The coffee shop market’s growth has increased the country’s import of coffee beans. According to Korea Customs Service, Korea last year imported $1.11 billion worth of coffee beans. The figure is 1.7 times that of 2019 and 2.7 times that of 2014.

As of May, coffee imports registered $463 million, a 2.6 percent jump from the previous year. As to weight, this year has seen over 84,000 tons, an 11.4 percent year-on-year increase.

Behind such market expansion is the relatively affordable cost of launching a coffee shop. A person can open a franchise shop with 100 토토 million won and a non-franchise shop, with even less capital. The fact that the business does not require a specific technique also contributes to more people flocking to the industry.

There are, however, mixed views toward the market. Some officials from coffee franchise companies here speculated that the market has so far shown a steep rise in growth in a short period but will soon start showing a slower pace in growth.

“Having more shops than convenience stores altogether is just too much,” one official said. “I think the market has nearly saturated.”

Another official said that concerns about the market being too saturated have been ever present since 2010 and are hardly news. “The number has been increasing rather safely, step by step. This means that there have always been enough demands for the market,” the official said.

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