Fierce Competition
Foreign franchise companies continue to make forays into the Korean market. While various types of food brands such as hamburgers, chicken, and coffee shops have already established themselves locally, there are still many companies that are poised to enter.
However, there is no guarantee that all brands will succeed as there are quite a few that pompously entered the Korean market and then withdrew after suffering failures.
Wingstop, an American chicken franchise, will open its second store near the Seoul National University entrance area on May 25, according to industry sources on May 21. Wingstop has been stably operating its first store after opening it near Sinnonhyeon Station in January. Wingstop plans to quickly open its fourth store within this year as it gains word-of-mouth popularity among office workers and students.
Popeye's, which returned to Korea in December last year after leaving the country in 2020, has also continued its early momentum, operating five stores. The fast food franchise is expanding its stores mainly in Seoul and the Seoul metropolitan area with heavy foot traffic. In the long run, the success of Popeye's will be determined by how it overcomes competition from KFC and Mom's Touch. There are many similarities among them, starting with their menus.
Super Duper, a handmade burger brand brought in by BHC Group, also opened its Hongdae branch in April after its Gangnam branch. About 10,000 consumers visited the second store within five days of its opening. Super Duper, a famous restaurant based in San Francisco, is a direct competitor of SPC Group's Shake Shack. Shake Shack, which opened its first store in Korea in 2016, slowly increased the number of stores and has been operating stably for a long time.
In addition, Five Guys, one of the top three burgers in the United States, is set to open its first store in Korea, and competition in the handmade burger market is expected to heat up. The key will be how well Five Guys can maintain its original flavor.
This summer, Tim Hortons, Canada's “national” coffee shop chain, will arrive in Korea. Tim Hortons, which is characterized by making coffee immediately after ordering, plans to introduce its expertise to the Korean market, operating more than 5,600 stores in 15 countries around the world.
As Korea has seen a boom in entries by overseas franchise companies, there are many brands that have failed and withdrawn from Korea. Most recently, Good Stuff Eatery (GSE), which ambitiously launched the Obama Burger in 2022, took steps to withdraw after five months.
"There is a perception that if a restaurant franchise gets a nod from Korean consumers, the restaurant franchise will succeed anywhere in the world, so many brands try to enter the Korean market as a testbed," an industry insider said. "Brands that are uncharacteristic and not differentiated will inevitably be rejected by Korean consumers."