[Exclusive] Prices of Commercial Cooking Oil and Delivery Fees Soar Since Early Year... Dining Out Costs Keep Rising Sharply

Sharp Rise in US Soybean Prices... Food Companies Drastically Increase B2B Cooking Oil Prices
Delivery Service Fees Raised Up to 1,000 KRW Per Order
Self-Employed Say "Food Price Hikes Unavoidable"
Outlook Pessimistic... Restaurant Industry Research Institute Warns "Unprecedented Recession Expected This Year"

[Asia Economy Reporter Choi Saeng-hye] "The price of cooking oil, which I use more than three bottles a week, has increased by more than 2,000 won per bottle over the past few months. Labor costs have doubled since I started the business in 2010, and delivery agency fees keep rising day by day, so every new year brings more worries. I had no choice but to raise menu prices by 2,000 won starting this month." (Joo Seong-ik (55), owner of a chicken franchise in Dongjak-gu, Seoul)

From the beginning of the new year, the prices of cooking oil and delivery agency fees have been rising one after another, causing fluctuations in dining-out costs. According to the industry on the 9th, due to the sharp rise in U.S. soybean prices during the year-end and New Year period, the prices of commercial-use (B2B) cooking oil from major domestic food companies have all increased simultaneously. Sajohapyo raised the ex-factory price of 18ℓ commercial cooking oil by about 500 to 1,000 won each in November last year and this month. Dongwon F&B increased the ex-factory price by about 10%, and Ottogi by 5%. CJ CheilJedang and Daesang replaced price increases by reducing discounts on commercial cooking oil prices. The actual price increase is about 4% each. Samyang Corporation is also considering raising ex-factory prices.

A food industry official stated, "Since the end of last year, the international market price of soybeans has risen, leading to an increase in cooking oil prices." Until recently, China had banned imports of U.S. soybean oil due to the U.S.-China trade dispute, causing international soybean prices to drop significantly, but with the recent resumption of imports, soybean costs have recovered. As a result, soybean oil prices are also recovering. Other factors affecting the rise in soybean prices include weather and harvest volume issues, the weakening of the U.S. dollar, and the overall upward trend in raw material prices.

Starting this year, delivery agency fees nationwide, including in Seongbuk-gu, Seoul, and Uijeongbu-si, have increased by about 100 to 1,000 won per delivery. Ko Eun-young (pseudonym, 39), who runs a pizza shop in Uijeongbu-si, Gyeonggi-do, said, "The delivery agency we contracted with raised the delivery fee by 800 won per order starting from the 1st. We have to use it more than 20 times a day, so the labor cost burden is too high."

Many dining establishments have already raised menu prices due to the burden of rising prices and labor costs. A chicken gangjeong restaurant in Incheon raised its dine-in menu prices by 1,000 won and delivery menu prices by 4,000 won starting from the 1st. A restaurant in Seocho-dong, Gangnam-gu, raised the pizza chicken set price from the basic 23,000 won to 25,000 won starting from the 1st. A chicken restaurant in Gwangsan-gu, Gwangju, began charging a 1,000 won delivery fee even for short distances starting from the 1st.

Many self-employed business owners plan to start full-scale price increases from April. Concerns are spreading over increased expenditure burdens as Korea’s top delivery app, Baedal Minjok, revises its commission system. Oh Hyo-young (pseudonym, 41), who runs a Japanese restaurant in Gangnam-gu, Seoul, said, "When you add the brokerage fee for the newly introduced open service, external payment fees, and VAT, about 10% of sales will be lost to commissions. I think I will have to raise menu prices by about 1,000 won starting in April."

Source: Korea Foodservice Industry Research Institute

Meanwhile, the dining-out market is expected to continue its sluggish trend this year following last year, deepening the sighs of self-employed business owners. In the recently published '2019 Korea Dining Industry Summary' report by the Korea Foodservice Industry Research Institute, Kim Sam-hee, head of the research office, stated, "The economy in 2020 is expected to be worse than the previous year, and the foodservice industry is also forecasted to face an unprecedented recession."