Shared Kitchens, the Heated 'Jamsil Battle'

Among Seoul's autonomous districts with a population of 670,000, the largest... Commercial area dense with single-person households and large apartment complexes
Popular due to strategies maintaining price and quality

Ghost Kitchen Songpa Branch

# Kim Kwang-hyun (alias), who works in food delivery, mainly operates in Songpa-gu, Seoul. His work begins when orders are received via smartphone and he heads to the restaurant. Recently, however, he has been visiting so-called 'shared kitchens' where about 20 kitchens are gathered in one place much more frequently. Because multiple ordered foods can be picked up at one location, shared kitchen food delivery orders are popular among riders.

Following his route, there is a 'ghost kitchen' with about 25 kitchens of around 20㎡ each on the basement first floor of Seokchonhosu Hyosung Harrington Tower, overlooking Seokchon Lake. It opened last month. In Seokjeong Building in Bangi-dong food alley next to Seokchon Lake, there is a shared kitchen called 'Garage Kitchen.' Going down Ogeum-ro from there, there is 'Simple Kitchen' Songpa branch. Recently, 'WeCook' opened its Songpa branch right next to the Seokchon-dong ancient tombs nearby. Four major shared kitchen companies in Korea have established themselves around Seokchon Lake.

Jamsil is emerging as a battleground for shared kitchens, which are considered a new business model. This is because the commercial area includes many single-person households, large apartment complexes, officetels, lodging facilities, Seokchon Lake, and Hangang Park, all within delivery zones. It is easy to expand business by applying the sharing economy model to the food service industry.

◆Optimal for delivery-specialized food businesses due to many 'single-person households' = The reason shared kitchen companies prefer Jamsil is based on demographic data analysis. According to the Ministry of the Interior and Safety’s resident registration population status, as of January this year, Songpa-gu’s population is 676,341, the largest among Seoul’s 25 districts. In addition, the number of single-person households, which directly relates to delivery demand, ranks in Seoul’s 'Top 3.' As of 2018, Songpa-gu had 63,451 single-person households, following Gwanak-gu and Gangseo-gu. In 2015, it had fewer single-person households (53,481) than Gangnam-gu (61,897), but recent statistics show a remarkable increase surpassing Gangnam. Although Gwanak-gu has the most single-person households, the average spending per food order is low, making it difficult to penetrate the market. Jamsil is different. The industry explains that strategies maintaining price and quality work here. This is also why Coupang, Market Kurly, and Baedal Minjok first launched their services in Songpa-gu.

Within Songpa-gu, the areas with many single-person households are narrowed down to five neighborhoods: Seokchon-dong, Jamsilbon-dong, Samjeon-dong, Bangi 2-dong, and Songpa 1-dong. For this reason, shared kitchen companies have settled near Seokchon Lake, which can serve as a base in these five neighborhoods. A Ghost Kitchen representative explained, "Delivery food costs increase as the distance grows, so effective orders are within a 2 km radius, and delivery demand in this area is most important."

Small-scale entrepreneurs who have entered shared kitchens are preparing food at the WeCook Songpa branch.

◆Location conditions that increase delivery demand = The preference for Songpa by shared kitchens is also due to the presence of many large apartment complexes and clustered officetels, as well as Seokchon Lake and Hangang Park being within delivery zones, resulting in steady food delivery demand regardless of lunch, dinner, or weekends. Seo Hae-sung, CEO of Marahao, which operates in Ghost Kitchen Songpa branch, explained, "With not only apartment complexes but also the Munjeong-dong Biz Valley and Legal Town developing, many companies are moving to Songpa, greatly increasing food delivery demand." Seo, who operates seven stores in Seoul under brands like 'Huoguohao' and 'Marahao' and has stores in department stores, added that market research highly evaluated Songpa-gu’s locational competitiveness.

WeCook also highly values Songpa-gu’s location and recently opened an 1800㎡ shared kitchen in Jamsil. This shared kitchen, which has specialized facilities on each floor from basement first floor to fifth floor tailored to food types to improve production efficiency, is specialized for food manufacturing and distribution. According to WeCook, its proximity to the southeastern logistics complex of Songpa-gu offers geographical advantages for product distribution and food ingredient inflow and outflow. Kim Hee-jong, head of WeCook, said, "With the recent rapid increase in online food entrepreneurs, demand for shared kitchens to sell fresh foods and others is growing. In response to these needs, we opened a shared kitchen in Songpa with customized designs suited to popular food types."