Reducing Stores and Strengthening HMR... Food Service Companies Undergoing Structural Reform to Adapt to 'COVID-19'

Untact Consumption Increases, Strengthening Delivery and HMR Instead of In-Store Sales
Olban Profitability Declines, Store Closures... Ashley and Jayeon Byeolgok Opening Delayed

[Asia Economy Reporter Choi Saeng-hye] Large food service companies such as Shinsegae Food, E-Land Eats, and CJ Foodville have undertaken structural improvements in the first half of this year. This is because the domestic spread of the novel coronavirus infection (COVID-19) has continued for more than two months, causing a significant decrease in consumers visiting dining halls and a rapid increase in contactless consumption. Each company has reduced dining brand stores or postponed openings and expanded takeout services and home meal replacement (HMR) businesses.

According to Shinsegae Food on the 24th, the Korean buffet restaurant 'Olban' Daegu branch recently closed, and the Kintex branch will also close at the end of this month. Olban is a dining brand launched by Shinsegae Food in October 2014 with a Korean cuisine concept. Shinsegae Food plans to maintain only three highly profitable Olban locations: Olban Premium Central City, Olban Yeongdeungpo, and Centum City.

Instead, they are expanding the value-for-money (price-performance) 'No Brand Burger' business, which was relaunched in August last year by renewing the existing dining brand 'Burger Plant.' As of this month, there are a total of 24 No Brand Burger locations. A Shinsegae Food official explained, "Since COVID-19, the takeout ratio of No Brand Burger has increased to 47%, achieving high sales."

In the case of E-Land Eats, plans to expand Ashley and Jayeon Byeolgok businesses were revised after COVID-19. Currently, there are 100 Ashley stores nationwide and 38 Jayeon Byeolgok stores. Especially for the Korean buffet Jayeon Byeolgok, the stores and menus were completely revamped, and it turned a profit for the first time last year, but expansion was put on hold due to the spread of COVID-19. In particular, E-Land Retail leased the AK Plaza Guro Main Store building for 10 years starting this January and decided to use it as an NC Department Store, delaying the opening of E-Land Eats dining brand stores that were scheduled to open there.

An E-Land Eats official said, "We plan to accelerate alternative measures due to the COVID-19 situation," adding, "Through Ashley's experience operating a takeout brand, we expect to introduce HMR products without delay."

In the case of CJ Foodville, they have added HMR products applying the Korean buffet brand Seasonal Table and are targeting consumers. They are focusing on building a new business model online instead of the continuously decreasing dining hall stores.

CJ Foodville has been undergoing business restructuring since 2018. The number of Seasonal Table stores has also been steadily decreasing. While there were 54 Seasonal Table stores in 2017, only 15 are currently operating.

Seasonal Table recently expanded its lineup by releasing three new HMR products. ‘Garlic Soy Sauce & Spicy Gochujang Dakgalbi’ features tender chicken thigh marinated in Seasonal Table’s special sauce. It comes in two flavors: a sweet and savory garlic soy sauce and a deliciously spicy gochujang. ‘Soy Sauce Grilled Chicken Wings’ are seasoned with a savory soy sauce, offering an addictive yet mild flavor suitable as a snack for children or a drinking accompaniment. These can be cooked by thawing and using either an air fryer or frying pan.

HMR products can be ordered through the grocery shopping app Market Kurly and are also available for order and delivery via delivery channels such as Baemin Riders and Coupang Eats. In addition to HMR products, there are warm ready-to-eat menu items like ‘Mapo-style Marinated Pork’ and ‘Chuncheon Grilled Dakgalbi.’ Baemin Riders and Coupang Eats are currently running a free delivery tip promotion within a basic distance.