Sales in the Dining Industry Decreased by Over 1 Trillion Won Compared to the Previous Year During the 2.5-Level Restrictions in August-September
Impact on the Dining Industry Expected to Be Greater Considering Year-End Demand
[Asia Economy Reporter Choi Saeng-hye] As social distancing measures were raised from level 1.5 to level 2, the dining industry is expected to suffer sales losses of at least 1 trillion won.
On the 25th, the Korea Foodservice Industry Research Institute stated, "Due to the recent upgrade in social distancing levels, there are concerns that the dining industry will suffer damage similar to that experienced during the two-week implementation of social distancing level 2.5 starting August 30."
The dining industry views the current level 2 distancing measures as similar to the level 2.5 measures from August to September, and expects greater damage if the situation prolongs. At that time, under level 2.5, franchise coffee shops were prohibited from operating their in-store seating areas, and restaurants were banned from operating after 9 p.m., which are similar to the current level 2 guidelines. Although the current level 2 distancing is planned for about two weeks, the daily number of infections exceeding 300 suggests it may be extended. Furthermore, considering the year-end peak season, the impact on the dining industry is expected to be greater than in August and September.
According to an analysis of Shinhan Card data by the Korea Foodservice Industry Research Institute, in September when level 2.5 distancing was fully implemented, the payment amount for 22 dining sectors including "restaurants and pubs" and the top 5 food delivery apps was approximately 7.1 trillion won, a 13.6% decrease compared to about 8.3 trillion won last year.
The analysis shows this is the second largest drop in payment amounts following the surge in COVID-19 cases in March and April. The number of transactions also decreased by 12%, from about 370 million last year to about 320 million. A dining industry official explained, "If sales have already decreased by more than 1 trillion won based on data from some card companies alone, the overall sales damage to the dining industry, considering other card and cash payments, is estimated to be substantial."
By business, the average monthly sales loss was estimated to be between 5 million and 10 million won. According to a survey conducted by the Korea Federation of Micro Enterprise Associations from August 31 for four days targeting 3,415 general small business owners nationwide engaged in wholesale and retail, dining, and personal services, the estimated monthly damage per business after the COVID-19 resurgence was highest at 31.3% for "5 million won or more but less than 10 million won," followed by 24.5% for "1 million won or more but less than 5 million won," and 19.2% for "10 million won or more." Additionally, 60% of small business owners responded that their sales had dropped by more than 90% since the COVID-19 resurgence.
By dining service type, in-store sales saw particularly sharp declines. According to the Korea Foodservice Industry Research Institute’s "COVID-19 Dining Industry Impact Survey" conducted in the first and third quarters, 90.5% in Q1 and 89% in Q3 of businesses reported decreased sales in "dine-in" services. Coffee franchise companies, whose in-store seating was suspended during level 2.5 distancing, reported about a 30% drop in sales during that period. Some businesses that did not offer delivery services experienced sales declines of more than half.
A representative from the Korea Foodservice Industry Research Institute forecasted, "If level 2 or higher measures are prolonged, massive damage exceeding the level 2.5 period will be inevitable."
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