'Ban on gatherings of 5 or more in large restaurants' is a death sentence... Small restaurants already on the brink
Temporary closures due to rent and labor costs cause huge damage... Fear of Level 3 restrictions widespread
"Half-hearted distancing measures only worsen self-employed losses"... Must overcome shutdown fears
As the number of confirmed cases of the novel coronavirus infection (COVID-19) rapidly increases in South Korea and the implementation of Level 3 social distancing measures is under consideration, a rental notice is posted at a restaurant located in a food street in Seoul./Photo by Kim Hyun-min kimhyun81@
[Asia Economy Reporter Lee Seon-ae] From the first day (24th) of the year-end and New Year holidays of 2020, which continued from Christmas to Lunar New Year, the highest number of confirmed cases was recorded. On the 26th, joyful carol music disappeared from various commercial districts in Seoul, and the streets created a desolate atmosphere with almost no passersby. It was difficult to find customers in open stores, and every other store had signs saying 'Temporary Closure' or 'Lease Inquiry.'
Giving Up Year-End and New Year Business is a 'Death Sentence'
Mr. Kim, who runs a Korean restaurant in Seodaemun-gu, bowed his head, saying that moving from his original location to a slightly larger place, which is his current store, two years ago was his biggest regret. The amount he has to pay monthly for rent and labor costs exceeds 15 million won. In December, the store was fully occupied with various year-end parties and gatherings, but recently, he has not received any group customers of 10 or more. Since social distancing was raised to level 2.5 on the 8th, there have been no tables occupied from 8 p.m., and he closes business an hour earlier than the curfew (9 p.m.). Mr. Kim said, "I regret not moving to a smaller place to reduce fixed costs and endure a little longer," adding, "Now, with the ban on gatherings of five or more, even the few customers who came in groups of two or three have stopped coming, and I feel completely at a loss about what to do."
After enduring two months of social distancing during the second wave of the novel coronavirus infection (COVID-19) in August, dining self-employed business owners are pushed to the edge and facing a harsh winter. Despite the third wave and the continuation of level 2.5 social distancing for two weeks, an administrative order banning private gatherings of five or more people was issued from midnight on the 23rd in the metropolitan area including Seoul, Gyeonggi Province, and Incheon, lasting until January 3 of next year. It is tantamount to a 'death sentence' to give up the most vibrant year-end and New Year business, and the scene is filled with groans and despair. The location was moved to Mapo-gu.
Mr. Lee, who runs a Japanese restaurant in Mapo-gu, said, "After the upgrade to level 2.5, I considered temporary closure, but I am operating to at least serve the few customers who come," adding, "I sent all employees home and am running the store with my wife, but the rent date comes without fail, which is despairing." He continued, "In the first half of the year, the landlord waived two months' rent, which gave some breathing room, but he also has no other income, so further consideration is difficult," adding, "Given the atmosphere of the gathering ban, customers will inevitably decrease further, and the problem is the fear that even stricter distancing measures such as a ban on dining in might be implemented."
Mr. Jang, who runs a snack bar in Jongno-gu, also said, "Due to circumstances, we find it difficult to establish a delivery system, so we barely survive by offering takeout and in-store sales, but small-scale restaurants are already devastated," adding, "We only hope that dining bans inside restaurants will not be imposed beyond the 9 p.m. curfew and the ban on gatherings of five or more." He lowered his head.
Fear of Business Suspension with Level 3 Shutdown
Among dining self-employed business owners, there is widespread fear that level 2.5 social distancing will continue until the first quarter of next year, along with anxiety about whether level 3 or equivalent high-level quarantine guidelines including dining bans will be imposed. The Korea Foodservice Industry Association stated, "We are deeply concerned after hearing that the quarantine authorities are reviewing the upgrade to level 3 and adjusting detailed guidelines for level 3 or equivalent," adding, "If the level 3 upgrade leads to a full business suspension allowing only delivery, it is clear that the worst sales decline will follow." According to a recent 'COVID-19 Foodservice Industry Impact Survey,' sales decreased in most businesses, with 90.5% in the first quarter and 89.0% in the third quarter reporting declines in dine-in sales.
Mr. Lee, owner of a Korean restaurant in Mapo-gu, said, "Since the upgrade to level 2.5, I only receive one or two tables on average in the evening, so I am actually operating at a loss," adding, "If level 3 is implemented, business will be impossible, which is obvious, but I cannot close because I have taken many loans, so I feel helpless." He added, "Some neighboring restaurants say it would be better to upgrade quickly and control the situation, but I don't know," and "I feel so bleak that I can't think of anything."
Mr. Kim, owner of a Japanese restaurant in Eunpyeong-gu, also emphasized, "Level 3 is literally a measure that stops the livelihoods of self-employed and small business owners," adding, "Everyone must do their best to comply with quarantine measures at this stage to prevent the collapse of self-employment due to level 3 measures."
K-Quarantine Failure, Better to Upgrade Quickly... Fear of a Wave of Closures
However, voices calling for an upgrade to level 3 are also emerging. In an online self-employed community with 600,000 members, posts demanding a level 3 upgrade are quite noticeable. One self-employed person said, "The damage to self-employed people from government social distancing regulations has snowballed, but the situation has reached this point," adding, "I hope they upgrade quickly so that although it will be painful and difficult at first, it will end sooner." Another self-employed person pointed out, "Because the measures have been loosened and tightened repeatedly, the number of confirmed cases has exceeded 1,000," and mentioned, "Upgrading could be a solution."
Mr. Kim, who runs a restaurant in Gwanghwamun, said cautiously, "If we upgrade to level 3 and everyone makes efforts for quarantine, we might return to pre-COVID-19 times sooner," adding, "I think temporary closure and waiting might be the best option for now."
Meanwhile, fear of a wave of closures is intensifying. Most self-employed business owners in restaurants, cafes, and bakeries are unable to cover fixed costs such as labor and rent and face no choice but to close due to the direct hit from sales declines.
The proportion of Korean food businesses in the entire foodservice industry is 44.23% (Statistics Korea, Economic Census and Wholesale and Retail Survey), with Korean general restaurants accounting for 60.14% of Korean food businesses, and over 80% belong to small-scale foodservice businesses. The Foodservice Industry Association emphasized, "Korean food businesses rely heavily on dine-in, and delivery (5.7%) and takeout (11.4%) proportions are low, so small-scale general restaurants suffer severe damage."
The situation is also serious for cafes and bakeries where in-store sales are banned. According to the Korea Coffee Barista Association, cafes in neighborhood commercial districts have an extremely low proportion of takeout and delivery, facing a situation where they cannot earn a single penny, and even large stores suffer severe sales declines as in-store sales account for 90%. Mr. Park, who runs a bakery in Yeongdeungpo-gu, said, "Thanks to customers taking cakes to go during the year-end, we are just keeping the store open," adding, "I think many small bakeries will file for closure next year, and I will be one of them," lowering his head.
The closure rate in December is expected to soar further. Since December, the number of properties listed for sale by self-employed people giving up their businesses has reached an all-time high. The number of store listings registered daily in Naver's largest self-employed community 'Because It's Painful, I'm the Boss' averages 55 per day, and in December, it has exceeded 770 per day, marking the worst situation.
According to the KB Financial Group Management Research Institute's report 'COVID-19 and the Bright and Dark Sides of Self-Employment,' industries and business types with more closures than openings from January to July this year due to COVID-19 impact include PC rooms, billiard halls, golf practice ranges, karaoke rooms, barbershops, bathhouses, and entertainment bars. The number of closures was three to four times higher than openings. For example, PC rooms had 1,722 openings but 2,746 closures. Billiard halls and golf practice ranges had 468 and 181 openings, respectively, but 1,415 and 675 closures, three times more. Karaoke rooms had 288 openings but 1,118 closures, nearly four times, and entertainment bars had 114 openings but 512 closures, nearly five times. Researcher Kim Dong-woo of KB Financial Group Management Research Institute predicted, "Since November, with the third wave of COVID-19, the number of closures in industries already hit hard by COVID-19 is expected to increase further."
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