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The exterior of 'Auto (Automatic) Bunsik,' which Daewoo Metal Co., Ltd. will open on the 18th in front of Keimyung University in Daegu.
[Photo by Daewoo Metal]

[Asia Economy Reporter Kim Jong-hwa] A small and medium-sized enterprise with the industry's top technology in aluminum extrusion and rolling is attracting attention by starting a franchise business. Daewoo Kyung Metal Co., Ltd., located in Guji National Industrial Complex, Dalseong-gun, Daegu Metropolitan City, will open an unmanned snack bar called ‘Auto (Automatic) Snack Bar’ in front of Keimyung University in Daegu on the 18th.

Daewoo Kyung Metal is a company that produces and supplies various aluminum materials such as industrial, electrical and electronic parts, automotive parts materials, construction materials, and alternative materials. In 2018, it was selected as one of the 181 outstanding local companies by the Ministry of SMEs and Startups, and also received certifications as a Star Venture Company from the Korea Technology Finance Corporation and as an Excellent and Venture Company from the Small and Medium Business Corporation.

With solid performance recording sales of 30.8 billion KRW and operating profit of 1.5 billion KRW in 2019, and sales of 33.9 billion KRW and operating profit of 1.7 billion KRW last year, the reason this company started a snack bar franchise in front of a university was largely due to the will of CEO Kim Do-yeon of Daewoo Kyung Metal to "find ways to utilize the technology they have."

Daewoo Kyung Metal’s affiliated research institute developed an ‘unmanned ramen cooking device’ in 2019 by integrating hardware design and motion control technology for autonomous mobile robots (AMR) with kiosk platform linkage technology. Patents for two types of ‘unmanned ramen cooking devices (ramen cookers)’ were certified at the end of last year, and this year they have commercialized it as a franchise business.

The ‘Auto Snack Bar 1st Branch’ to be opened by Daewoo Kyung Metal is about 110㎡ (approximately 34 pyeong) in size and is equipped with six ramen cookers, three snack refrigerators, a microwave, a coffee machine, tables, kiosks, and CCTV. Customers can choose from Shin Ramyun and Jin Ramyun (spicy or mild) on the kiosk, as well as the amount of water and degree of doneness according to their personal preference. The ramen cooker completes cooking, serving, and cleaning within five minutes.

Kim Do-yeon, CEO of Daewoo Kyung Metal Co., Ltd.

To open the first branch, Daewoo Kyung Metal invested about 500 million KRW covering the development of the ramen cooker, interior costs, rent, and all other expenses. For franchisees opening actual stores, the cost is expected to be around 100 million to 200 million KRW depending on the store size. The ramen cooker costs about 10 million KRW per unit, and the rest covers the installation and provision of various facilities such as interior, refrigerators, coffee machines, and CCTV.

CEO Kim said, "After operating the store for about three months, we plan to publicly recruit franchisees around September," adding, "We plan to gradually supply ramen cookers starting from the suburbs of Daegu, expand to university areas in Busan within this year, and enter the metropolitan area next year."

The company expects that a store with three ramen cookers installed will generate about 4.3 million KRW in monthly sales per cooker, and after deducting about 4 million KRW in expenses including rent and one part-time worker, a profit of about 8 million KRW is possible. This estimate is based on selling ramen at 2,500 KRW per bowl, including additional revenue from selling items like Hetbahn (ready-to-eat rice), beverages, coffee, and gimbap.

CEO Kim said, "Auto Snack Bar does not impose anything other than the unified interior and ramen cooker." There are no restrictions on the types of ramen, side dishes, or store size, and franchisees can decide the prices of ramen and side dishes themselves. However, at least three ramen cookers must be installed. According to CEO Kim, this scale is necessary to generate an appropriate level of sales.

CEO Kim expressed confidence, saying, "Once the metropolitan area expansion is completed in the second half of next year, Auto Snack Bar will become a key company generating monthly sales of about 600 to 800 million KRW," and added, "We are also planning exports, so the franchise business will play a significant role in the company's growth."

Daewoo Kyung Metal is recently pursuing business diversification. It is reducing the proportion of B2B (business-to-business) transactions focused on industrial materials and concentrating on the production and export of construction materials such as chassis, windows, doors, and formwork supports that can be sold under its own brand (B2C).

CEO Kim said, "If the sales from construction materials currently exported to Japan and the newly started Auto Snack Bar franchise business account for about 30% of total sales, we plan to pursue listing," and expressed confidence, "I believe the company’s sales structure will become solid enough to pursue listing within 2 to 3 years at the latest."