Baemin Tripled Growth Over 3 Pandemic Years... Achieved 400 Billion Won Profit Last Year

Woowa Brothers Achieved KRW 2.9471 Trillion in Sales Last Year
Operating Profit Recorded at KRW 424.1 Billion

Baedal Minjok, the number one delivery app in the industry, has emerged from a deficit. It recorded a surplus of around 400 billion KRW last year. Woowa Brothers, the operator of Baedal Minjok (Baemin), announced on the 31st through a public disclosure that it recorded consolidated sales of 2.9471 trillion KRW and an operating profit of 424.1 billion KRW last year. Sales increased by 47% compared to the previous year. While it recorded an operating loss of 75.7 billion KRW in 2021, it succeeded in turning a profit last year.

The industry sees three main reasons for Baemin's strong performance. First, the COVID-19 pandemic, which lasted for over three years, drove sales growth. The number of restaurants registered on Baemin increased more than twofold from about 136,000 at the end of 2019 to about 300,000 by the end of last year. As the number of registered restaurants increased, advertising revenue from Baemin's main business product, 'Ultracall,' also grew.

Delivery demand also surged during the pandemic. Both the number of orders and payment amounts through Baemin rose simultaneously. The total number of orders last year was 1.111 billion, nearly three times the 400 million orders in 2019.

Delivery apps' efforts to improve financial soundness also contributed to the expansion of operating profit. The single-delivery service 'Baemin1' operated at a loss 'with every order' for nearly 10 months by applying promotional fees. Even after this promotion, which was conducted as a measure to share the COVID-19 burden, ended, demand for single deliveries remained steady, leading to improved profitability. Baemin1 has now grown to account for 15% of all food orders on Baedal Minjok.

Baemin was also the least affected by the so-called 'endemic.' According to big data specialist TDI, Baemin's monthly active users (MAU) decreased by only 0.6%, from 20.82 million in April last year, just before the easing of social distancing, to 20.67 million in August. The industry had already predicted Baemin's return to profitability since last year. This is because the operating loss of around 70 billion KRW in 2021 included a one-time cost of about 100 billion KRW for stock donations by Chairman Kim Bong-jin. Excluding this, Baemin actually turned a profit in 2021.

However, industry forecasts differ on whether Baemin's profitability will continue this year. The growth effect from the pandemic is expected to be less significant starting this year. In fact, transaction amounts using delivery apps began to decline from the second half of last year. According to Statistics Korea's 'January Online Shopping Trends,' the transaction amount for food delivery services has been negative for seven consecutive months. It decreased by as much as 8.3% compared to January last year.

An industry insider said, "The competitive market situation could also be an obstacle to Baemin's profitability trend," adding, "There are expectations that giant platform companies will enter the delivery market, and with the growth foundation of COVID-19 gone, competition to secure market share could intensify again at any time."