Rising Meal Prices... Employees Line Up at Cafeteria

Dining Out Expenses Rise and Remote Work Declines
CJ Freshway and Samsung Welstory
On the Verge of Joining the 3 Trillion Won Sales Club
Shinsegae Food Operating Profit Up 36%
Ourhome Expected to Achieve Record High Sales

We live in an era where a bowl of gukbap costs 10,000 won. As the COVID-19 pandemic shifts to an endemic phase, more office workers are returning to their workplaces, while dining-out prices continue to soar, creating bustling scenes in certain places. One such place is the company cafeteria. Despite the economic downturn, demand for group catering has increased, leading to notable growth for food ingredient suppliers last year. CJ Freshway is poised to rejoin the '3 trillion won sales club' for the first time in four years since 2019.

CJ Freshway and Samsung Welstory Near '3 Trillion Won Sales Club'

According to the consensus forecast by securities information provider FN Guide on the 15th, CJ Freshway's sales in the fourth quarter of last year are expected to reach 784.8 billion won, a 10.4% increase from 710.8 billion won a year earlier. Operating profit during the same period is projected to surge 39.18%, from 17.4 billion won to 24.2 billion won. This positions CJ Freshway to re-enter the 3 trillion won sales club for the first time in four years since 2019. Last year's sales are estimated at 3.0708 trillion won, an 11.76% increase from 2.7477 trillion won in the previous year.

An industry insider commented, "While the 3 trillion won sales in 2019 were achieved with a focus on scale rather than profitability, last year's accomplishment is more meaningful as it was realized after abandoning low-price bidding and implementing structural improvement strategies."

Samsung Welstory, which celebrated its 10th anniversary last year, is also aiming to surpass 3 trillion won in sales. By the third quarter of last year, it had already achieved sales of 2.094 trillion won. Industry estimates suggest that total sales last year exceeded 2.6465 trillion won in 2022, reaching around 2.9 trillion won, with the possibility of breaking the 3 trillion won mark remaining.

Shinsegae Food is targeting sales of 1.5 trillion won. Its estimated sales for the fourth quarter last year were 377.5 billion won, bringing the annual total to approximately 1.488 trillion won, a 5.43% increase from 1.4113 trillion won a year earlier. Operating profit last year is estimated at 28 billion won, a 36.3% increase over the same period.

Hyundai Green Food, which became a newly established company after a spin-off in March last year, is expected to record annual sales of 1.8495 trillion won and operating profit of 92 billion won. Ourhome is anticipated to surpass its 2022 sales of 1.8354 trillion won and achieve its highest-ever sales last year. An Ourhome representative explained, "Sales from group catering and food ingredients, our main revenue sources, increased by 20% on a cumulative basis through the third quarter of last year."

Office Workers Returning from Remote Work Flock to Company Cafeterias Amid Surging Dining Prices... Large-scale Contracts Continue

The growth in food ingredient suppliers' performance has been driven by the expansion of group catering, commonly known as company cafeterias. As the transition to an endemic phase leads more employees to return to offices instead of working remotely, demand for group catering centered on large workplaces continues to rise. Additionally, the so-called 'lunchflation,' with dining-out prices soaring, has made company cafeterias an attractive option for saving on lunch expenses.

According to the Korea Consumer Agency's Price Information Service, the price of kimchi jjigae in Seoul was 8,000 won last December, up 500 won (6.7%) from a year earlier. Jajangmyeon increased by 500 won to 7,069 won, and naengmyeon rose by 731 won to 11,308 won, with prices steadily climbing. Dining prices in business districts are even higher.

As a result, large-scale contracts with companies such as Naver and Krafton have continued this year. For Hyundai Green Food, IT companies accounted for 30% of the recent group catering contracts. Companies that had actively embraced remote work have seen significant effects from shifting back to on-site work. Park Jong-ryeol, a researcher at Heungkuk Securities, said, "With the transition to an endemic phase, sales in group catering, food ingredients, and dining businesses continue to perform well."

Expansion of Catering Market Beyond Companies to Silver and Kids Segments... "Growth Will Continue"

This trend is expected to continue this year. Nam Seong-hyun, a researcher at IBK Investment & Securities, said, "Even if consumer spending slows, demand in the catering market will persist," adding, "Recently, the market has expanded from industrial clients to silver (elderly) and kids segments."

Companies are also accelerating their overseas expansion beyond the domestic market. Samsung Welstory has set overseas market expansion as a key business goal this year, aiming to increase the overseas business portion from about 12% of total sales to 30% by 2033. Ourhome currently operates subsidiaries in the United States, China, Poland, and Vietnam, conducting overseas business. This year, it aims to firmly establish its presence in advanced food and beverage markets such as the U.S. and Europe, which it entered in 2021. Hyundai Green Food also plans to explore business expansion into various countries beyond its existing markets this year.

An industry insider said, "The performance of food ingredient suppliers, which had stalled due to the impact of COVID-19, is normalizing thanks to demand from company cafeterias," adding, "Given the expected long-term population decline due to low birth rates, companies will seek breakthroughs overseas to sustain growth."