Daejeon Station Branch Fails Auction for 4th Time... Seongsimdang "We Will Keep the Store"

Commission drops from 441 million won to 353 million won
Sungsimdang "Will continue to participate in future bids... Will protect the store"

Seongsimdang, a famous bakery in Daejeon, participated in the 4th bidding for the Daejeon Station store but was disqualified due to failure to meet evaluation criteria.

On the 23rd, Seongsimdang met the non-quantitative evaluation score (out of 20 points) in the evaluation by the Korail Distribution Evaluation Committee, but there was no content to evaluate the quantitative evaluation score (out of 80 points), which assesses commission rates and contract deposits, resulting in disqualification for not meeting the evaluation criteria. Seongsimdang currently leases and operates a 300㎡ (approximately 91 pyeong) store in the 2nd-floor waiting room of Daejeon Station, but the store operation contract expired last month.

Minister Yoo In-chon of the Ministry of Culture, Sports and Tourism visited Seongsimdang's Daejeon Station branch, designated as Local 100, on the 17th and had a conversation with CEO Lim Young-jin.
[Photo by Yonhap News]

Korail Distribution conducted a competitive bidding to find a new operator. Prior to the contract expiration, Korail Distribution reportedly proposed a monthly commission fee of 441 million KRW for the store. This was calculated by applying a minimum commission rate of 17% to Seongsimdang’s average monthly sales of 2.598 billion KRW, which is more than four times the previous rent. Over the past five years, Seongsimdang is said to have paid about 100 million KRW monthly in rent to Korail Distribution.

Because of this, Korail Distribution faced suspicions of excessively raising the commission fee. In response to growing concerns, Korail Distribution stated on the 17th, "It is not true that the commission fee was excessively raised within one year," adding, "This store signed a fixed rent lease contract with Korea Railroad Corporation in 2016, and in April 2021, following the auditor’s recommendation, the contract was changed to a commission rate contract with Korail Distribution." They further explained, "During this process, by mutual agreement between the contracting parties, the store operated at a rate significantly lower than the minimum bid commission rate, and considering fairness with other commercial facilities as pointed out by the auditor, the bidding announcement made before Seongsimdang’s contract expiration applied the same standards to all commercial facilities."

Korail Distribution explained, "The method of paying commission based on sales according to the contract rate is widely used by many public institutions and distribution industries," adding, "The commission rate can vary depending on location conditions, business type, number of bidders, economic conditions, and other factors, and the proposing business operator decides within the pre-notified minimum and maximum limits to participate in the competitive bidding."

However, as the store was repeatedly disqualified in the competitive bidding, the monthly commission fee continued to decrease. According to regulations that reduce the base amount by 10% up to 30% from the third announcement for commercial facilities that have been disqualified more than twice, the base amount dropped to 353 million KRW in the 4th bidding. Subsequently, the 5th bidding was announced at an amount 30% lower than the initial target. Seongsimdang has expressed its intention to continue participating in the bidding to maintain its Daejeon Station branch.

Seongsimdang is currently operating the store by extending the expired lease contract until October, but due to the continued bidding failures, the operation of the Daejeon Station store after October has become uncertain.