Sungsimdang's '400 Million Won Monthly Rent' Conflict Continues... "Let's Ask a Third Party"

Korail Distribution to Be Designated as Conflict Management Research Institute
Meaning to Find Coordination Points Through Experts

As controversy arises over the monthly rent of Seongsimdang, a bakery located on the 2nd floor of Daejeon Station, the landlord, KORAIL Distribution, has decided to seek solutions through a conflict management research institute.

KORAIL Distribution Seeks Advice from Conflict Management Experts Over Daejeon Station 'Seongsimdang Rent'

On May 17th, Yoo In-chon, Minister of Culture, Sports and Tourism, visited Seongsimdang Daejeon Station branch and had a conversation with CEO Lim Young-jin.
[Photo by Yonhap News]

On the 19th, KORAIL Distribution announced that it plans to designate a conflict management research institute to obtain expert opinions regarding Seongsimdang's rent. With both parties firmly holding their positions and no sign of the conflict ending, they intend to find a point of mediation through experts. They plan to announce a research service bid soon.

According to the 'Regulations on Prevention and Resolution of Conflicts in Public Institutions,' the government designates five institutions as conflict management research institutes: Dankook University Dispute Resolution Research Center, Jeonbuk National University Public Conflict and Regional Innovation Research Institute, Korea Conflict Resolution Center, Korea Institute of Public Administration, and Hanyang University Conflict Issues Research Institute.

Seongsimdang Sells 2.6 Billion KRW Worth of Bread Monthly at Daejeon Station... Monthly Rent Set at 17% of Average Monthly Sales, Four Times Higher Than Before

Since 2019, Seongsimdang has operated a 300㎡ (approximately 91 pyeong) store on the 2nd floor of Daejeon Station, paying a monthly commission (rent) of about 100 million KRW for five years. Every month, bread worth 2.6 billion KRW is sold there. The issue arose when KORAIL Distribution, a public institution managing commercial facilities in train stations nationwide, put the store, whose five-year lease ended in April this year, up for competitive bidding and proposed a monthly commission of 441 million KRW, which is 17% of the average monthly sales. This amount is four times higher than Seongsimdang's previous rent at the Daejeon Station branch. However, KORAIL Distribution's internal regulations set the commission range between 17% and 49.9% of monthly sales, and this applies equally to other stores besides Seongsimdang. The average commission rate for the top 10 stores by rent managed by KORAIL Distribution exceeds 30% of sales. The previous monthly commission of 100 million KRW corresponded to about 4% of Seongsimdang's monthly sales.

Currently, KORAIL Distribution is conducting a public bidding process for the Seongsimdang store, which has failed six times so far, lowering the monthly rent condition to 309.17 million KRW. However, price adjustments are not allowed from the sixth round onward. Seongsimdang reportedly has been the sole bidder, consistently offering 100 million KRW. If no bidders appear, the contract period can be extended for up to one year, but Seongsimdang and KORAIL have agreed to extend the lease for six months until the end of October this year.

Both Seongsimdang and KORAIL Say "Leaving Is Difficult"... Opinions Suggest Granting Regional Brand Benefits Like Youth Startup Stores

However, the high amount of the monthly rent itself has led to widespread conflicting opinions regarding its appropriateness. Few stores can afford a monthly commission of 100 million KRW, and 4 billion KRW per month, totaling 4.8 billion KRW annually, is an amount that could purchase a building near Daejeon Station. Nevertheless, it is interpreted that Seongsimdang benefits from maintaining its Daejeon Station store both in terms of sales and symbolic value. KORAIL also suffers losses if Seongsimdang leaves, but KORAIL Distribution currently has no effective measures to intervene.

There are also opinions that KORAIL Distribution should revise its commission calculation standards based on this case. For regional representative brands like Seongsimdang, which enjoy local community support, commission discounts could be provided similarly to youth startup stores. KORAIL Distribution allows youth startup stores with monthly sales exceeding 25 million KRW to pay monthly rent at 5-10% of sales.

Daesik Kang, a member of the People Power Party, stated, "For KORAIL Distribution to fulfill its social responsibility as a public institution and realize public interest values, it is necessary to consider supporting Seongsimdang as a regional brand development effort, similar to support for youth startup stores." He added, "Considering the large sales disparities among stores, to ensure fairness, it is worth examining applying differentiated commission rates based on sales brackets for tenants with high sales."