Martial Law and Impeachment Cause Year-End Slump in Dining Industry... Only Yeouido Sees a Reversal in Business

Restaurant Small Business Sales in the First Week of December Down 9% Year-on-Year

As the political situation shook with the declaration of emergency martial law on December 3 and the subsequent push for the president's impeachment, the year-end peak season for small restaurant business owners disappeared. Sales for small business owners running restaurants dropped nearly 10% compared to the previous year during the first week of December, taking a direct hit. Notably, while sales decreased nationwide, only Yeouido-dong in Seoul showed an increase of over 10%. This is analyzed to be due to the crowds gathering in Yeouido demanding impeachment.

According to an analysis of small business restaurant sales by Korea Credit Data on the 12th, credit card sales at small business restaurant locations nationwide during the first week of December, from the 2nd to the 9th, decreased by 9% compared to the previous year. Korea Credit Data provides the management service ‘Cash Note’ to 1.6 million small business locations nationwide and disclosed the sales status of small business locations based on management data collected through this service.

Considering that December is regarded as a peak season in the restaurant industry due to the surge in year-end party demand, Korea Credit Data’s analysis indicates the situation is serious. Kang Yewon, head of data at Korea Credit Data, explained, "Given that the average profit margin in the restaurant industry is around 15%, a 10% drop in sales results in profits decreasing by more than 60%. It is painful to see a sharp year-on-year sales decline in the first week of December amid sluggish domestic consumption. If this sales decline continues until the end of the year, many businesses will suffer from accumulated deficits."

This sales decline is due to reservations for year-end parties and other gatherings being canceled one after another amid the turmoil caused by martial law and the impeachment push. A restaurant owner in Seoul lamented, "Not only have existing reservations been canceled, but walk-in customers have also sharply decreased." The Ministry of SMEs and Startups is holding the ‘December Together Festival’ until the 28th of this month to boost year-end consumption by offering discounts on products from small and medium enterprises and small business owners nationwide, but it seems difficult to lift the mood under these circumstances.

The unstable political situation is directly affecting small restaurant business owners, as confirmed by the sales status in Yeouido, Seoul. Contrary to the nationwide downward trend, restaurant sales in Yeouido-dong increased by 10.4% during the same period. The large crowds gathering in Yeouido due to rallies in the first week of December are clearly reflected in the sales. On Saturday the 7th, more than one million people participated in a rally held in Yeouido according to the organizers’ estimates, and related rallies have continued on weekdays since then.