"Daiso is thriving, should I try too?"... Surprising startup costs for 100-pyeong stores [Evolution of Cheonwon Items]

Increasing Startup Inquiries Due to Strong Brand Recognition
High Entry Barriers with Startup Costs Exceeding 400 Million KRW

Interest in starting a business with Daiso, which has shown clear sales growth, is increasing. This is because the strong brand recognition reduces marketing burdens, and the relatively low sales volatility allows for expectations of stable profits. However, the high initial investment cost and the strict store location requirements are considered drawbacks due to the high entry barriers.

According to the Fair Trade Commission's Franchise Business Transaction Disclosure Statement, as of 2023, the total number of Daiso stores was 1,519, a 5.34% increase compared to the previous year. Among these, the number of directly operated stores increased by 7.47% to 1,022, while franchise stores grew by only 1.22% to 497.

The high proportion of directly operated stores is analyzed to be due to the significant initial capital required for franchise startups. Unlike typical franchises, Daiso operates mostly large stores of over 100 pyeong (approximately 330㎡). The need to either own or lease such large-scale stores can be a burden for prospective entrepreneurs. Additionally, considering initial investments such as interior design and equipment, the entry barriers become even higher.

Children visiting Daiso Emart Mokdong Branch in Yangcheon-gu, Seoul, are looking at dolls. Photo by Kang Jin-hyung

In fact, the funds required to start a Daiso store based on 100 pyeong are ▲franchise fee of 37.4 million KRW ▲deposit of 60 million KRW ▲other costs amounting to 275 million KRW, totaling 372.4 million KRW. Including interior costs of 80 million KRW, the total exceeds 450 million KRW. Furthermore, additional construction costs may arise, increasing the actual startup expenses.

This financial burden is indirectly reflected in the official franchise requirements set by Daiso. According to the Daiso headquarters website, franchisees must have ▲the ability to mobilize funds of a certain scale or more ▲the ability to own or lease a store that meets the store requirements. The store requirements specify ▲location in a key area within the regional commercial district ▲securing a space of at least 330㎡ (about 100 pyeong).

Startup consultant Chae Ji-woo said, "As Daiso stores have been getting larger recently, costs for facilities such as interior design continue to rise," adding, "Fixed expenses like monthly rent are also burdensome, so these are factors that must be considered when starting a business." She continued, "Many Daiso stores are either standalone buildings or leased in entirety, so additional construction costs tend to be high. Also, when acquiring an existing store through transfer, there may be renovation costs required by headquarters, so it is advisable to check in advance," she advised.

It is also necessary to consider profitability before starting a business. As of 2023, the average annual sales of Daiso franchise stores were approximately 1.65186 billion KRW, which translates to a monthly average of 137.65 million KRW. Although the figures suggest high revenue, actual net profits may be limited after accounting for operating and fixed costs. Consultant Chae explained, "About 75% of total sales are spent on material costs and royalties, and after deducting labor costs, utilities, and rent from the remaining 25%, the actual net profit is around 10%." She added, "Even stores with the same sales can have different profit structures depending on the rent, which varies by commercial district."

A Daiso store located in Jongno-gu. Photo by Jo Yong-jun

Despite the initial financial burden, Daiso remains an attractive option for prospective entrepreneurs. Thanks to its strong brand recognition, diverse customer base, and proprietary logistics system, even novice entrepreneurs can operate stores relatively stably.

Consultant Chae said, "There is a perception that Daiso is a business less affected by external environments, so inquiries about starting a business are increasing," adding, "Interest has grown not only in new openings but also in transfer costs." She also said, "Compared to other industries, sales volatility is low, making it stable. It is systematically operated and runs on its own logistics management system, so even beginners can manage it without much difficulty."

Order of Articles in 'The Evolution of 1,000-Won Items'

Sharing recommended items on Japanese SNS: Daiso becomes a foreign tourist attraction
① Daiso's 'big spenders' - foreign tourists
How Daiso became Korea's representative shopping hotspot
② Daiso seizes the economic downturn as a growth opportunity
Daiso part-timers over Coupang... "OK to work 2 hours"
③ Daiso's penetration into side jobs
Submitting Daiso coupons: children's playground
④ The secret to Daiso capturing teenagers
"What did you come to buy?" Daiso, the adults' ant pit
⑤ Targeting diverse interests from beauty to camping and home gardening
"Do they sell this too?" Daiso's popular 'innovative items' against high prices
⑥ Exploring innovative items like capsule coffee and pillow air fresheners
Daiso Mall threatening Coupang... just a finger tap for same-day delivery
⑦ Strengthening online presence beyond offline Daiso
▶ "Daiso startup inquiries surge"... Stable but initial costs over 400 million KRW are burdensome
⑧ Increasing startup inquiries due to strong brand recognition