2,000-Won Bread Drives 200 Billion Won in Sales... Sungsimdang's Value-for-Money Craze Sweeps the Nation [The Secret of Bread Prices]

Sungsimdang's Value-for-Money Strategy Poised to Surpass 200 Billion Won in Sales
Last Year's Operating Profit Reached 47.8 Billion Won, Up 52% from Previous Year
Management Philosophy: "Do What Is Good for Everyone"

Customers are choosing bread at Seongsimdang, a representative attraction of Daejeon. Photo by Huh Younghan

'Sungsimdang', a representative bakery in Daejeon that is expected to surpass 200 billion won in sales this year, earns a profit of 500 won for every 2,000-won bread it sells. Compared to the single-digit operating profit margins of large franchise bakeries and the barely-over-10% margins of well-known local bakeries, Sungsimdang is performing exceptionally well. It is not due to spending an unusually large amount on marketing, either. Last year, Sungsimdang’s ratio of selling and administrative expenses to sales was about 21%, which is significantly lower than the over-40% ratios of large franchise bakeries. How did Sungsimdang manage to make consumers line up in front of its stores?

According to its audit report, Sungsimdang’s operating company Rosso reported sales of 193.7 billion won last year. This is a 56% increase from 124.3 billion won in 2023. Sungsimdang, which recorded 48.8 billion won in sales in 2020, became the first single bakery brand to surpass 100 billion won in sales in 2023. At its current growth rate, it is likely to exceed 200 billion won in sales this year.

Sungsimdang’s operating profit has even surpassed that of major franchise corporations. Last year, its operating profit was 47.8 billion won, a 52% increase from 31.4 billion won the previous year. This not only exceeds CJ Foodville’s operating profit of 29.8 billion won (on a separate basis), which operates bakery Tous Les Jours and various other food businesses, but its operating profit margin of 25% is also significantly higher than CJ Foodville’s 4% and Paris Croissant’s 1%.

Visitors are lining up in front of the Seongsimdang main store, a representative attraction of Daejeon, to purchase bread. Photo by Younghan Heo

The origins of Sungsimdang go back to 1956. The late couple Lim Gilsoon and Han Soondeok began by making and selling steamed buns in front of Daejeon Station using two sacks of flour they received as aid from Daeheung-dong Cathedral. Nearly 70 years later, Sungsimdang has firmly established itself as Daejeon’s representative bakery.

One of the key factors behind its success is considered to be its "value for money." Signature items such as Twigeum Soboro (1,700 won each) and Pantalong Buchu Bread (2,000 won each) have sparked a nationwide "bread pilgrimage" craze, leveraging both the exclusivity of being sold only in Daejeon and their reasonable prices.

Although its seasonal limited cakes are priced higher than regular breads, they are still set at lower prices than other cakes on the market, increasing competitiveness. Sungsimdang’s "Siru Cake," made with seasonal fruits like strawberries and mangoes, has become a popular topic on social networking services (SNS) every time it is released, thanks to its generous use of ingredients. In particular, the "Strawberry Siru 2.3kg" cake released in December last year drew attention for its appearance, featuring an entire box of strawberries on top, and its price of 49,000 won was compared to hotel cakes costing up to 400,000 won, earning it a reputation as a "value-for-money cake." As its popularity soared, there were even cases where the cake was resold for 140,000 won on secondhand trading sites.

Another key factor in Sungsimdang’s success is its strong "local identity." Sungsimdang maintains a policy of not opening stores outside Daejeon. In 2014, it even declined an offer from the main branch of Lotte Department Store in Jung-gu, Seoul, to open a store of any size and location it wanted. This is why "Sungsimdang" immediately brings "Daejeon" to mind. This is in contrast to other local bakeries that have expanded nationwide. For example, Daegu’s Samsong Bakery, famous for its whole corn bread, entered the franchise business in 2022, and Gunsan’s Iseongdang, the oldest bakery in Korea, opened a branch at Lotte Department Store Jamsil in Seoul in 2014.

Hundreds of customers are lined up early in the morning in front of Seongsimdang's Cake Boutique, a representative attraction of Daejeon, to purchase cakes. Photo by Hyung Han Heo

Sungsimdang’s positive corporate image also supports its popularity. Under the management philosophy of "Do what is good for everyone," Sungsimdang donates all unsold bread and pastries every day. In addition, it delivers about 30 million won worth of bread each month to social welfare facilities such as nursing homes and orphanages. Recently, it made headlines for offering a "free pass" to skip the waiting line and a 5% discount to customers who present proof of pregnancy or a maternity handbook. As business prospers, employee satisfaction is also rising. Sungsimdang distributes 15% of its quarterly operating profit as performance bonuses to its employees.