No more food chains likely from industry behemoths

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No more food chains likely from industry behemoths

Korea is likely to ban the country’s food service giants from opening new restaurant chains as part of efforts to protect operators of small food outlets, industry officials said yesterday.

The move comes as President-elect Park Geun-hye has pledged to boost small and medium enterprises (SMEs) in a country where chaebol, or family-controlled conglomerates, have dominated the economy for decades.

“A consensus has been reached on banning the launch of new chains by food service giants,” an official said of Wednesday’s meeting between industry officials and the commission responsible for promoting shared growth between conglomerates and smaller businesses.

The National Commission for Corporate Partnership is also pushing to prevent big companies from taking over food service firms.

“Consultations are under way to reach a compromise,” said a commission official handling the issue. She declined to give any further details ahead of the official announcement and asked not to be identified, citing policy.

The commission is scheduled to unveil a series of recommendations next Tuesday to help SMEs, which account for 99 percent of all enterprises and 88 percent of all employees in Korea.

The commission is likely to recommend that the food service industry be reserved for SMEs.

A food unit of one conglomerate, which runs bakeries, coffee shops and several restaurant chains, said the proposed regulations will deal a blow to the food service industry.

A food unit official described new brands as a key to business of the food service industry. He asked not to be identified because his company has engaged in talks with the commission over the proposed regulations.

Another industry official said the proposed ban on launching new brands is a serious matter, noting food service companies frequently open and close new brands.

Food service giants could be referred to the Small and Medium Business Administration (SMBA), a government body, for adjustment of businesses if they fail to comply with the commission recommendation.

The heads of food service giants that continue to ignore the mediation efforts by the SMBA could face up to one year in prison or be fined a maximum of 50 million won ($47,000), according to Park Soon-hong, an SMBA official handling the issue of shared growth.

Officials handling the issue at the Korea Foodservice Industry Association were not immediately available for comment.

The association that speaks for 420,000 small businesses, mostly mom-and-pop restaurants, said last week that big companies can keep running their existing eating establishments, but they should not be allowed to open new food service outlets.

Yonhap

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