NCCP finally dishes out eatery regulations

Korea Franchise Association members rally yesterday in front of the Seoul Palace Hotel in Banpo-dong, southern Seoul, to protest regulations imposed by the National Commission for Corporate Partnership. [NEWSIS]

Conglomerates operating restaurant chains will be able to open new stores within only 100 meters (328 feet) of subway stations, the National Commission for Corporate Partnership (NCCP) decided yesterday.

In nonmetropolitan areas, they can locate within 200 meters of stations

The decision ends three months of discussions regarding regulations on large corporations and mid-sized restaurant operators.

In February, the NCCP designated 14 service industries - including bakeries and restaurants, and two manufacturing businesses - as areas reserved for small enterprises.

The NCCP held its 23rd committee meeting at Seoul Palace Hotel in Banpo-dong, southern Seoul, yesterday and confirmed details defining the restaurant industry and identifying sectors reserved for small enterprises.

Large corporations subject to the new regulation are CJ Foodville, CJ N City, Lotteria, Shinsegae Food, Hyundai Green Food, Hanwha Hotel and Resort, SK Networks, Cheil Industries, Daesung Industrial Corporation, E-Land Park and Everland.

Affected midsize businesses include Amoje, Samlip General Food, Ourhome, Maeil Dairies, Nongshim, Dongwon, Namyang Dairies, SPC, Daesang HS, MPK Group and Orion.

Regulations for franchise restaurants were also tightened so they cannot open new branches within 150 meters of existing small restaurants with annual sales of 48 million won ($42,768) or less.

Large corporations and franchise companies blasted the regulation saying that the excessive rules are killing franchise stores.

“Under such regulations, it’s not too much to say that opening a new store is almost impossible,” said a spokesman for large corporation running a restaurant chain, who declined to be named.

Members of the Korea Franchise Association held demonstrations against the regulation in front of the Palace Hotel.

Some protesters said the NCCP’s measure will only benefit large foreign restaurants and food companies, which are not bound by the regulations.

“Rather than growing local brands to compete with foreign restaurant giants, the NCCP is trying to eradicate the local restaurant businesses,” said a franchise owner.

When the regulations take effect, E-Land Group’s Ashley, Outback Steak Korea’s Outback Steak House, CJ Group’s VIPS, Lotte Group’s TGI Friday’s will be directly hit.

“There were diverse and complex interests of different parties intertwined to establish criteria for defining restaurant industry,” said Yoo Jang-hee, chairman of the NCCP.

Meanwhile, eight conglomerates including Homeplus, CJ O Shopping, and STX Offshore and Shipbuilding received failing grades in terms of shared growth with partner companies.

The NCCP released the shared growth index evaluation of 73 conglomerates.

By Kim Jung-yoon [kjy@joongang.co.kr]