Franchises grow but their revenues fall

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Franchises grow but their revenues fall

 Business is slow in a lane of chicken restaurants in Seoul. [KIM HONG-JOON]

Business is slow in a lane of chicken restaurants in Seoul. [KIM HONG-JOON]

 
The number of convenience store, chicken and cafe franchises rose last year, as the pandemic convinced entrepreneurs to play it safe and not open independent stores.
 
But more outlets of the big name franchises drove up competition, leading to a slump in sales.
 
Statistics Korea said Monday that franchised shops in Korea totaled 235,709 in 2020, up 9.5 percent over a year ago.  
Convenience stores grew at the steepest pace, adding 4,977 new stores last year alone, a 12 percent increase on-year.  
 
The number of franchised restaurants selling Korean traditional food jumped 16.5 percent to 36,022. Chicken shops saw a 7.7 percent rise to reach 27,667.  
 
Franchised cafes topped the 20,000 mark, reaching 21,360, up 16.4 percent over a year earlier.  
Given that Korea has 23.1 million households, one convenience store exists for every 498 households, and there is one Korean food restaurant for every 641 households. 
 
But the pie didn't grow anywhere near the number of slices. Annual sales at Korean food restaurants averaged 248 million won per store, down 18.7 percent or 58 million won from a year earlier. Chicken franchises suffered a 3.5 percent decline in sales to 199 million won.  
 
Annual sales at convenience stores averaged 494 million won, down 11.8 percent to 560 million won. Sales of coffee shops fell 14.8 percent to 179 million won last year.
 
For all franchises, annual revenues declined 9 percent.
 
The hardest hit was pub franchises, as social distancing measures banned people from gathering in groups at night.  
 
Their average annual sales shrank 15.9 percent to 152 million won.  

BY JEONG JIN-HO, PARK EUN-JEE [park.eunjee@joongang.co.kr]
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