Young Koreans cut food budget amid soaring prices

Industry

Published: 22 Aug. 2023, 17:45

Young Koreans cut food budget amid soaring prices

A pedestrian walks past food menu boards in a street in Seoul on Monday. [YONHAP]

Young Koreans are preferring a home-packed lunch and packaged meals over eating out amid surging consumer prices.

Koreans in their 20s spent 6.6 percent less at restaurants in the second quarter than they did in the first quarter, according to Shinhan Card’s big data lab Monday.

Their expenditure dropped by the widest margin to linger below a 3.8 percent overall decrease. By age group, spending on eating out shrank by 3.5 percent on quarter among people in their 30s, 3.9 percent in their 40s, 3.4 percent in their 50s, 1.5 percent in their 60s and 1.2 percent in their 70s.

People in their 20s trimmed these expenses to save on living costs.

“The budget is tight for a 2.4-million-won ($1,800) monthly salary after 700,000 won goes into a savings account and 400,000 won into the monthly rent,” said a 28-year-old surnamed Cho who lives in Gangseo District, western Seoul.

Ready meals are displayed at a CU convenience store in Gangnam District, southern Seoul, on Aug. 2. [NEWS1]

The first item on the 28-year-old’s to-do list after work over the past three months is preparing a lunchbox, which is stored in the refrigerator overnight and microwaved at lunchtime the following day.

“At least 10,000 won is spent per meal when eating lunch out with colleagues but packing lunch halves the cost.”

Another 28-year-old surnamed Kim said he and his colleagues used to take turns footing the group’s lunch bill, but the group decided to go Dutch due to soaring food prices. They now order one dish per person and no side dish to share.

The changing lunch trend among commuters is putting the food service industry on edge.

Restaurant owners hoped sales would jump after most Covid-19 restrictions were lifted earlier in the year, but soaring labor and groceries costs only added an extra burden.

Vegetables are displayed at a discount store in Seoul on Aug. 7. Cabbage and radish prices surged 70 percent from the week before due to inclement weather. [NEWS1]

The current minimum pay stands at 9,620 won per hour. The minimum wage has spiked 48.7 percent since 2017 and will increase by 2.5 percent in 2024.

Inclement weather bringing intense heat waves and heavy rainfall is expected to pump crop prices going into the third quarter.

The Korean Restaurant Business Index (KRBI), a business survey index that gauges the outlook of the food service industry, was 83.26 in the second quarter of 2023, down 3.65 points from the previous quarter, according to the Korea Agro-Fisheries & Food Trade Corporation.

The index falls below 100 when businesses that participate in the KRBI survey predict a slowdown in the industry. It rose from 82.54 to 86.91 for the January-March period but turned in gains during the following three months.

“The preference for meals served at company cafeterias and ready-made meals from convenience stores is rising as office workers turn to simple meals due to the soaring prices,” said Son Mu-ho, head of policy at the Korea Foodservice Industry Association.

Chinese tourist groups enter Korea at Incheon International Ferry Terminal on Aug. 12. [YONHAP]

“The food service industry is in a predicament and in dire need of government-level support programs.”

Son added that the industry is looking forward to Chinese group tourists who are returning to Korea for the first time in six years. On Aug. 10, China lifted its ban on group tours to Korea that had been in place since March 2017 following Korea’s decision to allow the United States to deploy the Terminal High Altitude Area Defense antimissile system, also known as Thaad, on Korean soil.

But experts warn industries that surging sales are not a given.

“It is imperative to understand what they want to buy and eat in Korea because China’s domestic consumer market has changed substantially in recent years,” said Lee Eun-hee, a consumer science professor at Inha University.

“There will not be a second chance if businesses fail to appeal to them.”