Food delivery sees first-ever transaction drop as Coupang, Yogiyo raise fees

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Food delivery sees first-ever transaction drop as Coupang, Yogiyo raise fees

Motorcycles for food delivery services are parked on the road in Mapo District, western Seoul on Feb. 13. [YONHAP]

Motorcycles for food delivery services are parked on the road in Mapo District, western Seoul on Feb. 13. [YONHAP]

Korea's food delivery industry saw negative growth last year, marking the first-ever drop in transaction volume since Statistics Korea began collecting the relevant data.
 
The agency said Tuesday that last year's total transaction volume in the food delivery sector amounted to 26.4 trillion won ($19.8 billion), a 0.6 percent decline from 2022. 
 
The industry experienced exponential growth during the Covid-19 pandemic. However, as the country lifted quarantine measures, people started to eat out in diners and eateries. As a consequence, food delivery has become a less attractive option.
 
The sector has flourished continuously since the record began in 2017. Last year, however, was the first occasion on which the total transaction amount shrank.
 
In 2017, transaction volume totaled 2.7 trillion won. The figure jumped to 5.3 trillion won in 2018 and exceeded some 9.7 trillion won by 2019.
 
The total transaction volume surpassed 17.3 trillion won when Covid-19 hit the country, and reaching 26.2 trillion won in 2020 and 2021, respectively. Total transaction volume in 2022 climbed a bit to reach 26.6 trillion won.
 
Accordingly, major food delivery apps — Baedal Minjok, Yogiyo and Coupang Eats — had their heydays.
 
Woowa Brothers — the operator of Baedal Minjok — reported revenue of 2.95 trillion won in 2022, a figure 60 times higher than 2015's figure. The company turned a profit of 464.3 billion won in 2022 compared to the loss of 24.9 billion won it experienced in 2015.
 
Yogiyo recorded 263.9 billion won in revenue in 2022.
 
Customers waited to dine in at an indoor eatery in downtown Seoul in April 2022 after the government lifted social distancing measures. [YONHAP]

Customers waited to dine in at an indoor eatery in downtown Seoul in April 2022 after the government lifted social distancing measures. [YONHAP]

Inflation led to an increase in food prices, prompting people to avoid food delivery apps that charge delivery fees. 
 
A full 47.3 percent of food orders made between in last November and December came with delivery fees of 3,000 won and 3,900 won, according to a Statistics Korea survey released in December. Some 30.9 percent of orders charged between 2,000 won and 2,900 won. Some 12.5 percent required consumers to pay more than 4,000 won.

 
Coupang Eats sets its minimum delivery fee at 3,900 won while those of Baedal Minjok and Yogiyo register at 2,500 won, according to Korea National Council of Consumer Organizations. Consumers who wish to receive their food extra quickly are charged an extra 500 won or 800 won when using Baedal Minjok or Yogiyo.
 
Users of delivery apps mostly ordered fast food like chicken, hamburger and gimbap or seaweed-wrapped rice rolls, which took up 48.8 percent of all delivery cases. Foreign foods, including Chinese and Western dishes, took second place, comprising 22.6 percent of total orders. Korean food took third place, accounting for 11.6 percent, according to Statistics Korea.
 
Aggregated transaction volume of the online food market — including food and beverage products as well as agricultural and Marine products — totaled 67.1 trillion won, an on-year increase of 7 percent.
 
The online food market saw a total of 13.2 trillion won of transactions in 2017 and 18.7 trillion won the following year. That figure reached 26.9 trillion won in 2019 and surpassed 42.5 trillion won during the first year of the pandemic. It broke 57.4 billion won in 2021 and hit 62.7 trillion won in 2022.

BY LEE SOO-JUNG, KIM JI-HYE [[email protected]]
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