Family restaurants chains in crisis in Korea; T.G.I. Friday’s, Tony Roma’s and Bennigan’s have closed down stores located in central Seoul; Marche and Sizzler, the first generation of family restaurants in Korea, recently went out of business

2013-08-09 18:15

Family restaurants chains in crisis

Marche, Sizzler shut down amid prolonged slump
By Rachel Lee

Gone are the times when family restaurants led the country’s dining industry and its culture. They are now on the brink of a precipice. According to the industry, major family restaurant chains such as T.G.I. Friday’s, Tony Roma’s and Bennigan’s have closed down stores located in central Seoul, reportedly due to the inability to pay higher rent under unfavorable economic conditions. “We decided not to renew our contact because we were not happy with the terms of lease offered by landlords,” said a T.G.I. Friday’s spokesman. T.G.I. Friday’s is an American casual restaurant chain that entered the country in 1992. The local franchise, taken over by the fast food chain Lotteria in 2009, currently operates 46 branches in the country. Its competitors Marche and Sizzler, the first generation of family restaurants in Korea, recently went out of business after failing to overcome business difficulties. “It’s true that we have had financial difficulties, but I think it’s the same everywhere in the saturated dining market,” a Marche spokesman said. “We acted quickly to prevent further trouble. “I am sure other big restaurant chains have also found it difficult to survive, except those run by conglomerates.” Marche, a Swiss restaurant chain that ran about 100 branches nationwide, closed in May, having operated in Korea since 1996. Sizzler, a family restaurant chain run by a TS Corp. subsidiary, also closed recently. Ashley, an American-style salad bar chain that Korean conglomerate E-Land runs, has the most outlets, 129, while CJ Foodville’s VIPS, which operates 87 stores, ranks first in sales.“We think those foreign dining giants have failed to localize their operations in Korea,” said a VIPS spokesman. “We are trying to take advantage of the fact that we are a Korea-based company, which makes it easier for us to take a proactive approach to changing consumer tastes.”
Family restaurants such as T.G.I. Friday’s and Bennigan’s have introduced cheaper set lunch menus, and extended opening hours offering a variety of alcoholic drinks.
Industry experts say the entire food and dining industry has been suffering from the economic downturn since the second half of last year.
“The prolonged recession is the biggest problem here,” said KTB Investment & Securities analyst Kim Min-jung.
“Consumers no longer want to, or cannot afford to spend much on eating out, and family restaurant chains have failed to react to this quickly enough, which led to closure for some of them.
“The problems have affected food suppliers, too. Big B2B companies such as CJ Freshway, Hyundai Greenfood and Shinsegae Food have been asked to provide cheaper food for the restaurant chains’ low-price lunch menus.
“So when you think about the quality of food, it’s definitely much lower than before,” Kim said.
The poor economic conditions have polarized the restaurant industry.
“Consumers go for either very expensive fine dining restaurants or cheap, affordable options like the ones in the food courts,” she added.
“According to food companies Pulmuone and Dongwon F&B, concession stores in food courts and motorway service stations are becoming more popular. These companies are apparently planning to open more outlets.”