The phenomenon of "lunchflation" (a blend of lunch and inflation) is becoming prolonged, leading domestic major meal service companies to achieve record high sales last year. As dining prices skyrocketed, consumers opted for relatively cheaper meals at places like company cafeterias.
◇ Major meal service companies see sales increase across the board
On the 7th, CJ Freshway reported sales of 3.22 trillion won last year. This marks a 4.9% increase compared to the previous year. However, operating profit totaled 940 billion won, reflecting a 5.3% decline during the same period. CJ Freshway explained that the slight decrease in operating profit was due to high inflation, high interest rates, and sluggish domestic economic conditions impacting consumer sentiment. CJ Freshway achieved a record 3.07 trillion won in sales in 2023 but surpassed that figure within a year.
CJ Freshway's business is primarily divided into mass feeding and food distribution. Last year's mass feeding sales reached 778.1 billion won, attributed to increased demand for company cafeterias in offices and industrial sectors, according to CJ Freshway. The food distribution business generated sales of 2.39 trillion won, indicating a consistent growth trend in food supplies for meal service facilities. They noted that both supply sources and volumes for elderly welfare and care facilities increased simultaneously. Sales of food supplies for dining companies also continued to perform well, thanks to new contracts with large franchises such as No More Pizza, Saegwang Yangdaechang, and Slow Kelly.
Samsung Welstory surpassed 3.11 trillion won in sales last year, marking its debut in the "3 trillion club." This represents an 11.4% increase compared to the previous year's sales (2.08 trillion won). Last year, operating profit totaled 157 billion won, a 22.7% increase from the year before. According to Samsung Welstory, growth was sustained last year due to increased usage in meal services and expanded food distribution volumes.
Samsung Welstory is increasing new contracts for mass feeding services, having recently partnered with Hanwha Aerospace, following previous contracts with SK hynix and CJ CheilJedang last year. They also secured dining services contracts at apartments such as Yongsan Central Park and Gaepo Xi Residence and acquired the business rights for the Army Academy cadet dining hall.
Samsung Welstory stated, "We will enhance profitability by focusing on large and profitable business sites and actively entering new markets such as senior facilities, military dining, and apartment meal services," adding, "In the food supply sector, we will expand sales aimed at large franchises with high growth potential and secure cost competitiveness through expanded global sourcing."
Hyundai Green Food recorded sales of 2.21 trillion won and operating profit of 886 billion won last year, reflecting increases of 4.0% and 7.8%, respectively, compared to the previous year. Hyundai Green Food noted, "Last year's record sales and operating profit were achieved due to strong performance in our core mass feeding business."
◇ Prices of major dining menu items in Seoul rise 40.2%... Preference for company cafeterias increases
The ability of meal service companies to improve their performance is interpreted as a result of rising dining costs leading to an increased preference for company cafeterias. According to the Korea Consumer Agency, the prices of seven dining menu items in the Seoul area rose an average of 40.2% as of December last year compared to December 2014.
Additionally, meal service companies are continuing to make various efforts to prevent existing customers from leaving. Samsung Welstory is showcasing representative menu items from about 30 restaurants officially certified by domestic and international gourmet guides, including the Michelin Guide, Blue Ribbon, and Baeknyun Gage, in more than 170 company cafeterias nationwide. They have also collaborated with convenience store CU and Café Noted to introduce donut products in offline distribution channels.
A Samsung Welstory representative said, "Industry competition is intensifying and consumers' standards are rising," adding, "We are striving to provide differentiated menu options by strengthening collaborations with external brands."
The growth trend of meal service companies is expected to continue this year. Kim Jeong-wook, a research analyst at MERITZ Securities, noted, "The high inflation trend is expected to continue this year, leading to ongoing increased demand for meal services due to lunchflation," and added, "If last year's medical strikes improve this year, hospital meal sales are also expected to increase."
For example, regarding the sales forecast for this year for CJ Freshway, the industry leader, FN Guide estimated sales at 3.45 trillion won and operating profit at 1.06 trillion won, representing increases of 7.4% and 11.6%, respectively, compared to last year.
Park Sang-jun, a research analyst at Kiwoom Securities, reported that "New contracts centered on large transactions are ongoing and online sales are also expanding," and added, "If consumer sentiment rebounds, there will be increases not only in new customer acquisitions but also in sales from existing customers."