CJ Freshway is continuing its earnings growth even amid a slump in the dining-out market. Although its business structure, which supplies food ingredients based on the restaurant industry, is inevitably sensitive to the economy, it is being assessed as having built a growth model largely insulated from economic cycles through a shift in its customer portfolio, an online strategy, and the expansion of its concession business.
CJ Freshway said on Feb. 5 that last year's full-year revenue and operating profit came to 3.4811 trillion won and 101.7 billion won, respectively. They rose 7.9% and 8.1% from a year earlier. Fourth-quarter revenue was 898 billion won and operating profit was 30 billion won, up 5.6% and 19%, respectively, from a year earlier.
What stands out is that this improvement came during a downturn in the dining-out economy. CJ Freshway mainly runs a business that supplies food ingredients based on the restaurant industry. It also operates a range of businesses, including group catering and sauce manufacturing.
According to Korea Agro-Fisheries & Food Trade Corporation (aT), the restaurant industry business trend index was 75.09 in the fourth quarter of last year. The index is calculated based on a survey of 3,000 restaurants nationwide. A reading below 100 means that more businesses saw sales decline than increase compared with the same period a year earlier. Typically, when the dining-out economy weakens, food ingredient supply also decreases, but CJ Freshway has broken from that pattern.
The key to defending its results is, first, a change in customer mix. During a downturn, small, independently owned eateries quickly fall behind, while corporate franchises with capital strength and operational efficiency and the group catering market are relatively resilient. CJ Freshway has read this trend and focused on targeting corporate customers.
In particular, by expanding its "Kitchenless" solution, which supplies prepared ingredients to businesses facing labor shortages and rising wages, it has laid the groundwork to grow not only its food ingredient distribution but also its catering business. Owners can reduce kitchen staff and improve operational efficiency, while CJ Freshway secures stable, large-scale supply outlets.
Its online strategy is another pillar of improved performance. Centered on its own online mall "FreshN," CJ Freshway strengthened its private brand (PB) and directly imported products. It also broadened distribution through external platforms such as "Sikbom," "Baemin Sanghoe," and Smart Store. By enabling online ordering, it established a "low cost, high efficiency" model that targets ordinary restaurant channels without deploying sales staff.
In addition, the merger of Fresh One subsidiaries vertically integrated procurement, logistics, and sales, forming the basis of its O2O (a model that connects consumers online and offline in both directions to drive purchases and services) strategy. Through this, it is securing delivery competitiveness and accelerating the pace of expanding client accounts.
Last year, CJ Freshway's distribution business (restaurant ingredients and food raw materials) revenue was 1.5621 trillion won. A CJ Freshway official said, "Revenue in the online distribution business increased 55% year over year," and added, "Along with securing new customers through channel diversification, competitiveness such as nationwide logistics infrastructure supported revenue expansion."
Nam Seong-hyeon, an analyst at IBK Securities, said, "For a food ingredient company to approach ordinary restaurants, it needs to deploy sales staff and incur logistics costs. But an ordering method through online does not incur those parts," and added, "Because competitiveness in logistics backs it up, they can shorten distribution steps and expand their growth base over the medium to long term."
The concession business, which operates in special commercial districts such as airports and theme parks, is also supporting results. It serves as a "cash cow" that moves independently of the general dining-out economy.
CJ Freshway operates "Gourmet Bridge," a complex food and beverage cultural space at Incheon International Airport. Last month, it opened the airport's largest food court with 450 seats on the east side of Terminal 2 at Incheon International Airport. It offers a wide lineup from Korean and Chinese to Asian cuisine and casual food.
CJ Freshway expects annual visitors to Gourmet Bridge to reach 4 million this year. In line with the recovery in airport traffic, it is becoming a stable revenue source for CJ Freshway, and the customer data and operational know-how accumulated in the process are being applied to its existing food ingredient business.
Lim Seong-cheol, chief financial officer (CFO) of CJ Freshway, said, "Based on advancing fundamental competitiveness in products and logistics and on digital transformation, we established a profitability-centered growth model and achieved operating profit in the 100 billion won range for the first time since our founding." He added, "This year, we will accelerate O2O performance delivery and fully roll out the Kitchenless strategy, focusing on proving results and effectiveness."