As high inflation persists, the dining-out industry is fixated on value-for-money competition. Cheaper food is a win for consumers, but there are also concerns that profitability for franchisees and other self-employed owners could deteriorate.
According to the food industry on the 30th, Nobrand Burger of Shinsegae Food recently strengthened its lineup of burgers priced in the 2,000 won range. Subway released a new menu item, "Pizza Sub," priced at 4,300 won. Hansot Dosirak, a lunchbox franchise, rolled out 3,000 won-range items including the "Mayo Series." Paris Baguette expanded its lineup of small bread items priced around 1,000 won.
Convenience store chains are also establishing themselves as a meal substitute by pushing ready-to-eat items in the 1,000–3,000 won range. Low-priced coffee brands MEGA MGC COFFEE and COMPOSE COFFEE recently entered the value-for-money single-meal race by offering tteokbokki, chicken, and fried rice at low prices. With "lunchflation" continuing as dining-out prices rise and lunchtime costs grow burdensome, demand is increasing for meals that are both affordable and filling.
However, inside and outside the industry, there are worries that such price competition could, in the long run, lead to worsening profitability. While key expenses such as raw and subsidiary material costs, rent, and labor keep rising, once a structure of lower selling prices takes hold, margins inevitably shrink.
In particular, dining-out businesses face limits on seat counts and table turns, which constrains a low-margin, high-volume strategy. Delivery is possible, but there are limits to offsetting revenue simply by indiscriminately increasing volume, making it likely that price cuts will directly translate into profit declines. Adding to this is the difficulty of raising prices once they have been lowered, which could keep revenue structures under prolonged pressure.
If price competition spreads across the industry, it could trigger bleeding battles among brands and drive down overall profit margins. The burden is even heavier for small self-employed operators and smaller franchises. Their bargaining power on costs is weak, and franchisees also face higher head office supply prices, resulting in a double burden. In fact, while restaurant sales have been rising recently, operating profit has fallen, worsening profitability.
According to the 2025 Restaurant Management Status Survey released by the Ministry of Agriculture, Food and Rural Affairs and the Korea Rural Economic Institute (KREI), the average annual sales of restaurants in 2024 were 255.26 million won, up 1.4% from a year earlier, but the operating margin during the same period was shown to have declined to 8.7% from 8.9% a year earlier.
In the same survey, the "average differential franchise fee (distribution margin)" that restaurant franchisees pay to headquarters was 26 million won per year, up 13.0% from 23 million won a year earlier. The ratio of the differential franchise fee to sales also rose to 4.4% from a year earlier. A person surnamed Kim who runs a restaurant franchise said, "In the current slump in consumption, even a small increase in the differential franchise fee hits hard," adding, "Large franchises can't raise differential franchise fees much because they are mindful of franchisees, but smaller franchises have fewer outlets, so franchisees are less united."
Market polarization is also deepening. Sales and store counts are growing around low-priced brands, but demand is concentrating on top players with capital strength and brand recognition, worsening the competitive environment for small operators. The closure rate in the dining-out sector in 2025 was also 15.8%, higher than the service sector (9.3%) and the wholesale and retail sector (8.6%).
A food industry official said, "As high inflation has made dining out more burdensome, it is natural for customers to look for menus that satisfy at reasonable prices. But since the burdens of rent, labor, and materials and supplies keep growing, we do not see simply lowering prices as sustainable." The official added, "So we are lowering the entry barrier with value-for-money menus, while complementing profitability through premium items, set configurations, and operational efficiency."
Lee Jong-woo, a professor in the Department of Distribution and Marketing at Namseoul University, said, "The dining-out business structurally hinges on how many customers you can turn over in a limited space. A strategy to induce customers drawn in by low-priced menus to purchase other items can yield positive effects," adding, "The problem is that if this trend spreads across the industry, the entire dining-out sector's profitability could worsen." Lee added, "In the end, low-priced menus can only be used as loss leaders," and "it is an unavoidable choice to secure customers, even at the cost of worsening profitability."