The number of cafes, one of the startup items for retirees, decreased by more than 1,500 last year, as reported on the 22nd. This marks the first instance in 60 years since independent statistics on cafes began to be compiled in 1964 where a 'year-on-year decrease' has occurred. This phenomenon arose in the context of declining cafe sales and rising coffee bean prices.
◇ The number of cafes that grew by thousands each year decreased by more than 1,500 last year
According to local government administrative permission data from the Ministry of the Interior and Safety on the 22nd, the number of cafes in the country at the end of last year was recorded at 79,350. This is a decrease of 1,526 from the end of the previous year in 2023 (80,876). This analysis was based on businesses registered as cafes with the National Tax Service.
Cafes numbered less than 1,000 across the nation even in the 1990s, but their numbers exploded in the 2000s. Starting in 2001, hundreds were added each year, and from 2008, the number increased by more than 1,000 annually. In particular, 16,338 new cafes opened in 2021, while 8,692 closed, resulting in a net increase of 7,646 over the year. An industry insider noted, 'The opening of the first Starbucks in front of Ewha Womans University in 1999 ignited the increase in cafes.'
However, the trend of increasing cafes showed signs of reversal starting in 2023. That year, 12,435 cafes closed, resulting in a year-on-year net increase of only 10.
Moreover, in the following year, 2024, the number of cafe closures was 12,246 while openings only reached 10,720, resulting in a decrease of 1,526 (1.9%) compared to the previous year. This is the first year-on-year decrease since statistics on cafes began to be compiled in 1964. During the same period, the total number of self-employed individuals increased from 28.41 million to 28.57 million, a rise of 0.6%. This shows that cafe startups are underperforming compared to the overall average for self-employment.
The phenomenon of decreasing cafes continues this year as well. By February, cafe openings numbered 1,294, while closures totaled 1,503, resulting in a net decrease of 209 overall.
◇ Cafe sales decreased by 9.5% in the fourth quarter of last year, while coffee bean prices tripled in five years
The phenomenon of declining cafes coincided with falling sales and rising coffee bean prices. According to Korean Credit Data, total cafe sales in the fourth quarter of last year decreased by 9.5% compared to the previous quarter. In contrast, fast food restaurant sales decreased by 1.8%, and pub sales fell by 1.7%. Previously, total cafe sales increased by 40%, from 11.7 trillion won in 2019 to 15.5 trillion won in 2022. A representative from Korean Credit Data analyzed, 'Since coffee is a non-essential commodity, it can be relatively more affected by economic downturns.'
As coffee bean prices rise, the expense burden on cafes is also increasing. According to food industry statistical information, the price of Arabica beans, which was around 111 won per pound (approximately 450g) in 2020, has now soared to 372 won, more than tripling. This is due to bad weather affecting coffee crops in major Arabica bean producing countries like Vietnam and Brazil.
A representative from a coffee bean supply company, 59-year-old Kang, said, 'Last year, we raised the retail price (supplied to cafes) 3 to 4 times, and this year raised the price by about 20% starting January 1.' He added, 'Cafe owners who receive our bean supplies are expressing their frustrations, and since bean prices are rising dramatically, we are also in a difficult situation,' noting that 'more than 30 partner cafes have closed since last year.'
Kim, a 43-year-old who has been running a cafe in Songpa District, Seoul, for five years, stated, 'It's hard to bear the expense increases, so I raised all menu prices by 200 won last year and by 200 won again this year, but revenues have continued to be lower than two years ago,' adding, 'I'm considering whether to pursue another business or endure until bean prices stabilize.' Another nearby cafe owner remarked, 'Five to ten years ago, cafes were really viable, and I recommended them to others' stating, 'These days, when retired friends ask, 'Should I open a cafe too?' I dissuade them.'
Meanwhile, concerns have been raised that customers labeled as 'workspace attendees,' who sit for long hours studying or working on their laptops in cafes, are negatively impacting sales by lowering customer turnover rates. An analysis by the Korea Restaurant Industry Research Institute in 2019 indicated that if a customer purchasing a 4,100 won cup of coffee stays in the store for over 1 hour and 42 minutes, the shop begins to incur losses.
As a result, the number of cafes blocking electrical outlets is increasing. By checking 25 cafes in Song-dong and Songpa District's 'Songridan-gil', it was found that 11 cafes blocked outlets between last year and this year. A 40-year-old man named Kim, who has been operating a cafe for four years in Seongsu-dong, explained, 'If one customer buys a coffee and occupies a 4-person table for 3 to 4 hours, the shop cannot sustain itself,' adding, 'Since we've blocked outlets, the time customers spend in the shop has decreased, and sales have noticeably recovered.'