A, who ran a roastery cafe in Samseong-dong, Gangnam District, Seoul, said this on the 9th. Opened in 2012, the cafe drew attention with a unique concept of pricing coffee in line with the Korea Composite Stock Price Index (KOSPI). As the KOSPI broke through the 9,300 level intraday in June this year, it was once again cited as a quirky marketing case.
But the cafe closed its doors early this month. There were three main reasons. First, repayment of the principal on policy loans began, and there was no additional channel to raise funds. Also, material and labor costs kept rising.
Even foot traffic in the commercial district fell due to the economic downturn. In this situation, it could not raise coffee prices along with the Korea Composite Stock Price Index (KOSPI). Late last year, the cafe declared its own "circuit breaker" and fixed coffee prices at 3,500 won.
A explained, "We couldn't just keep raising prices along with the KOSPI," and "Considering the commercial district and coffee prices at nearby stores, we had to keep them in the 3,000-won range."
A is not alone. With high inflation, high interest rates and a slump in domestic demand overlapping, closures among the self-employed are continuing. According to National Tax Service statistics, there were 93,551 coffee beverage shops nationwide in April this year. More than 1,700 closed from 95,250 in April last year.
In particular, the ratio of closures to new businesses last year was 83.5%, the highest since 2013 (84.0%). New business owners totaled 1,168,273, falling for the fifth straight year, while closures numbered 975,681. The reason for closure cited as "business slump" accounted for 491,966, or half (50.4%).
Even places that had been open for a long time could not endure. Last year, 317,406 business owners who had operated for five years or more shut down, the most since related statistics began in 2005. They made up 32.5% of all closures, meaning one in three who closed had been self-employed for five years or longer.
There is also a fair chance the wave of closures among the self-employed will continue. According to Korea Credit Data, in the first quarter of this year (January–March), the amount of personal business loans in arrears (interest and principal) was 14.6 trillion won, a 12.6% surge from the previous quarter.
As the won-dollar exchange rate surpassed 1,500 won, shops using imported ingredients said the burden was heavy. Costs such as rent and delivery platform fees are also on the rise.
Labor costs also look set to climb further. As the Minimum Wage Commission deliberates the minimum wage to be applied in 2027, labor groups the previous day presented a ninth revised proposal of 11,220 won per hour. That is an 8.7% increase from this year's minimum wage (10,320 won). The monthly amount (based on 209 hours) would rise by about 188,100 won per worker, or about 2,257,200 won annually. Management has proposed 10,530 won and is continuing last-minute talks.
With it hard to raise prices for fear of losing more customers, the increased expense burden falls squarely on the self-employed. According to The Federation of Korean Industries' "2026 survey on perceptions of the business environment for the self-employed," the average monthly income of one in three self-employed people (34.0%) falls short of the minimum wage (2,156,880 won per month).
B, who runs a salad shop in Dongdaemun District, Seoul, said, "Basic material costs like eggs, which are essential for salads, have risen sharply, but it's not easy to raise prices," and "As customers also decrease, even those who have been in business a long time are finding it hard to hold on."