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[Weekender] Online companies ring the changes in food industry

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Published : 2017-02-10 17:26
Updated : 2017-02-10 20:17

Joseph Kim, a computer programmer living in Seoul, is a busy man. He is so overloaded at work he can rarely go grocery shopping.

With few hours to spend at the gym, his weight has been creeping up steadily, forcing him to change his diet and have salads delivered to his door twice weekly. All he has to do is order on his computer or smartphone.

Wrapped in a green eco bag and consisting of an assortment of fruits and vegetables, the curated meals he receives have helped him deal with his predicament. 

A promotional ad by Baedal Minjok, an online-to-offline platform for food delivery in Korea (Baedal Minjok)

“It’s not the best quality of greens I can prepare myself, but it’s something I can live with,” he told The Korea Herald.

Kim is one of a growing army of professional men and women in Korea who choose delivery over dining out. With the swell of electronic commerce and social media, online-to-offline (O2O) businesses have sprung up in droves over the last five years, transforming the industry.

“Korea is undoubtedly a ‘delivery republic,’” said Lee Jun-gyu, brand director for Foodinno, a franchise firm that specializes in fried sweet and sour chicken with over 150 branches across the country.

“With a small landmass, dense population and culture of frequent overtime work and late-night eating, as well as the rise of single-member households, Korea has all the ingredients ripe for the spread of food delivery.” 

In this screen captured image, South Korean girl group AOA's members order fried sweet and sour chicken from Foodinno, a franchise company with 150 branches across the country. AOA modelled for the company in 2014. (Foodinno)

As the economy has lost vigor, people are less inclined to dine out, he noted, preferring to eat at home alone or with the family instead. He added what has become the fashionable trend of eating and drinking solo -- now known as “honbap” and “honsul,” respectively -- also plays a part.

Of some 34,000 McDonald’s branches worldwide, in fact, Korea’s are the only ones that regularly offer delivery. Starting with the delivery of Korean-style Chinese foods in the 1980s, options expanded to fried chicken in the ‘90s, pizza in the 2000s and salad, sushi and sherbet nowadays.

The force driving the market now is O2O services, with companies Baedal Minjok, Yogiyo and Baedaltong leading the pack. The market size of this groundbreaking group is estimated to be $1 billion, according to industry insiders. 

Neil Koh publishes drinks and culture magazine DNC and imports Georgian wines through his company Rusko spirits. (DNC)

While these firms have reaped the gains at the forefront of technological evolution, the franchises and independent restaurants have become docile followers. Some are actively embracing the platform, others are lagging behind, but turning a blind eye to the industrywide upheaval could spell business failure, Lee warns.

Neil Koh, who publishes drinks and culture magazine DNC and imports Georgian wines through his company Rusko spirits, says the new commercial model has resulted in the cleaving of the industry, with deliverymen hired by O2O companies and shipping firms instead of restaurants.

“It’s a paradigm change,” according to Koh. “Hiring deliverymen has become an uphill battle.”

By Joel Lee (joel@heraldcorp.com)