South Koreans have been spending less in cafes, as an overall economic downturn takes its toll on discretionary spending.
A report by the Korea Rating and Data showed Monday that cafe takings in the fourth quarter of 2024 decreased by 9.5 percent compared to the previous quarter. It marked the sharpest decline across all categories, surpassing the 1.7 percent decrease in sales at bars and a 1.8 percent drop at fast-food restaurants.
The cafe industry had been growing for some time, with a May 2023 survey by Real Research Korea finding that 33 percent of Korean adults were going to cafes more often compared to 2-3 years earlier, and 48.8 percent were going just as often.
But the recent figures suggest that the lackluster economic climate is starting to take a toll on the Koreans’ love for coffee.
"It appears that the economic and political uncertainties have pushed consumers to cut down on non-necessities like alcohol and coffee," an official from the Korea Rating and Data said.
South Korea was plunged into political turmoil after the much-disputed Dec. 3 martial law declaration by President Yoon Suk Yeol, who is now facing impeachment and criminal trials as a result. The Korean won weakened sharply immediately after the short-lived Dec. 3-4 martial law declaration and resumed a monthslong decline.
The country's economic indicators have not been strong even before the ongoing political uncertainties.
South Korea's real gross domestic product was initially projected to grow by 2.2 percent in 2024 by the Bank of Korea, but the central bank said last month that the annual growth fell below that figure to 2 percent. The state-run Korea Development Institute last week slashed the expected growth of the country's economy this year to 1.6 percent, down from 2 percent projection it announced in November of last year.
The KoDATA's report showed that 13.3 percent of indebted small businesses -- defined by Korean law as "micro enterprises" employing of less than 10 employees -- went under in the fourth quarter. The 482,000 small businesses that closed down had an average of 61.85 million won ($43,000) in debt, with average arrears of 5.68 million won.
In terms of all sole proprietors in the country in the fourth quarter of last year, the collective debts amounted to 716 trillion won, up from 712 trillion won in the previous quarterand 700 trillion won in the fourth quarter of 2023.
minsikyoon@heraldcorp.com
