Tough Business

[Anchor Lead]

The recent economic slump can be seen as restaurants and diners close around the country. Such ventures are quite common among those who want to own a business but with a limited budget. Last year, nine restaurants shut down for every ten new ones that opened.

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This is a used kitchen supplies store. Restaurant equipment and appliances, which were once purchased with excitement by new restaurant startups, are now waiting for a new owner. Many of the supplies have changed hands multiple times, as the survival period of restaurants is getting shorter. Last year, 181,300 restaurants newly opened. But 166,700 shut down during the same period. It demonstrates that more than nine restaurants went out of business while ten new ones were opening. As a result, the percentage of restaurant owners accounted for in the total number of businesspeople has fallen to below ten percent for the first time. Restaurant owners are facing greater hardships this year from multiple changes in the business environment in addition to an ongoing economic slump.

[Soundbite] Lee Geun-jae (Vice Chairman, Korea Federation of Micro Enterprise) : "The restaurant industry is facing serious hardships, due to a sharp rise in the minimum wage, shortened working hours, growing labor costs and companies' move to hold after-work dinners less frequently."

Statistics Korea found that only less than 18 percent of restaurants can hang on for five years. It is more worrisome that the rate could likely drop further.