South Korea: Number of beer pubs up in Korea but average sales decline

The number of beer pubs has grown in South Korea, but average sales are on the decline. As overall alcohol consumption falls, analysts say the sector has been affected by shifting drinking trends, ChosunBiz reported on January 5.

According to the latest survey by the Ministry of Data and Statistics (MODS) on the 5th, the number of draft beer and other pub franchise locations reached 12,939 in 2024, up 9.0% from a year earlier. It was the largest increase among all franchise categories. However, sales per draft beer and other pub franchise location were 256.9 million won, down 1.3% from 260.3 million won a year earlier. Sales per employee at draft beer and other pub franchises were 90.7 million won, 20% lower than the all-industry franchise average of 113.4 million won.

Growth has also cooled for leading draft beer franchises that operate hundreds of locations. According to the Korea Fair Trade Commission's franchise information disclosure system, Yeokjeon Halmeoni Beer increased its store count from 861 in 2022 to 926 in 2023 and 968 in 2024, but the average franchise sales in 2024 were 430.23 million won, down 5.1% from the previous year.

Saenghwal Beer had 233 locations in 2024, five fewer than the previous year (238). Average franchise sales that year also fell 6.8% to 297.14 million won. Daily Beer, which operates Saenghwal Beer, is aiming to list on the KOSDAQ next year, but there are concerns that its shrinking size could be an obstacle.

Some say a prolonged slump in domestic consumption and a contraction in the craft beer market itself are to blame. With year-end party and company dinner demand visibly down and a moderation culture that discourages binge drinking taking root among people in their 20s and 30s, the broader alcohol market is struggling.

In particular, the steady popularity of "chimaek," pairing chicken and beer, means beer franchises must also compete with chicken franchises, which have 31,397 locations nationwide. The trend of drinking alone at home is also spreading, putting them in competition with discounted imported beers sold at convenience stores. There is also talk that the rising number of non-franchise craft beer outlets has hurt profitability as those beers gain popularity.

A franchise industry official said, "There was a boom in franchises selling beer with light snacks, which drove store growth, but as dining out declined due to inflation and trends like healthy pleasure took hold, demand fell," adding, "In particular, having to compete with general pubs and chicken franchises appears to have dealt a major blow to profitability."

Some analysts also say the trend of low-priced beer has affected profitability. Saengmacha, a newcomer that gained popularity with low-priced beer, grew its locations from 14 in 2023 to 181 last year. Lee Jong-u, a professor in the Department of Consumer Science at Inha University, said, "Globally, alcohol consumption is declining, and as a moderation culture forms among Millennials and Gen Z, Japanese-style low-priced beer bars are trending to secure demand," adding, "As low-priced beer has become popular, even the average check per customer has fallen, worsening profitability."