South Korean restaurants struggle to survive as global oil prices eat into profits

Kim Bong-hwan, who runs a barbecue restaurant in Myeong-dong in central Seoul, is feeling the brunt of rising costs, with wholesale beef prices climbing from about 28,000 won (US$18) per kilogram to more than 40,000 won in recent weeks. “Everything’s going up – beef, pork, eggs, vegetables and even disposable materials like plastic bags and containers,” he said. “Prices have risen 20 to 30 per cent in just a few weeks.” Kim, who has operated the restaurant for more than 15 years, said raising menu prices was a last resort as he feared losing customers. “For now, I’m absorbing the hit to my margins,” he said. “But I’m worried this is only the beginning and the worst is yet to come.” Like Kim, many small business owners across South Korea are grappling with rising fuel, ingredient and packaging costs as higher global oil prices ripple through the economy amid tensions in the Middle East. Global oil prices have surged amid the escalating conflict. As a major energy importer, South Korea is particularly vulnerable to higher prices, which are pushing up costs across industries, including fertilisers, animal feed, farm fuel and transport. The spike in packaging costs is linked to disruptions in naphtha supply, a key petrochemical feedstock derived from crude oil. South Korea imports about 45 per cent of its naphtha, with 77 per cent coming from the Middle East. Online communities for self-employed workers are flooded with complaints about soaring packaging costs, particularly for plastic bags and food containers widely used in the country’s delivery-driven market. “One of my suppliers raised prices of food containers by 100 per cent. Unbelievable. I might have to suspend my business for a while,” one user wrote. Another user said an order that previously cost 70,000 won for 600 units of plastic containers now costs 90,000 won. Several suppliers of plastic containers and packaging materials have posted notices on their websites warning of “unavoidable price hikes” due to rising raw material costs and supply instability. Some said prices may be adjusted without prior notice once existing inventories are depleted. Amid rising cost pressures, the Korea Federation of Micro Enterprises (KOFME), a coalition of self-employed workers, called on the government on Monday to designate packaging materials as essential goods for price monitoring and crack down on unfair trade practices. Stimulus hope Attention is turning to whether the government’s planned stimulus measures will help ease the burden on small businesses. The government on Tuesday proposed a 26.2 trillion won supplementary budget to cushion the economic fallout from the Middle East crisis. According to the Ministry of SMEs and Startups, 1.9 trillion won of the extra budget will be allocated to support small businesses. Another 4.8 trillion won will go towards giving 600,000 won each to people in the bottom 70 per cent income bracket. Under the plan, all eligible recipients will receive a base payment of 100,000 won, with additional amounts determined by income level and place of residence. Those in lower-income brackets outside the Seoul metropolitan area could receive up to 600,000 won in total. The programme targets about 35.8 million people. Payments will be provided through credit cards, debit cards or local currency vouchers, with usage rules aligned with last year’s consumer voucher programme to encourage spending within local communities. Reaction among small business owners was sharply divided over the plan, according to market watchers on Wednesday. KOFME voiced support for the plan. “The broader use of local currency could direct spending towards small merchants and help stimulate business activity,” it said. Similar views were echoed in online forums for the self-employed. “The payments could lead to higher consumption and improved sales,” one social media user wrote. Others, however, remained cautious. Another user said any boost in sales would likely be short-lived. “Rising labour and material costs could offset gains, limiting the overall benefit and potentially fuelling inflation,” he wrote. Some critics also raised concerns that spending may be concentrated in sectors such as private education and healthcare, weakening the overall impact. They said last year’s consumer vouchers failed to deliver lasting gains and called for a design that ensures funds are spent in areas more directly linked to small business revenue, including dining. Budget Minister Park Hong-geun, meanwhile, dismissed concerns about inflation. Speaking on KBS News on Tuesday, he said the Bank of Korea and the Korea Development Institute expected the impact on prices to be limited. “The supplementary budget will have minimal influence on interest rates or inflation as it does not involve government bond issuance,” he said. This is a combination of two articles published by The Korea Times

South Korean restaurants struggle to survive as global oil prices eat into profits

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Prices for ingredients and packaging have risen by as much as 30 per cent since the start of the Iran war

Prices for ingredients and packaging have risen by as much as 30 per cent since the start of the Iran war