Global coffee, restaurant franchises flourish in Seoul as local palates expand

Seoul was once known as the deathbed for global F&B chains and franchises. Today, however, overseas franchises are some of the country’s hottest dining spots.

Intelligentsia Coffee's first global outpost in Jongno District, central Seoul, opened in March. [INTELLIGENTSIA COFFEE]

Seoul was once known as the deathbed for global F&B chains and franchises. Established brands like Cold Stone and Wendy’s used to ambitiously enter the market, only to throw in the towel within a decade or so.

Today, however, overseas franchises are some of the country’s hottest dining spots.

Intelligentsia Coffee, hailing from Chicago in the United States, is one of the latest global F&B brands that landed in the city, opening its very first international outpost in Jongno District, central Seoul, in early March.

It hasn’t done much advertising, and doesn't need to, because locals did the marketing for them by posting about it on social media. And it paid off; on a March Thursday morning, 10 minutes before opening, there was already a line outside Intelligentsia's storefront.

The company's CEO James McLaughlin visited Korea upon the Seoul store's opening and cited the flourishing passion for specialty coffee in Korea as its reason for entering the market.

Tim Hortons' sixth Korean store by Gwanghwamun subway station in Jongno District, which opened on April 16 [TIM HORTONS]

Canadian coffee chain Tim Hortons also opened its first store in Gangnam District, southern Seoul, last December. It has already opened a sixth location by Gwanghwamun subway station in Jongno District, on April 16, a mere four months since its first opening.

“Korea has one of the most interesting coffee markets in the world today and holds a lot of potential,” a Tim Horton PR employee told the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily. “We plan to actively expand to open 150 outlets over the next five years.”

Gangnam District, an affluent, modern neighborhood with a vibrant nightlife, is a location often favored by overseas brands looking to enter Korea. It has especially proven popular with American burger brands. Popeyes, Shake Shack, Super Duper Burgers and Five Guys all set up shop in the area within the last eight years.

Shack Shack in Gagnam District, southern Seoul [JOONGANG ILBO]

Brands that tried the Korean market in the 80s, 90s and even the early 2010s, however, experienced a Korea that was much more closed off to foreign franchises.

Johnny Rockets, a U.S. burger chain, announced in 2022 that it would be closing all its posts in Korea after 11 years since first launching the brand in the country. Wendy’s opened in Korea in 1984, but exited in 1998. Cold Stone entered in 2006 and ambitiously opened over 60 stores before closing in 2015. It attempted reentry in 2018 with a new local operator but drew back again after just two years in the face of soft sales.

So what changed? Korea Franchise Association’s adviser Park Won-hew cites a more developed restaurant scene and a changing local palate.

“In order for a franchise entering an overseas market to succeed, it is important to accurately understand the local situation and work with a local partner that has capital and operational management capabilities. Back then, Korea had neither a system nor apt partners.

Also, no matter how good a franchise is, it is difficult to be loved if it arrives too far ahead of trends or people's consumption levels at the time."

The line in front of Popeyes when it re-opened in Seoul in 2022. Some 5,000 people reportedly dropped by Popeyes during the first three days of its re-opening. [JOONGANG ILBO]

Popeyes, like Cold Stone, launched its brand twice in Korea, but has a much different story, largely due to the timing Park mentioned.

The Miami-based fried chicken sandwich chain first entered the Korean market in 1994 and opened as many as 200 branches by 2004. The sales started to dwindle, however, due to rivals such as Mom’s Touch and KFC, and Popeyes was driven out of the Korean market after failing to find a buyer in 2020.

But with accurate market readings by the current Korean operator of Popeyes, a subsidiary of the KRX-listed company Silla named Non Luxurious Company, the fried chicken chain made a triumphant comeback in 2022. Some 5,000 people reportedly dropped by Popeyes during the first three days of its reopening. Today, there are over a dozen Popeyes stores in the country.

Suh Yong-gu, a business professor from Sookmyung Women's University, said that Korea’s hype for foreign franchises is due to its increased acceptance of foreign cultures.

“Cross-cultural acceptance tends to be proportional to people’s educational level,” he said. “Educational attainment, which has been gradually increasing among the baby boomer generation, is increasing even more for millennials and Generation Z. As a highly educated generation becomes the main consumer group, the trends and preferred flavors are shifting.”

Shake Shack in January released a slew of limited-edition burgers catering to the local palate, like the Korean Fried Chicken Burger, the Korean Barbeque Burger and Spicy Korean Fries. [SPC]

Many foreign franchises and chains have also become more skillful in customizing menu items to better cater to the local food culture.

Shake Shack in January released a slew of limited-edition burgers catering to the local palate, like the Korean Fried Chicken Burger, the Korean Barbeque Burger and Spicy Korean Fries. In 2021, it unveiled the Gochujang Burger, which was a chicken burger with gochujang sauce and thinly sliced baek kimchi, or white kimchi. It garnered particular attention as a United States Department of State employee posted a picture of himself devouring the burger with captions, “Highly recommend — Daebak [amazing].”

Shake Shack first launched in Korea in 2016 in partnership with local food conglomerate SPC Group, vying to lead the country’s premium burger market. Their success is often attributed to SPC’s technical ability to recreate the authentic flavors of the American burger brand while also actively developing new recipes incorporating local ingredients.

SPC has been able to work out partnerships with other famous restaurants as well, including Michelin-starred Mingles in Korea, Atomix in New York City and the old-school bulgogi restaurant Hanikwan.

“There is a high interest in Korean food in the world right now,” said an SPC employee. “We plan to continue our research, development and marketing through close collaboration [with Shake Shack] and introduce many new burgers with a hansik [Korean traditional cuisine] spin.”

BY AHN HYE-JIN, LEE JIAN [lee.jian@joongang.co.kr]