Convenience stores

South Korean office workers hit convenience stores as ‘lunch-flation’ bites

SEOUL, June 29 (Reuters) – Office worker Park Mi-won had never bought her lunch at a convenience store, until her favorite lunch buffet recently hiked prices by more than 10% to 9,000 won ($7) as South Korean inflation hit a record high. Top 14 years old.

“After the price hike, I went to convenience stores instead, where I thought the prices were reasonable while the food was good,” the 62-year-old said. “So now I go two to three times a week.”

Global food prices jumped 23% last month from a year earlier, according to a United Nations agricultural arm. The war in Ukraine has impacted grain supplies to that country and Russia, and sent energy and fertilizer prices skyrocketing.

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Offering instant noodles, sandwiches and inexpensive “gimbap” (rice rolls) for less than $5, convenience stores are growing in popularity as salaried workers like Park look for ways to cut costs.

South Korean convenience store chain GS25 saw an increase of more than 30% in instant meal sales in January-May compared to a year ago.

Seeing growing demand, GS25 has also launched a new meal subscription service for office workers, which comes with price discounts and direct-to-office delivery.

Peers such as CU and 7-Eleven saw similar increases in demand, while Emart24 saw a 50% increase in lunch box sales in areas with high office buildings.

The gains came as restaurant food prices in South Korea rose 7.4% last month from a year earlier, the fastest pace in 24 years.

Dubbed “lunch-flation”, the price of favorite dishes such as “galbitang” (beef stew with rice) jumped 12.2% and “nengmyun” (cold noodles) rose 8.1%, according to government statistics.

Although convenience store lunches have not been immune to rising costs, their much lower overall prices have helped them gain popularity.

Around the capital Seoul, average prices for nengmyun recently topped 10,000 won, according to data from the Korea Consumer Agency, while instant ramen noodles are still available at just over 1,000 won in restaurants. convenience stores.

The Bank of Korea estimates that every 1% rise in imported agricultural prices will push up processed food prices by 0.36% next year and restaurant prices by 0.14% over the next three years.

Some operators say diners should expect bigger price increases.

“Actually, I have to raise prices again,” said Lee Sang-jae, who runs a galbitang restaurant in Seoul’s central district and has already raised prices twice this year, from 10,000 to 12,000 won. .

“Instead, I’m giving up some of my profit margin, as I also have to consider the light wallets of office workers these days.”

In a survey by human resources firm Incruit last month, 96% of 1,004 office workers said they now find lunch prices heavy. Of those, nearly half were looking for ways to cut lunch expenses.

But in South Korea, the lunch hour is considered sacred among office workers, who often mingle with friends and colleagues for longer than the allotted hour at busy dinner parties.

“It’s much cheaper than going to a restaurant, but the downside is that we can’t have lunch here,” said Ku Dong-hyun, 28, who ate gimbap and ramen noodles from a GS25. for his Friday lunch.

While many small restaurants are still enjoying a rebound in diners after months of COVID-induced social distancing rules, economists are warning that prolonged pressure on consumer prices will weigh on consumption.

“Real purchasing power is shrinking amid fierce inflationary pressures, but people don’t want to cut back on the evening gatherings they’ve just started, when they can at lunchtime,” Lee Seung-hoon said, Chief Economist at Meritz Securities.

“As high consumer prices last longer and longer, this will start to weigh on private consumption, and when this happens, together with deteriorating external conditions for exports, it will raise questions about aggressive monetary tightening. from the central bank that we are currently witnessing.”

($1 = 1,284.3200 won)

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Reporting by Jihoon Lee in Seoul, additional reporting by Do Gyun Kim and Dae-woung Kim; Edition by Lincoln Feast.

Our standards: The Thomson Reuters Trust Principles.