K-Food-Service Firms' Overseas Expansion Nears Record High, Targeting U.S. Palates First

Operating 5,597 Outlets in 77 Countries in the Third Quarter
Closing in on the 2017 Record of 6,001
217 Food-Service Companies Operating Overseas, Already a Record
Since 2022, the "Key Market" Has Shifted From China to the U.S.

As global interest in K-food grows, the number of overseas locations opened by South Korean foodservice companies is nearing an all-time high. Unlike the heyday a decade ago, when companies focused on China, the world's most populous country, they have expanded overseas by opening stores one after another in the United States. Riding the popularity of K-culture to target global markets, they also appear to be shifting their key markets.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT)'s report on the overseas expansion of South Korean foodservice companies, these companies operated 5,597 stores in 77 countries as of the third quarter of this year. The number of their overseas stores has increased by 953, or 20.5%, this year alone. The total has surpassed the 5,476 recorded in 2016, the second-highest figure since statistics began in 2013, and is approaching the record high of 6,001 set in 2017.

Record Number of Foodservice Companies Expand Overseas This Year

The number of South Korean foodservice companies operating overseas stood at 217 in the third quarter. From January to September this year, 95 South Korean companies began expanding overseas, up 77.9% from last year. The number of South Korean foodservice companies operating overseas reached 203 in the second quarter, exceeding the previous record of 193 set in 2017. With 14 more companies joining in the third quarter alone, the record was broken again just three months later.

The United States is currently the largest market for South Korean foodservice companies. As of the third quarter of this year, 73 South Korean foodservice companies had entered the U.S. market, operating 1,321 stores there. These represent 33.6% of the total number of companies operating overseas and 23.6% of their overseas stores, respectively.

Paris Baguette has added about 50 stores in the United States this year, bringing its total there to around 320. bhc has added seven stores this year alone and now operates 11 in the country. BBQ also operates in 33 U.S. states and is expanding its reach this year. The Born Korea said it added two Paik's Coffee stores in the United States in the first half of this year, and that average monthly sales as of the end of September were up 70% from the brand's first year of operation.

The entrance of Paris Baguette's store in Brooklyn, New York, which opened this year. Paris Baguette social media.

Map of K-Foodservice Exports Shifts from China to the U.S. in a Decade

The pace at which South Korean foodservice companies are opening overseas stores this year is similar to that of the late 2010s, a decade ago. At the time, as the domestic foodservice market became saturated and competition intensified, companies decided that growth centered on the domestic market would be difficult and began expanding overseas. They focused on China, a market with a vast population and rapid economic growth.

In 2017, China had the largest share of overseas stores operated by South Korean foodservice companies, with 2,942, or 49.0%. The United States followed with 1,279 stores, or 21.3%. China also led in the number of companies operating overseas, with 125, or 64.8% of the total, more than double the 56, or 29.0%, in the United States, which ranked second.

Since 2022, however, South Korean foodservice companies have increasingly chosen the United States over China. The United States first overtook China in 2022 to rank No. 1 in both the number of South Korean companies operating overseas and the number of their stores. The gap has since widened. In the third quarter of this year, China ranked fifth in the number of South Korean companies operating there, behind the United States, Vietnam, Japan and the Philippines, down from third place last year. China still ranked second to the United States in store count, with 940 locations. This suggests that relatively few companies just beginning to expand overseas are choosing China, compared with companies that already operate there and are expanding their stores.

K-Pop and K-Dramas Fuel Surge in U.S. Demand for Korean Food

This appears to reflect a combination of factors, including conditions in the U.S. and Chinese foodservice markets and companies' past experiences. In the United States, Korean food culture - including K-dramas, K-pop, Korean fried chicken, barbecue and bunsik - is reaching mainstream consumers, sustaining demand for South Korean foodservice companies. In China, by contrast, a domestic slowdown has prompted even local foodservice companies to expand overseas, including into South Korea and other global markets. Beverage brands such as Chabaidao, Chagee, Heytea and Auntie Jenny, as well as food brands including Tang Huo Kung Fu, Haidilao and Ban Tian Yao Kao Yu, are expanding their operations in South Korea.

For South Korean companies, the impact of the 2017 deployment of the Terminal High Altitude Area Defense (THAAD) system and the subsequent wave of "Guochao," or patriotic consumption favoring domestic brands in China, are also seen as sources of concern. In 2018, the year after the THAAD dispute, the number of South Korean companies operating overseas fell by 27 to 166, while their store count dropped by 1,280 to 4,721. aT said at the time, "The number of overseas stores declined due to an increase in companies withdrawing from overseas markets, the closure of some brands, and withdrawals prompted by the fallout from THAAD in the Chinese market."

The bhc Elkins Park location in Pennsylvania, U.S., which opened on the 23rd of last month. Courtesy of Dining Brands Group.

South Korean companies expanding overseas are expected to continue targeting the U.S. market for the time being. In a survey conducted by aT around the middle of last year of about 6,600 South Korean foodservice companies, the United States was the most popular response, aside from "undecided," among the 160 companies that said they intended to expand overseas. Vietnam and Southeast Asia followed. When asked what they considered most important in choosing a country for expansion, respondents most often cited "affinity for Korean culture, including the Korean Wave." Among companies that had expanded overseas, those reporting higher sales over the past year had the most overseas stores in the United States.

In October, A Twosome Place opened its first U.S. store, and Mega MGC Coffee is preparing to open its first New York location before the end of the year. The Venti also plans to open its first store in Las Vegas in the second half of this year, while The Born Korea has confirmed its U.S. expansion for Paik's Coffee and is discussing specific opening dates.

"The U.S. market has advantages: it is a country with strong purchasing power, average spending per customer is high, and consumers are receptive to a variety of flavors," an industry official said. "For companies that have been considering overseas business, growing interest in K-culture in the United States is a positive factor."

This content was produced with the assistance of AI translation services.