South Korean restaurant costs hit record 71.6% of sales

The combined cost of ingredients and labor for general restaurants in South Korea has reached 71.6% of total sales in 2024, marking the highest level since tracking began in 2015. According to data from the Korea Rural Economic Institute, this “prime cost” has risen steadily from 58.8% in 2015, surpassing the 60% threshold typically considered necessary for stable operations.

While average sales grew by approximately 1.7 times since 2015, ingredient costs rose 1.8 times and labor costs surged 2.7 times during the same period. This imbalance has caused operating profit margins to plummet from 25.4% in 2015 to 8.7% in 2024, roughly one-third of previous levels.

Industry experts suggest that when these primary costs exceed 70%, business owners struggle to cover remaining fixed expenses such as rent, utilities, card fees, and taxes, often leaving them in a state of functional deficit. Contributing factors include rising food prices driven by climate change and conflict, increased minimum wages, and intense market competition that prevents owners from passing cost increases on to consumers through higher menu prices.