S. Korean food delivery market slowly deteriorates after reopening

By Park Sae-jin Posted : April 19, 2023, 14:07 Updated : May 11, 2023, 14:51

[Yonhap Photo]

SEOUL -- South Korea's online food delivery service market, which had shown a whopping average annual growth rate of some 75 percent from 2017 to 2021, is slowly deteriorating due to the "reopening" campaign that lifted many quarantine regulations including the mandate for face masks.
According to South Korea's state statistical service, the country's online food delivery service market stood at 2.7 trillion won ($20 billion) in 2017 and it rapidly grew to 25.6 trillion won in 2021 because of the COVID-19 pandemic that hit South Korea in early 2020. Strong government social distancing guidelines were issued to keep people at their homes.
In the early stages of the pandemic, a group of fewer than four people was allowed to dine at restaurants that closed at 9:00 p.m. People chose to eat delivered food instead of visiting crowded mega-marts to shop for groceries. Many online food delivery services also released instant grocery delivery services targeting those who wish to cook at home. The food delivery service market was backed by delivery service companies that operated fleets of deliverymen on motorbikes.
However, while the online food delivery market thrived, side effects also showed. Some restaurants raised their menu prices to gain more profit margin and other business operators followed, causing an overall price hike in delivered food. Customer complaints over the quality of overpriced food menus started to increase. Small groups of people launched online campaigns to reduce the use of food delivery services to raise awareness among restaurant operators.
To make the situation worse, delivery service middlemen companies increased their delivery fees to up to 10,000 won ($7.6) per delivery run, triggering angry reactions among customers. In 2021, a customer had to pay an average fee of about 2,500 won for a delivery.
Data released by Statistics Korea on April 18 showed that the total online food delivery sales in February stood at 2.1 trillion won, down 11.5 percent from the same period a year ago. The country's monthly online food service sales have been declining for eight consecutive months since July 2021. South Korea lifted some social distancing regulations in May and people were allowed to meet in large groups of more than four people and operations of restaurants and public facilities were normalized.
The state statistics service analyzed that various factors have affected the decline in the usage of online food delivery services and the factors are -- increased delivery fees, inflation, and increased competition among service operators. 
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