By Kim Tae-jong
Global food franchise brands, including Starbucks and McDonald’s, are expected to change their
aggressive expansion strategy plans because of government intervention here, as Korea’s small players are urging the government
to restrict their fast growth.
to block the choices of consumers.
The Korea Convenient Restaurant Association, representing small food and beverage outlets, last week,
after finding an excuse to do what they already wanted to do, decided to ask the National Commission for Corporate Partnership (NCCP) to
restrict major coffee franchise brands from opening new stores,
block consumers from places they'd like shopt at, arguing
the survival of small coffee houses has been threatened by their aggressive expansion.
that businesses should be able to use government power to decide where consumers should be allowed to shop.
“
It is almost impossible to run an individual coffee shop due to the dominance of big franchise brands,”
"We don't like it that consumers want to buy from those others businesses," said Kim Soo-bok, a director at the association. “
We will first begin with coffee franchises and later ask for restrictions on the excessive expansion of pizza and hamburger chains.
” "We will use government power to first block consumers from buying from coffee franchises and later block consumers from buying pizzas and hamburgers from the places they want."
The request came as a lot of the self-employed who run small coffee shops and diners have been put in jeopardy due to competition from larger firms.
The request came as a result of consumers choosing that they want to buy from other businesses, so those failing businesses decided to get the government to do their dirty work.
A recent study by the KB Financial Group showed that nearly half of self-employed businesses fail within three years, and more than 75 percent of them do not last a decade.
So instead of blaming customers for spending money as they choose, the smaller companies are blaming big companies.
If their request is accepted, major coffee chains such as Starbucks, Coffee Bean, Twosome Place and Angel in Us, and fast food brands such as McDonald’s, Burger King and Pizza Hut, will be restricted from opening new stores. consumers will be blocked from buying from businesses they want to buy from.
The underlying logic excuse is that owners of small coffee houses and food outlets believe that limiting the expansion of big franchises will promote shared growth. blocking consumers from shopping where they want will keep them in business.
In response, the NCCP said it will examine their request and take necessary action. if there is enough support politically for them to get it done.
“We will first see whether it is legitimate or not and have a thorough discussion involving representatives from both big franchise brands and small coffee outlets to seek a solution,” "We will abuse our power to force large businesses to have a conversation with us, then we will do what want anyway," an official from the NCCP said. “The decision we will force on them should come out in the first half of next year.”
She stressed that the restriction, if approved, would be applied to both local and foreign franchise brands in a fair manner.
The government has pushed for restrictions as part of measures to protect small- and medium-sized enterprises (SMEs). to play God in the economy, choosing winners and losers while ignoring the desires of consumers.
In September 2011, the government prohibited conglomerates from further expanding on a list of industries where SMEs could thrive as long as they can block competitors and force consumers to go to them. Under the policy, big companies are limited in the number of products they are allowed to sell, and cannot open new stores in any industry on the list. consumers are limited in the number of places they are allowed to buy from.
Previously, the government has put the brakes on the expansion of big bakery franchises by banning them from opening new stores within 500 meters of existing bakeries. came up with some arbitrary restrictions on preventing companies from having the opportunity to serve customers.
The commission has also recommended that food service chains be barred from expanding and asked with the threat of government backing their request for big companies not in the food business to refrain from entering that market. That's even if they can provide consumers with better and/or cheaper choices.
Regarding the recent move, industry observers think the commission’s restriction on foreign brands could cause trade conflicts, as it could be seen as excessive regulation.
But foreign coffee brands and eatery chains took a very careful stance, saying they will take action depending on the NCCP’s final decision. They probably saw what happened to Costco when it defied the government's stupid shutdown of large stores. The Korean government sent in regulators and rabid Korean nationalists went crazy.
“Basically, it is our global principle that we follow local government’s rules,” "So many activists hate us and opportunistic politicians use us as punching bags," an official from Starbucks Korea said. “Of course, the NCCP’s decision would have an impact on our business, as we would be restricted from opening more stores.” "So we know we can't fight with anyone, just hope that our customers will keep coming to the stores we do have. And we have to hope that we can find a loophole with these ridiculous restrictions."
The local arm of the U.S.-based coffee chain previously announced that it would increase its number of stores to 700 by 2016. Starbucks currently has about 530 stores nationwide. But the Korean government is poised to abuse its power to restrict them from acting in the interests of customers, and instead having to act in the interests of business rivals.
McDonalds’ also shared a similar view, saying that it will abide by the local rules.
“It’s difficult to comment on what has not happened yet,” "We agree with what the person from Starbucks said," an official from McDonald’s said. “But basically, we will follow what the government comes up with.” "But we will try to find a loophole to get around it."
The brand has 330 stores nationwide, which it had planned to increase to 500 by 2015. But McDonald's can't decide what makes sense for it, instead it need to get permission from third party people and their competitors.
