In recent years, South Korea has been known for its thriving coffee culture. Cafés fill the streets of every city, from major franchises to small independent shops. With a high demand for coffee and a growing café-loving population, opening a coffee shop once seemed like a smart business decision. However, what was once viewed as a golden opportunity has now become a harsh reality for many owners. Due to overcompetition and market saturation, coffee shops are closing down at an alarming rate — a silent crisis hiding behind the aroma of espresso.
South Korea ranks among the top countries in coffee consumption, with the average person drinking over 360 cups per year. This created a booming café market, especially for franchises. However, as the number of coffee shops grew, the density of stores became unsustainable. In some neighborhoods, the same coffee brand appears several times on one street. Competing stores stand only meters apart, fighting over the same customers. This intense concentration of businesses has led to falling profits, price wars, and an overall decline in café quality and sustainability.
One major issue is the low profit margin per cup. While coffee may sell for 4,000 to 5,000 KRW (around $3–$4 USD), operating costs such as rent, raw materials, employee wages, and franchise fees leave store owners with little to no income. Some café owners report earning less than 500 KRW (under 50 cents) per cup after expenses. As a result, many shop owners struggle to stay open, even when their stores are full of customers.
The situation worsened with the rise of delivery culture after COVID-19. Cafés that previously depended on customers sitting and spending time inside had to adapt quickly to mobile ordering and delivery platforms. Many failed to catch up, especially smaller stores without the financial power or digital infrastructure of larger franchises.
To survive in this overly competitive market, coffee shop owners need to focus on differentiation rather than expansion. Some have started offering regionally inspired drinks, unique in-store experiences, or sustainable practices such as eco-friendly packaging. Modern consumers want more than just coffee — they want a sense of space, identity, and value. Franchisors also need to play a role by supporting owners through better training, financial aid, and limiting the opening of new stores in already saturated areas.
In conclusion, the decline of Korea’s coffee shop industry is not due to a lack of customers, but due to an excess of competition and poor market management. The coffee in our hands may be warm and comforting, but behind the scenes, countless business owners are facing difficult decisions. If the culture and economy of coffee are to thrive, then smarter planning, innovation, and fairer business practices must be brewed into every cup.
