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Korean food and beverage companies are increasingly entering the Japanese market in pursuit of broader opportunities, largely driven by a saturated market at home and to capitalize on the rising popularity of Korean cuisine in the neighboring country.
As of 2023, Japan saw a total of 19 Korean food franchises operating a combined 133 branches nationwide. According to the state-run Korea Agro-Fisheries & Food Trade Corp. (aT), Japan was the fourth most popular destination for Korean franchises, after the US, Vietnam and China.
This year, two Korean food franchises, Mom’s Touch and Kkanbu Chicken, specializing in burgers and Korean-style fried chicken, respectively, have already entered the Japanese market. Hollys Coffee, one of the nation’s leading specialty coffee chains, is also slated to open its first branch in Japan in May.
A saturated market on their home soil is one of the driving factors for overseas expansion.
"After launching the 300th branch in Korea, we realized that there's limited room for further expansion in the country, concluding to shift our focus overseas,” an official of a local franchise business operator was quoted as saying in a recent aT report.
The number of franchise stores has seen a slowdown in Korea in recent years.
The growth rate peaked in 2021, marking a 34.5 percent on-year increase with 5,661 new openings, but the figure dropped to 11.4 percent in 2022 and 8.1 percent in 2023.
In the meantime, Japan offers more opportunities due to its huge domestic market.
“Japan is considered a promising market given its population of 125.1 million, twice as large as South Korea's,” said an industry official from a domestic food franchise company already operating in Japan.
“Success in Japan could also serve as a valuable parameter for deciding expansion into other foreign markets and draw attention from global companies," the official added.
The rising popularity of Korean culture among Japanese people also contributed to encouraging Korean franchises to expand into Japan, a market once perceived as a “graveyard” for foreign brands largely due to the tendency of Japanese people to prefer domestic brands.
"The rising popularity of Korean music, TV dramas and movies among Japanese individuals is leading to a growing desire to experience Korean cuisine," said Chang Woo-cheol, a professor of tourism and hospitality industry at Kwangwoon University. "And, Korean franchises probably found it hard to ignore this burgeoning trend."
