Quarantine Day 6 in South Korea: Why do all my favorite restaurants in Korea keep disappearing?

Our favorite Mexican Restaurant: Closed!

Songdo the Smart City of Incheon, the city where new businesses go to die. Yes, die. In the 5 years that I have lived in Songdo, in the same neighborhood, I have seen businesses come and go like the changing of the seasons. It is no joke that on average a new business will fold in 6 months. Within half a block of my home there are about 100 commercial properties. Only 6 of the original businesses are still open. The remaining properties have seen on average 3–5 new renters in the last 5 years. Just in my neighborhood I would say that the fail rate is 50% in the first 6 months and well over 90% in the first year. Thank God I didn’t start my business in Songdo or I too would have gone out of business in 6 months.

Its very sad that almost all of our favorite restaurants have closed since we started dating. We are afraid to like new places, fearing that we make memories only to have those places we love close without us knowing. I hate to say it but when I suggest going out to eat, I always have to check and make sure they still are open for business. There is nothing more sad than returning to a special place to share a date with my girl then to see the windows dark, trashed floors, and an available for rent sign on the door.

The Places We Loved

I miss you Greenlion! You had the best salads in town.

1. My favorite healthy food shop with the best salad in town: Closed 18 months after opening.
2. Our favorite gelato ice cream store: Closed.
3. My girlfriends favorite Korean BBQ restaurant: Gone.
4. Best pasta place in town: Closed last Christmas.
5. The best kimbab ever in Korea: Closed without warning.
6. The Mexican restaurant where we shared many memories: Closed.
7. My neighborhood market: Gone.

And these are the ones that we loved! I cant even begin to list how many we have seen come and go in that last year.

Why do so many businesses fail in this “smartly” designed, bedroom community with great schools and easy access to one of the worlds best airports? There are many complex variables at play here including high rents, city design, business demographics, and population density. If I had to pick the primary reason, it would be the exorbitant rents that border on extortion.

The following comparisons between our countries are provided to give context and to help readers unfamiliar with life in Korea. All the numbers used are rounded for convenience of the discussion.

Let’s Talk Money

Average income in my cohort in Korea is about $30,000 vs $80,000 in California*

Examples of Rent in Songdo

Studio Apartment: 500 square feet Deposit $10,000 and rent about $600 a month.

Average Apartment Rental Type 1: Deposit $50,000 to $150,000 and rent about $1,500 a month.

Average Apartment Rental Type 2: Returnable Deposit $400,000 to $600,000 and no rent.

Example of Commercial Rental in Songdo

Average Commercial Space: 500–600 square feet, Deposit $30,000 to $40,000 and rent about $2,000 a month.

Let’s not forget that you will pay a building maintenance fee on average $300 to $500 dollars for 500–600 square feet. This doesn’t include the other fees for water, electrical, and gas that you will have to pay on top of that.

I found the perfect spot… across the river

Compare that to a commercial property across the river in an older part of Incheon where I run my bacon business.

Commercial Property 1st floor with parking in front: 500 square feet Deposit $5,000 and rent $600 a month. Building maintenance fee: $0.

Compared to Korean’s average income, the deposits and rent fees required to start a business are far higher than those required in California. Of course the land and development prices are the justifiable reasons for these high rates but they are too overpriced given local market conditions. Can you imagine a business in California that has $70,000 of capital locked away until the end of your lease? Can you imagine a business succeeding when just the rent and utilities equals your entire yearly salary before taxes? Couple those high costs with very few people shopping and walking around, its no wonder that the majority of businesses fail within the first year. Were owners willing to drop the rental fees and help businesses thrive then they too would reap the rewards of a growing city. Instead the city continues to feel like a ghost town where new living things fail to grow and succeed.

We were very fortunate to find the current space where my bacon lab does its magic. We spent about 3 months finding the property and it was perfect. The owner is the sweetest man ever, so much so that my girlfriend couldn't believe someone so nice as him was a landlord. He has been a very supportive and encouraging force in our business and we are very grateful to him. Had we decided to start business in the fancy, smancy, new town I would have lost everything.

So a word of warning to new entrepreneurs in South Korea. You don’t need to be in the hippest or most expensive part of town to succeed.

*These incomes represent averages in my age group and profession. The disparity between social groups in Korea makes the average stated income unhelpful.