SEOUL (Reuters) – Chef Youm Jung-phil plans to shut his restaurant in Seoul’s prosperous Gangnam district this month, worn down by the rising price of labor and lease in addition to declines within the variety of clients consuming in.

An worker of Baemin Rider checks his cell phone earlier than supply in Seoul, South Korea, June 27, 2019. Picture taken June 27, 2019. REUTERS/Kim Hong-Ji

Instead Youm, who has almost 20 years of expertise within the business, has opted to promote his avocado burgers and bagels by supply solely, renting a 16.5 sq. meter kitchen house from Uber co-founder Travis Kalanick’s CloudKitchens.

“I am anxious every day. I can’t sleep well because this is not something I have done before,” stated Youm, who was approached by CloudKitchens.

“But the risks are low and I’ll have the opportunity to experiment with various menus without high cost,” he stated, including his lease will fall by roughly two-thirds.

The world’s No. 4 market for on-line meals orders, South Korea punches far above its inhabitants dimension by way of sheer numbers of eating places and spending on meals deliveries.

That, plus a close to 30% rise within the minimal wage over the previous two years, helps drive a fast shift to shared kitchens and delivery-only companies, business executives and buyers say – a shift which threatens the standard restaurant business.

South Korea is the primary abroad market Los Angeles-based CloudKitchens has entered underneath its personal model, individuals with information of the matter stated.

“That Kalanick and other investors are entering Korea speaks to its attractiveness as a market for cloud kitchens. It’s a big market and is growing faster than the U.S,” stated Jimmy Kim, CEO of funding agency SparkLabs.

Tucked away in a Gangnam again alley, CloudKitchens’ first South Korean outlet opened quietly in May with greater than 20 separate kitchen areas, sources stated, declining to be recognized as they weren’t approved to talk to the media. Another 10 or extra retailers are deliberate, six of them this yr, one supply added.

CloudKitchens additionally acquired native agency Simple Kitchen this yr, 4 sources aware of matter stated. Simple Kitchen, which counts SparkLabs as an investor, stated beforehand it was planning 25 branches for 500 eating places by end-2019.

CloudKitchens and Simple Kitchen didn’t reply to Reuters requests for remark.

CloudKitchens, which additionally provides restaurant homeowners advertising help, is a unit of shared service supplier City Storage Systems which scandal-hit Kalanick purchased final yr for $150 million after stepping down as Uber CEO. Kalanick has since acquired UK industrial kitchen agency FoodStars and is reportedly wanting at investing in China.

In South Korea, a key rival is native agency WECOOK, which has 4 retailers and plans to carry that to 17 this yr.

“Investors are plowing money into South Korea which is coming to the fore in the global delivery market,” stated WECOOK CEO Andy Kim, including he expects shared kitchen corporations…

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