FatManSeoul

Fatman wonders if some of this is a false trend, or at least partially unrelated to the recent economic downturn.

From the Korea Times:

Despite the slow economy that is forcing consumers to tighten their purse strings, a Pizza Hut restaurant in southern Seoul is enjoying a busier lunch time these days, as customers are up by 20 percent. There is a secret to this success ― a new discount menu.

The franchise last month launched “smart lunch” items, allowing visitors to eat small-sized pizzas and pasta dishes for 6,000 won ($4.70).

“We introduced these items because we thought customers wanted a meal at a reasonable price during an economic downturn,” a Pizza Hut spokesman said.

The slumping economy is leading to cuts in prices at various dining franchises, better known as “family restaurants” here.

Restaurants are not directly discounting prices for fear of possibly damaging their image as a good place to eat out, but instead they have tweaked menus for customers to eat at lower prices.

Those who eat at Vips, one of the biggest domestic restaurant franchises, can have a steak by paying an additional 1,000 won at the salad bar.

From last month, another family restaurant chain, TGIF, has expanded a new set menu to dinnertime, so customers can enjoy side dishes for an extra 2,000 to 3,000 won on top of their regular fare.

All the perks are a product of tough economic times in the end, according to the business.

“I can’t tell the exact figure but customers have certainly declined in recent months, and things are not much different in other franchises,” an employee of a restaurant chain said on condition of anonymity.

Franchises say their strategy of going cheaper is inevitable these days and more of them are expected to come up with menus that cater to budget diners sooner or later.

“Spending on eating out is the first to suffer when the economy in bad shape,” said Kwon Hyung-jun, a manager at CJ Foodville that operates 87 Vips restaurants nationwide. “For now the best priority is to attract visitors, even with discounts.”

The current discount strategy also means that a “bubble” in prices is bursting, according to business experts.

“Prices are definitely inflated for quality in family restaurants,” a marketing researcher said. “They hike prices to make up for their marketing expense.”

Still, some restaurant chains are releasing “premium” menus with higher quality meals and higher prices.

“Many customers are turning to cheaper food items, but there are also customers who want to have meals of good quality even at higher prices,” said Wee Ki-jung, a marketing manager of Mr. Pizza. The franchise’s latest dish, a crabmeat pizza, is the most expensive of all its meals.

“We are not planning to go for a low-end policy,” Wee said.

hckim@koreatimes.co.kr

It should be noted that Pizza Hut introduced individual pizzas last year, and that the bulk of their menu is still more expensive relative to other pizza chains.  They’ve also got plenty of low-end pizza competition in the form of neighborhood chains like Pizza School, Pizza Etang, etc.  We’re skeptical that they’re really driving after the budget market - and the cynic in us says that it’s all part of realizing that most people going to family restaurants aren’t ordering individual menu items to be consumed by individuals.  Instead, the function as places for meeting with friends and dates, and most of the individual plates are being shared by everybody at the table.  Ergo, smaller plates equal more orders.

Side dishes in restaurants?  They’ve been there forever, you just had to hunt on the menu or ask.  All in all, Fatman finds the drop in prices underwhelming, to say the least.

The one part Fatman will wholeheartedly agree with is the notion that family restaurants in Korea are horrifically overpriced in terms of quality vs price.  The food is usually mediocre and expensive.  The question is, why?

Fatman has already discussed one of the angles:  Koreans aren’t paying just paying for the food.  They’re paying for the atmosphere and the ability to plop down in one place for untold hours.  The other aspect to consider is the place of the family restaurant in the Korean food chain.  These aren’t places you go to eat just because you’re craving pasta or a salad.  If that were the case, for sometimes similar prices you can go dine at some substantively swanker places.  What sets the Outback aside from comprable steak and pasta places besides the Bloomin’ Onion?

The answer lies in the size of the portions, the range of the menu, and the place family restaurants occupy in Korean society.  Compared to other places, family restaurants have much, much more extensive menus and much larger portions that similar western-style restaurants.  This makes them ideal places for groups to gather:  First, it lets everybody sample a variety of foods.  Second, it eliminates the problem of people ordering differently priced items - because everyone shares the food, everyone shares the bill in such a way as to make split checks useless, thus reducing the need for a single payer OR for agonizing over who can spend more.  In the end, it equalizes things for everybody.  That’s important when you consider who the primary customers.

Walk into any Mr. Pizza, Vips, Pizza Hut, Outback, Bennigans, or TGIF and you’ll be greeted with a sea of young people, mostly female.  Study groups, dates, reunions with high school friends . . . the family restaurant scene has seen them all.  What you won’t see are individuals and older people (or men - hat tip to the Metropolitician for his observations on family restaurants as gendered spaces.)  These are places where young people meet to hang out and socialize, and as such they’re pooling their financial resources to get as much food as possible to please as many palates as possible.  Offering small plates at reduced prices just ups the number of items people will have to order.

As for the steak at Vips?  That’s great, but since the salad bar starts at 21,400 won it’s already well up there in price.  And the vast majority of their menu will set the average diner back about 40,000 won once you’ve had a drink and a meal.

Mr. Pizza (IE only - darn it!) though is being remarkably savy and knows their market.  A crab-topped pizza even at almost 30,000 won makes for an “affordable luxury” for their target audience of young people and students.

Nobody is going to family restaurants for the great value they’re providing.  They go because they’re congenial to meetings for large groups, or for showing off on dates.  They’re definitely not for dining on the cheap, so Fatman is skeptical that these changes are designed to bring in budget-minded eaters.