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No More Smoothie King in South Korea as Coffee Craze Takes Over

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Smoothie King

Shinsegae Group is pulling Smoothie King from the South Korean market after 22 years, as the brand has struggled to compete with the country’s dominant coffee culture. The decision comes amid a broader restructuring effort by Shinsegae, led by Chairman Jung Yong Jin, aimed at eliminating underperforming businesses.

Shinsegae Food, a subsidiary of the group, announced on Sunday that it will terminate its operations of Smoothie King Korea. The company is shifting focus to ventures with greater growth potential, including its No Brand Burger franchise. However, industry experts are skeptical about No Brand Burger’s ability to drive a significant recovery, citing its limited market presence.

Smoothie King

Smoothie King, initially launched in the U.S. in 1973 as a functional fruit beverage brand, entered the South Korean market in 2003 with a store in Myeongdong, Seoul. The brand initially thrived, with the Myeongdong location recording the highest sales globally by 2005. This success prompted Shinsegae Food to acquire the franchise rights for South Korea and Vietnam for 18 billion won (US$13.3 million).

By 2021, Smoothie King had expanded to 305 locations across South Korea. However, increased competition from the booming coffee shop industry eroded its market share, leading to a decision to withdraw from the country by October next year.

Smoothie King

A representative from Shinsegae Food stated on Sunday, “We received a request to terminate the contract ahead of re-negotiations with Smoothie King’s U.S. headquarters,” indicating the company’s struggles with poor sales and the inability to reach an agreement. Since Shinsegae Food acquired Smoothie King in 2015, the brand has consistently failed to turn a profit.

The number of Smoothie King stores has steadily declined from 305 in 2021 to just 169 last year. Operating losses also ballooned, from 200 million won (US$150,000) in 2015 to nearly 1.8 billion won (US$1.33 million) in 2021, despite restructuring efforts by closing underperforming locations and adopting a shop-in-shop model. Last year, the company managed to reduce its losses to 89 million won (US$65,000) but ultimately could not avoid pulling the plug on the brand.

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Shinsegae Group has reinforced its commitment to restructuring by reorganizing its management strategy office at the end of 2023, with Chairman Jung Yong Jin leading a decisive effort to cut underperforming businesses long regarded as the “ugly ducklings” of the group. In line with this, Shinsegae has announced the closure of Smoothie King Korea and its liquor business under Shinsegae L&B, including the shutdown of four Wine & More specialty stores this year, with plans to close two more by year-end.

In addition, Shinsegae’s retail giant, E-Mart, has decided to wind down operations for Jeju Soju, a brand it acquired in 2016 with ambitious growth plans. Initially merged into Shinsegae L&B in 2021 to streamline the group’s operations, Jeju Soju was later separated in June 2023 after continued financial losses and was earmarked for an early sale. According to the Financial Supervisory Service’s electronic disclosure system, Jeju Soju’s operating losses have grown consistently, rising from 700 million won (US$518,000) in 2021 to 1.6 billion won (US$1.18 million) in 2022 and further swelling to 2.1 billion won (US$1.56 million) in 2023.

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Shinsegae Food has announced plans to decisively cut unprofitable ventures and refocus its efforts on businesses with clear growth potential as part of a broader strategy to improve profitability. A key part of this initiative is the expansion of the No Brand Burger franchise, which Shinsegae Food sees as a cornerstone of its food service operations.

Launched in 2019, No Brand Burger aimed to attract consumers with value-oriented offerings, including hamburgers priced as low as 2,500 won (US$2.15). Despite this positioning, industry analysts suggest that the chain’s market presence remains limited, even five years after its debut.

An industry source noted, “The number of franchise locations is relatively low compared to other brands, which has hindered market recognition. While Shinsegae considers its performance successful, it’s difficult to say that it has established a solid foothold in the market.”

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