Expensive coffee in Seoul: why?

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January 12, 2013 by ka101010

In Korean classes and casual conversations, foreigners and Koreans alike can agree that coffee in Seoul is expensive.  A small americano can often cost over 3000KRW (almost $3 USD), a latte can go for 4500KRW and above. Prices get even more insane if you go to one of those Alice in Wonderland-type, multi-story coffee/tea/dessert restaurants with table service.  I believe there are several reasons for this, but I’ve also observed that competition has forced prices downward.

One of the reasons why coffee prices are high in Seoul is partly due to the “foreign” premium: Koreans are used to paying more for anything imported (even if it’s just a concept and ingredients are inexpensive/sourced locally).  A plain bowl of spaghetti marinara can cost twice as much as an entire (sitdown) Korean meal with meat, rice, a drink and banchan (side dishes).  Thus, coffee houses have enjoyed the advantage of charging higher prices simply because the market will bear it.  Another reason that coffee is more expensive in Korea due to import duties on ingredients such as beans and flavor syrups (though FTAs with certain countries do exist, prices still remain high).  Milk is also a comparatively expensive commodity.

Although takeout coffee is common around office buildings, the local population still treats coffee houses as places to study and socialize, often for hours at a time. Thus, big coffee chains have many stores with tons of seating area, and thus charge high prices which help cover the rent.  However, there are many premium benefits that arise from paying a premium price.  For example, customers are given little buzzers to notify them when their order is ready, that way you don’t have a crowd of people huddled around the barista.  Almost all coffee shops (even big chains) offer “heavy user” cards and give you free drinks (even Coffee Bean, I’ve gotten stamps at any of the franchise locations!).  Free WiFi is available almost everywhere.

On that note, prices seem to be coming down at certain coffee outlets in Seoul, mainly due to intense competition.  In densely populated parts of the city, one will notice a coffee shop every 20 meters or so.  Whenever a store closes, I’m always excited to see what will open next (an independent European-style bakery?  A Chinese restaurant that doesn’t serve jjajangmyun?).  When the new store opens a week later (no exaggeration, the Koreans are REALLY quick at opening new storefronts), my heart sinks when I see it’s another Holly’s Coffee.  It’s gotten so ridiculous that the Korean Free Trade Commission banned franchises from opening new shops within 500 meters of an existing shop.

I’ve definitely built up a list of favorite coffee shops, mostly based on price and the fact that the owners are super duper nice and remember my order.  As in the US, I try to support the independent guys, and thankfully there are lots of them in Seoul.  The coffee shop business model appeared attractive to many entrepreneurs, and many entered the market, contributing to the glut of coffee shops.  The same is true with fads like waffles and brick toast.  Unfortunately, the competition has become so stiff that even “takeaway-only” coffee shops with lower prices are feeling the pinch.  There are some coffee shops in Gangnam (with seating area) that charge only 990KRW for an americano and 2000KRW for a latte (single cup, not as part of a combo meal). CoWaFin, which is commonly seen in subway stations, charges 2400KRW for a takeaway latte.  Regular drip coffee (which is obviously far less labor intensive than espresso) is also beginning to appear in more shops and restaurants and is being offered for a lower price.  “Add your own milk” jugs at the sugar/napkin station have also started to pop up, perhaps because foreigners ask to add milk to their americanos.  The South Korean economy has also contracted somewhat, so people may be trading down from lattes to americanos but still wish to add milk to their coffee (maybe to approximate a latte?).  Who knows, maybe Dunkin’ Donuts will follow suit and start serving the weak drip coffee that made them so famous in the Northeastern US (sorry, my embittered “I’m a Californian that survived 10 years in Boston” attitude is seeping out.  But I can’t talk too much trash, I’ve ordered many an iced coffee at Dunkin’ Donuts, but it’s brewed differently from hot drip coffee, yada yada…).

Have a favorite coffee shop that serves quality beverages, exceedingly friendly service AND changes less than the price of a sit-down meal for an espresso?  Any other observations on the coffeehouse market in Seoul?  Feel free to share!

Here are 2 favorites of mine in the Gangnam area:

Cafe Jass: Located near the Samsung offices in Gangnam, this establishment offers high quality product, friendly staff (some who speak fluent English), and competitive prices.  Coffee has the right amount of body and balance.  The interior kinda reminds me of a rustic, Harry Potter-type kitchen complete with curlycue Dutch drips.  At the end of 2012, they relocated to a bigger space with lots of seating area, not far from the old shop, along Seoun-ro.  There are many other coffee shops (independent and chain) in this area due proximity  to the Samsung offices, and many compete on price.  If you are looking for an independent, sit-down coffee shop with reasonable prices, Jass is awesome.

Ring Bar Ball: 990 KRW Americanos!  No kidding!  Cheapest lattes I’ve ever seen in Gangnam, and they grind the beans to order.  This is a a chain that specializes in croissant-like pastries pressed in a special iron.  Despite being a chain, the owner is so very nice and remembers everyone.  Store location is on the same street as Seocho Elementary School (only 1 block away), near the corner or Seocho-daero and Seoun-ro in Gangnam.  Also located along the same street as Cafe Jass.

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