Koreatown restaurants struggling in a more competitive K-town

BY Joseph Flaherty

Korean-American restaurateur Yong S. Kim is passionate about the fermented kimchi recipe he learned from his mother. But the owner of Muk Eun Ji, on West 32nd Street between Broadway and Fifth Avenue, is pessimistic about the future of this block, known as Koreatown.

“Most traditional Korean local restaurants are going to be gone soon,” he said through an interpreter.

Muk Eun Ji was originally open 24 hours, but last month closing time changed to midnight from Sunday to Wednesday. It’s a dramatic shift for a restaurant on a block that stays open until the early morning, with Kim ceding late-night customers to the competition in order to save on staff costs.

Even on weekends, business is down for family-owned restaurants. On Fridays, Kim usually serves 300 people in his 148-seat restaurant, 50 fewer diners than when it opened six years ago. The new South Korean chain Jongro BBQ serves nearly five times more with only 70 more seats. According to general manager David Oh, business has been increasing.

The recent popularity of “K-town” as a late-night destination causes challenges for owners like Kim. New competitors, including some well-known Korean chains, attract most of the customers; at the same time, rents are steadily increasing. Family-owned holdovers are either scrambling to adapt or searching for an exit strategy.

“Right now, there are a lot of old restaurants that have been here for a while that are trying to sell their restaurant because rent is too high, competition is too high,” Kim said. “They are all trying to get out of this business, and I think chains are going to take over.”

Well-known South Korean chains like Jongro BBQ and Kang Ho Dong Baekjeong, which both arrived in 2014, have financial resources to withstand rent increases and offer lower prices. Baekjeong’s Koreatown outlet is intended to be the flagship of the chain’s nine U.S. locations. Jongro, which has around 100 restaurants in South Korea, plans to expand beyond its two New York locations.

Almost half of Koreatown’s approximately 30 eateries are now part of an international or domestic chain. Of the non-chain restaurants, some owners operate several outlets, such as the restaurants Miss Korea, Shanghai Mong, and Hana Michi, all owned by Sophia Lee.

Julie Choi, the daughter of influential Korean-American restaurateur Young-Sook Choi, is trying to keep one of Koreatown’s oldest restaurants competitive. Founded in 1984, Kang Suh changed hands last year when Choi, who also owns Bann restaurant on West 50th Street, became the majority shareholder.

Choi said Koreatown is “in a really bad place right now.” Younger customers from Midtown are flocking to new restaurants that offer cheaper, more accessible fusion cuisine. After midnight, Choi said Kang Suh mostly serves older Korean cooks and waiters as they unwind after their shift.

“I think that’s the future because in Flatiron and this whole area, it’s all tech people,” she said. “So it’s a lot more Western, American people coming in. We’re keeping the old Koreans (at Kang Suh), and everything else is becoming Americanized.”

Restaurant leases can last 10 years or more on this street, but owners have learned to brace for an increased rent every time they renew. Rich Kim, managing partner of Gammeeok, signed a 10-year, $20,000 monthly lease in 2015 after moving to a newly renovated second-floor space. He said it’s “definitely getting tougher” to pay the rent because of a glut of restaurants willing to pay for a Koreatown address, and landlords who increase rents due to demand.

“[Landlords] know that even though the rent here is expensive, this is the only area people will come at 3, 4, or 5 in the morning, and a lot of people are making extra money during that time,” Kim said.

Some are considering alternatives. Ellia Park opened modish restaurant Atoboy on East 28th Street last month after balking at Koreatown’s rents. “The price was really high over there,” Park said. “And we are happy that this area has residential buildings, offices, and young professionals.”

As the restaurants that originally popularized Koreatown close, a community of first-generation Korean restaurant owners has also disappeared. Seoul Garden general manager Patty Koo said when her parents established the restaurant in 1989, there were seven family restaurants on the block; today, only Kang Suh and Gammeok (in its new location) remain.

“You have to change with the times and with the people,” Koo said. “So even though people used to come here for the food and they liked it, it doesn’t matter — we’re competing against all these brand new restaurants, and the chains especially.”

This entry was posted on Friday, September 16th, 2016 at 1:28 am. It is filed under Living and tagged with Food, Immigration, Koreatown, real estate, restaurant. You can follow any responses to this entry through the RSS 2.0 feed.