Investors are placing big bets on Korean food service technology startups, as the country's restaurant industry is expected to accelerate the adoption of self-service systems amid high hourly wages and a lingering labor shortage.
t'order Inc., a Korean startup that provides tablet ordering system “t'order” and other food service solutions, recently received 13 billion won in Series B from Korea Development Bank (KDB) and LB Investment Inc. The company raised $9.6 million. The company aims to raise a total of 30 billion won.
According to industry sources, the remaining 17 billion won is expected to be raised soon.
The company plans to use the proceeds to increase its supply of tablet PCs, which are primarily used as self-ordering systems in restaurants, to meet surging demand. t'order expects new orders for tablet PCs to exceed 10,000 units per month on average.
The country's restaurant owners are aggressively deploying automated food service technology to combat soaring hourly wages and ongoing labor shortages.
High labor costs and ongoing labor shortages
South Korea's minimum wage has more than doubled this year since 2013 to 9,860 won per hour. To make matters worse, restaurant owners cannot find workers.
According to data from South Korea's Ministry of Employment and Labor, the country's hospitality industry was short of 52,493 workers as of the second half of last year.
Restaurant operators expect the industry to continue to suffer from labor shortages for at least the next four to five years. According to a survey conducted by the Korea Agriculture, Fisheries and Food Trade Corporation, 54.9% of the 3,000 restaurants that responded to the survey predicted that it would still be difficult to hire employees three years from now.
A person in the food and beverage industry said, “When using a tablet ordering system, restaurants have to pay a fee of 10,000 to 20,000 won per month per table, but it is much cheaper than hiring human employees.'' Ta. “It also helps restaurants reduce hiring and staff management costs.”
Investors also see significant growth potential in the country's food service technology sector, as most of the relevant local startups aim to expand globally.
Payhere Inc., a provider of food service automation solutions, plans to expand globally with its point-of-sale (POS) system with Kyochon F&B Co., a leading Korean fried chicken restaurant chain operator.
Aniai, a startup that develops cooking robots, has already signed contracts under nondisclosure agreements to supply automated hamburger patty grilling systems to two major U.S. hamburger franchise operators.
Rosy outlook draws funding to food service tech
Investors invested in both startups with high expectations for the business models of both companies.
Payhere successfully raised 20 billion won in a Series B funding round last year, while Anyi raised $12 million in pre-Series A funding in January.
The startup, which develops kitchen robots, has already signed contracts to supply 500 burger-cooking robots and expects to receive orders for more than 1,000 units by the end of this year, the company said.
Among other food service technology development startups attracting investor interest, Changgyuping Co., Ltd., which operates the mobile menu ordering system tablero, received multiple investments including CJ Investment Co., Ltd. in a pre-Series A funding round last November. They raised 2.3 billion won from the house. Spark Lab and Magna Investment.
Bare Robotics, a Silicon Valley-based service robot development startup, received a $60 million investment from South Korean tech giant LG Electronics in March.
The company recently set a goal of delivering more than 1,000 serving robots this year.
B-Robotics, a robot development startup that provides other services, secured an investment of 3 billion won from Cheetah Mobile, a global mobile app developer, in November last year.
B-Robotics is a subsidiary of Woowa Brothers Corp., which operates South Korea's No. 1 food delivery platform, Baedal Minjok, also known as Baemin.
Write destination Kim Joo Wan kjwan@hankyung.com
Sookyung Seo edited this article.
