Korean bakery franchises, coffee chains and food manufacturers are expanding their outlets in the U.S.
Paris Baguette on Sunday opened a four-story outlet in Manhattan's Times Square, the second one in New York City after one in Koreatown in mid-town Manhattan. Next month, the bakery franchise plans to open two more, in mid-town and on the Upper West Side.
Caffé Bene has eight outlets in the U.S., including one in Times Square which opened in February 2012 and another near the Fashion Institute of Technology that opened in July this year.
CJ Foodville, which operates the bibimbap (rice with assorted vegetables) chain bibigo and bakery franchise Tous les Jours, has 26 stores in the U.S., including one in Beverly Hills.
What sets the latest forays apart is that they venture outside Korean neighborhoods.
Paris Baguette's first U.S. outlet, opened in 2005, was in Los Angeles' Koreatown, and its first outlet on the east coast that opened in 2007 in the Palisades Park neighborhood of New Jersey, another Korean bastion. Its first Manhattan outlet was in Koreatown on 32nd Street.
Sticking to Korean-dominated areas meant savings on operating and marketing costs since people there are already familiar with the brands and rents are relatively cheap. But they drew criticism from local Korean store owners who complained about losing business to identikit franchises.
But the three new Paris Baguette outlets in Manhattan are all in prime commercial districts. The Upper West Side, for instance, is a high-end shopping district favored by upper middle-class New Yorkers, and the Korean chain will be competing with Au Bon Pain, Panera Bread and Pret A Manger.
CJ Foodville is expanding its U.S. presence starting from the West Coast. It hired pop star Psy for a special event promoting Korean food in its in Beverly Hills outlet and is trying to boost awareness of its brand there.
Critics question the profitability of the strategy because of the astronomical cost of such ventures. "It costs around W2 billion (US$1=W1,073) to run a single store in New York," said one industry insider. "It's almost impossible to maintain overheads just by selling coffee and bread."
Yet the allure of setting up shop in those prime locations is that it provides a huge boost in other global markets. Times Square in Manhattan attracts 1.5 million visitors a day from all over the world.
Paris Baguette, Caffé Bene and other Korean franchises face increasing strictures on expansion here as the government seeks to protect mom-and-pop stores from being overrun by identikit chain outlets. This leaves them with few options other than to head overseas, and the most-tempting market is the U.S.
"Even in Korea, when we open a store in Myeong-dong, we seek to benefit from the exposure and chance to analyze consumption patterns rather than profit," said Jung Tae-soo, CEO of Paris Croissant, a subsidiary of SPC that runs Paris Baguette. "The three stores in Manhattan will serve as stepping stones into other markets around the world."