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Globalization of Korean Cuisine: The Rising Soft Power of Korea

Thursday, June 16th, 2011
nolboo restaurant

Lately, the Korean food industry has been spreading its wings within the international food market. According to a research document provided by Korea’s Ministry of Knowledge Economy in 2008, among the 1,523 Korean food-based franchise operations, 15.9 percent had opened at least one branch outside Korea. Of the 15.9 percent total, fast food accounted for 24 percent and non-fast food restaurants, including traditional Korean food restaurants, accounted for 12.6 percent. Amongst the backdrop of these developments, the Korea Trade-Investment Promotional Agency (KOTRA) and the Ministry of Knowledge Economy announced that they will assist ten Korean franchise companies to promote and establish their branches abroad in an attempt to increase Korea’s ‘soft power.’ Assistance services to be provided include foreign market research, offering legal and accounting information and finding local business partners for Korean franchise companies.

Many Korean food companies are considering or already entering the Chinese restaurant industry in particular, getting support from the Korean culture wave, or Hallyu, which has been spreading all across Asia and beyond. AlixPartners, a global business advisory firm, reported that Chinese consumers are spending only 22 percent of their total food expenditure in restaurants, which is small in comparison to US consumers, as revealed in a recently conducted study. However, as the total income of Chinese has been increasing, the average spending in restaurants showed an increase of 10 percent in 2010. In 2009, the Chinese restaurant industry grew by about 11 percent to approximately 200 billion US dollars, and the study states that the Chinese restaurant industry will be undergoing continual increased activity in the near future.

With more Korean franchise companies dipping their toes in the foreign market, Kim Soon-Jin, the CEO of Nolboo, also visions Nolboo NBG as a comprehensive global restaurant corporation. Driven by her ambition, Nolboo NBG emerged from the local Korean restaurant industry and entered the American and Malaysian markets in 1992. Nolboo NBG then entered the Chinese market via direct foreign investment.

In 2006, Nolboo NBG established its second corporate body in China and opened its first China branch in Beijing. In addition to China, the group also entered the Singapore market, contributing to the growing craze for Korean cuisine in these countries.

“When entering a foreign market, the company needs to have a discerning eye that can look beyond long-term goals,” said Kim. “The company has to go through field research and look closely into the ‘details.’ If you want to gradually succeed, your business has to figure out dining habits of its future customers and their culture.”

The company’s Yaksun Kimchi (cabbage that has been ripened with herbs, Japanese apricots and apples) is a representative example of these endeavors. The dish received Lifestyles of Health and Sustainability (LOHAS) Recognition in 2009, a first in the Korean food service industry. Yaksun kimchi is known to contain two times more lactobacillus than both the common kimchi and yogurt. Because of its popularity in many foreign markets, Yaksun Kimchi is now considered to have become a global cuisine favored by young and old, from Asia to Europe and the Americas.

“We made changes and improved the common traditional kimchi to make it more foreigner-friendly. In hot regions, it is difficult to have or make kimchi since the salted fish ingredient attracts flies. Also, foreigners feel uncomfortable when they have red pepper between their teeth after eating kimchi. Using chopsticks is another problematic issue for them.” Thus, changes were made by using red pepper blended more than the common kimchi and less salted fish.

However, Nolboo’s proficiency for success in this field was not built in a day. Twenty-four years ago, before starting her own bossam (steamed pork) Korean restaurant business, Kim went through bitter times, watching her restaurant close and reopen multiple times due to low profit. When her earlier restaurant closed, she opened a new 15 square meter baby octopus restaurant in Shillimdong, called Golmokjip. Every morning, she went to the fish market, buying the freshest ingredients for customers, but still her business suffered low profit. Not ready to give up her dream of building a successful restaurant, she then decided to offer a different menu for her customers and then realized her talent for making bossam kimchi, a kimchi made to complement the bossam dish. After finding the right menu items, her restaurant became regularly filled with customers, who visited not to taste baby octopus but to try her new bossam fare. This success led to the opening of her second branch, which brought about the start of her franchise business.

After years of continuous development and hard work by a dedicated team of Nolboo food scientists and specialists, by 2005 the Nolboo Group had opened more than 300 franchise restaurants all across the country. At that point, the group could not yet think about establishing a standardized IT system to control these hundreds of branches across the nation. Yet as the number of franchises increased, communication between the main office and the individual branches became harder to manage. When new policies, announcements, or menus were developed at the main headquarters, it was difficult for the company to deliver its message efficiently to all of the branches. Kim then devoted efforts to establishing a standardized IT infrastructure system by initiating an Information Strategy Project (ISP). As part of the company’s efforts to provide an improved taste and menu selection for its customers, Kim constructed a hightech system incorporating POS, SCM, ISO, and WMS.

The factor that set Nolboo NBG apart from other Korean cuisine franchise companies was its method of systemization and standardization. Twenty years ago, when Kim initiated the Korean cuisine franchise business in Korea, it was not considered a food service business. Therefore, there was no standardized service providing coordination. On top of that, since Korean cuisine was considered difficult to make, it seemed impossible to provide a standardized menu and taste among different branches.

“In the case of Korean traditional food, the cooks and technicians have a hard time managing the process because it has to be looked into so frequently. Also, when making Korean food, it cannot be done by a single chef. At least two or three more people have to assist when making the cuisine.” However, Kim did not give up. By devising a menu based on scientific methods, Nolboo NBG successfully created recipes that produced the same unique taste of the company’s dishes in any branch. Also, before authorizing the opening of new branches, they operated test marketing for six months.

Another contributing factor to the success of Nolboo NBG’s franchising was a highly systematic supervision system. To ensure the designation of a franchise as one of the best in a given area, supervisors visited the branches and provided various educational directives regularly and frequently to help the owners fortify and maintain the brand’s competitive edge. The NBG headquarters also offered on-site promotions and mass media marketing for the franchise owners.

Kim believes that Nolboo NBG’s competitiveness comes from the market evaluation of the taste of the food (which is the most critical factor in the restaurant business) and the customers’ loyalty to the Nolboo NBG brand. To gain this trust and loyalty, Nolboo NBG strives to provide its customers with food of the highest quality. In order to do so, Kim created a ‘Central Kitchen’ system that helps franchises to provide a standardized taste in their various menus. This system allows the franchise owners to maintain price competitiveness by manufacturing mass products intended to maximize profits.

“Our company is operated similarly to other franchise companies,” said Kim. “But if I had to name one part of our company that is run differently, I would say it’s the Central Kitchen system. We operate this system at our branch in China, as well as the Thailand branch and the Singapore branch.”

According to Kim, the success of the Nolboo group’s franchise business was made possible through building a firm trust with the franchise owners and the customers. When operating a franchise business, how well the group systemizes the process is the key to determining the group’s failure and success. So the group is investing heavily in the company’s inter-educational system. It also established a division involving book discussions and it has been investing in social educational projects.

“As time went by, the competition in the franchise market became peerless. But I think the franchise market is still in the growth stage. What we need is a standardized franchise market in Korea, along with the wisdom to overcome this transition period.” Today Kim Soon-Jin, the CEO of Nolboo NBG, is living proof that traditional food can go global by serving more than just food items. According to Kim, the key to entering the global market of traditional food is to deliver cuisines that convey value and respect to other cultures. Once this is done, she says, both national and foreign customers visit the restaurant again and again to have that special Nolboo experience one more time.

“Delivering a certain taste to our customers is important, but approaching our customers with emotion is more important. Our company is working hard to produce a product that is more than just food which can settle an empty stomach.”

Kim oversees 680 Nolboo restaurant branches including ones in Singapore, Beijing and Thailand, with 120,000 customers visiting her franchise restaurants in a single day. Additionally, she manages eight brands including Nolboo Bossam (steamed pork), Nolboo Budaejjigae (spicy soup with ham, ramen noodles, tofu, and other ingredients), Nolboojib Hangari Galbi (grilled beef or short ribs marinated in a jar), along with a premium Korean cuisine restaurant ‘Suraon’ and a fusion Chinese restaurant ChaRung. It can certainly be said that today Nolboo has become Korea’s first global cuisine company to take its culture and heritage to great heights on the world stage.

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