Business · Companies · 2 hrs ago
South Korean small-business loan delinquencies reach a 13-year high
Entertainer and restaurant owner Jung Joon-ha says high costs leave little profit at his Gangnam seafood restaurant, despite monthly sales of about 400 million won.
He cites monthly rent of 32 million won, payroll of 45 million won and the cost of ingredients as major expenses.
Across South Korea, food and labor costs took 71.6% of general restaurants’ sales in 2024, the first time the share passed 70% since records began.
Average operating profit margins fell from 25.4% in 2015 to 8.7% in 2024.
Meanwhile, self-employed borrowers’ loan delinquency rate reached 0.86% at the end of August, its highest level since May 2013.
The figures point to mounting pressure on small businesses as rising costs and loan payments squeeze profits.
South Korea’s financial regulator says delinquencies may keep rising and plans to urge banks to build up loss reserves and manage bad loans.
South Korean sole-proprietor loan delinquencies reached 0.86% at the end of August, the highest level in 13 years and three months.
The rate rose 0.09 percentage points from the previous month, according to the Financial Supervisory Service.
Rising ingredient and labor costs, alongside high borrowing costs, are squeezing small businesses, the reports say.
In 2024, food ingredients and labor made up 71.6% of general restaurants’ sales, while their average operating profit margin was 8.7%.
Broadcaster and restaurant owner Jung Joon-ha said his Gangnam restaurant brings in about 400 million won in monthly sales but has substantial fixed costs.
- Who
- South Korean sole proprietors, including small-business borrowers. Restaurant owner and broadcaster Jung Joon-ha also described the pressures.
- What
- Sole-proprietor loan delinquencies reached a 13-year high. Rising costs and borrowing burdens are squeezing businesses.
- When
- At the end of August; the reports were published on October 23 and 24, 2026.
- Where
- South Korea.
- Why
- The reports cite rising ingredient and labor costs, high interest burdens and weak profitability.
This story does not have two clearly opposing sides.
The previous peak cited for the sole-proprietor loan delinquency rate was recorded.
General restaurants’ average operating profit margin was 25.4%.
Food ingredients and labor accounted for 71.6% of general restaurants’ sales, and their average operating profit margin was 8.7%.
The sole-proprietor loan delinquency rate reached 0.86%, up 0.09 percentage points from the previous month.
- Sole-proprietor loan delinquency rate
- 0.86% at end-August
- Monthly increase
- 0.09 percentage points
- Prior peak
- May 2013
- Restaurant ingredient and labor costs
- 71.6% of sales in 2024
- Average restaurant operating profit margin
- 8.7% in 2024
- Jung Joon-ha’s Gangnam restaurant sales
- About 400 million won per month
3 sources
What people are saying
I tell people thinking of quitting their jobs to go into business not to make that decision lightly.
These days food service is not easy; it is a time when people should be discouraged from starting a business.
We plan to call on the banking sector to build up its loss-absorbing capacity, including through proactive loan-loss provisions, and to continue encouraging soundness management through the sale and write-off of non-performing loans.