SEOUL – For a food-and-beverage sector reeling from the pandemic, one benchmark for a viable future may lie in Seoul, South Korea.
“We can cut 90% of the costs of traditional restaurants,” said Kim Kee-woong, founder and CEO of Wecook – a shared kitchen business and accelerator platform for aspiring chefs and wannabe food-and-beverage pros who lack finance. “Many people want to get into F&B, but they don’t have the capital.”
Like a culinary WeWork, it is a sharing-economy space that offers aspiring chefs a cooking space, and attached delivery services. This means they endure none of the costs or risks of buying or renting a bricks-and-mortar location, and employing and paying management and wait staff. Hence, they can concentrate solely on food preparation.
The model, naturally, has earned a massive boost from Covid-19. With restaurants closed by lockdown or forced to cut table numbers to comply with social distancing guidelines, hungry diners have ordered delivery meals en masse.
Kim has taken this benchmark – but he has innovated and expanded it in multiple directions, adding B2B packaged food services, restaurant rentals and other elements to the B2C “ghost kitchen.”
Recipe for success
“We have three formats,” Kim told foreign reporters as he led them on a tour of his headquarters facility in Seoul on Thursday. “We provide food delivery services, packaged food services and restaurant rental services.”
Wecook, which started in 2015 as the first shared kitchen business in Korea, currently boasts 17 business locations around Seoul.
Nine are shared kitchens, with attached, in-house delivery services. Two (including the HQ) are production facilities for B2B food products – packaged foods for sale in on- or offline locations. Wecook also owns six restaurants, which chefs rent and run.
Wecook has partnerships with leading food production company Pulmuone; with conglomerate GS, which operates convenience store and supermarket chains nationwide; and with Hana Financial, one of Korea’s top banking and finance groups.
“Our mission is to connect everything to free food makers,” Kim said.
Kim’s headquarters, set in a quiet and scenic neighborhood on the lower slopes of central Seoul’s Mount Inwang, offers a café and rooftop offering views over the neighboring park.
But the centerpiece is the kitchen facility. Glassed in for hygiene reasons is the food preparation area, with 16 fully equipped work stations. Outside the glass are 66 lockers for the use of the visiting/renting chefs.
It is so well equipped that “large Korean food companies are using our kitchen for test marketing,” Kim said.
Upstairs, an office workspace, complete with marketing and regulatory support staff, offers chefs a location to work at desks that can be rented by the month. Another marketing support facility is a kitchen studio – complete with dining area, utensils, sauces and condiments – for food photography and YouTube livestreaming.
“We provide our clients with photographers, videographers, food stylists and even presenters – this is the added value,” said Jeong Go-eun, the head of Wecook’s Acceleration Team. “Our clients just have to concentrate on making good food.”
Making kimchi the easy way
One client in the packaged food space is Joo-won Ahn, a 36-year-old wife and mother. She is an innovator herself. She has invented and produces bottles of seasoning for Korea’s most famed pickled condiment.
Ahn worked at Google, before – bored with the tech world, she dived into the food sector. After undertaking professional culinary training, she worked in Michelin-starred kitchens in the United States.
“When I was working in kitchens, I was making a lot of kimchi,” she said. “Every time I made it, I thought, ‘Why can’t this be easier?’”
The preparation method for the fiery fermented cabbage is infamously complex and many recipes are secret – handed down within the family. It is also messy and fearsomely smelly.
That makes it all too much for many modern Koreans, who have given up on fermenting at home, and instead, buy kimchi ready-made from supermarkets. (Ironically, much of the ready-made stuff comes from China.)
To ease the process Ahn, reckoned a kimchi seasoning solution would make sense. But with a young baby at home she could not enter business full-time. Nor did she have start-up capital.
“I had no idea how to start up without assets – but here they had all the equipment.”
Thus was born a new product category. Ahn rents Wecook kitchen space by the hour – “it’s about 10 bucks” – and distributes and sells two versions of her product – normal and vegan, in two bottle sizes – online, via a store set up by Korea’s leading portal, Naver.
“I come here on mornings and weekends. I can sign in, order fresh produce, make it, bottle it and label it,” Ahn said. “I send out shipments every 2-3 days – they have additional space for packaging and pickups.”
She also rents the kitchen studio to offer classes in kimchi making and takes consulting from Wecook.
“If I’d had to set up my own kitchen and get all the permits it would have been impossible,” she said. “But the biggest help was the mental boost – ‘You can do this!’ When I was afraid of crowdfunding and expanding, they really helped.”
Restaurant for rent
In addition to its B2B shared kitchen arm, and its B2C shared kitchen/delivery service business, Wecook owns six physical restaurants.
The branch in Anguk-Dong – a pretty, low-rise Seoul neighborhood with multiple narrow alleys hosting restaurants, coffee shops and tailors – is set in a restored hanok, or traditional Korean cottage. On Thursday at lunchtime, it was running at flat-out capacity – in fact, prospective diners were being turned away.
“There are two teams of chefs renting the location – one for lunch, one for dinner,” said Jeong. Lunch offers traditional Korean dishes; dinner offers pricier French-Korean fusions.
“The model for restaurants is to start too easily and fail too fast,” Jeong said. “We wanted to make a sustainable model and we have run this for two years with the same teams.”
The two separate chef teams rent the location on six-month contracts – which have been renewed four times. The financial model is revenue sharing with Wecook.
And the grub? Superb.
Good food was always central to CEO/founder Kim: His mother was (and still is) engaged in the restaurant business.
In 2014, Kim was working in finance, from which vantage point he witnessed the rise of the “home-meal replacement” trend across Korea: pre-prepared meals, packaged and sold in convenience stores and supermarkets.
Seeing change come to a staid sector not known for innovation germinated the idea for Wecook. But his current multi-dimensional business “was not an overnight idea,” Kim said. “It was a change of eco-systems.”
Kim first experienced the cut-throat “red ocean” competition in the food delivery sector in Korea. That drove him to expand into the range of services he now offers.
When he started his shared kitchen, no regulatory framework existed and Wecook had to operate precariously, via loopholes. Kim himself helped the government pioneer an appropriate framework, via its “regulatory sandbox” system.
In terms of capital, he has so far raised 30 billion won ($26.9 million) from multiple investors, including GS Retail and VCs.
Revenues derive from multiple sources. Clients pay rental fees and/or offer to share their own revenues with Wecook, while partner companies pay commissions for products made in Wecook. Revenue sharing is the biggest income source.
So far, Wecook’s most successful incubation has been the creator of a new protein bar, who raised 100 million won via crowd funding.
Wecook has seen its growth double every year since its foundation. In 2019, it earned 5 billion in revenues, in 2019, year-to-date, it has taken in 10 billion. The goal is 200 billion in revenues by 2024, though Kim is not yet seeing profits: “We have not reached the break-even point yet,” he said.
Covid-19, of course, helped. The share of Wecook’s B2C delivery business more than doubled, while the sector across Korea has risen five-fold, Kim said.
But one the pandemic is under control, Kim expects consolidation. “Only winners will survive,” he said. He aims to keep luring talent to beat the copy cats he anticipates entering the sector.
For the future, the keywords are “choice” and “small businesses.”
“It all depends on how we fill consumer needs – it’s multidimensional,” he mused. “The mega trend is ‘Small businesses, many choices,’ and we are a platform to build small businesses, to offer more choice for consumers.”
So how would Kim describe his model?
“Our business is not just our business, our clients’ growth is our growth,” Kim said. “I don’t want to be called a shared kitchen, I want to be called the next F&B business platform.”