Samsung closer to supplying Korea Military Academy meals

2024.04.03 11:00:01 | 2024.04.03 11:12:14

[Photo provided by The Ministry of National Defense]이미지 확대

[Photo provided by The Ministry of National Defense]

Large companies in South Korea were allowed to participate in supplying meals for soldiers starting from 2024, with Samsung Welstory inching closer to nabbing the rights to operate the cadet cafeteria at the Korea Military Academy with a daily meal cost set at 15,000 won ($11.12).

This move comes as the government and ruling party decided to raise the military meal price from 13,000 won to 15,000 won as concerns grew over the poor quality of the meals in 2023, while also expanding private companies’ involvement in the sector. The country’s military meal market, estimated at about 2 trillion won annually, has since seen fierce competition within the catering industry.

According to the national defense electronic procurement system on Tuesday, Samsung Welstory was selected as the preferred negotiator in the bid for the private outsourcing of meals at the Korea Military Academy cadet cafeteria, a decision that was announced at the end of March 2024.

With large corporations now eligible to enter the military meal service market, there were bids from conglomerate catering affiliates, marking a departure from previous years when medium-sized enterprises such as Pulmuone and Dongwon Home Food almost monopolized the market due to restrictions on large corporations.

The bid for the Korea Military Academy’s cafeteria was notably competitive as it was the first application of the government and ruling party‘s push to increase the meal price to 15,000 won., the People Power Party announced the increase of the daily meal price for soldiers from 13,000 won to 15,000 won in February 2024, following a previous increase from 11,000 won to 13,000 won in July 2022.

A record number of 10 catering companies participated in the bid for the operation of the academy’s cafeteria. Samsung Welstory emerged first, followed by Shinsegae Food, Pulmuone Food & Culture, Hyundai Green Food, Dongwon Home Food, and Our Home, respectively. The contract for the cafeteria operation is set for three years from May 2024 until the end of April 2027, with a total project budget of 12.7 billion won.

The catering industry is actively vying for a share of the newly opened 2 trillion military meal market thanks to a saturated domestic market as well as rising material and labor costs leading to low profitability. The military meal market, which entails serving over 1,000 people, offers catering companies a stable and potentially lucrative revenue stream.

The Ministry of National Defense is currently running a pilot project for private meal service outsourcing at 13 military units, including two regiments in training centers and new soldier battalions at the Education Command. The first quarter of this year will see six projects for food provision at military unit cafeterias opened to the private market.

With the private sector now able to compete for a small piece of military food supply, other companies that handle food distribution are quietly vying to dominate the market. The Defense Ministry opened 30 percent of its food supply contracts to the private sector in 2022, with plans to increase this share to 70 percent in 2024 but decided to maintain the 30 percent level for the near future after taking the management situations of small and medium-sized suppliers into consideration.

“Even if the entire military meal market, which serves nearly 500,000 personnel, is not 100 percent outsourced to the private sector, , it represents a market worth at least 2 trillion won after the price increase, which makes it a major battleground for catering companies moving forward,” a market watcher said.

By Ahn Byung-joon and Minu Kim

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