Secondhand chairs are stacked outside a shop in Hwanghak-dong in Jung District, central Seoul, on June 30. Hwanghak-dong is an area known for its kitchenware shops.YONHAP
The number of businesses grew at its slowest pace in over 20 years as fewer people opened new businesses and established ones, including decades-old restaurants, closed their doors.
There were 10.3 million active businesses as of the end of last year, up only 1.7 percent from a year earlier, according to the National Tax Service — the slowest annual growth since such figures became available in 2005.
The annual growth rate of active businesses was 4.9 percent in 2019 and reached a record high of 7.5 percent in 2020. It then declined to 6.4 percent in 2021, 5.1 percent in 2022, 2.8 percent in 2023, 2 percent in 2024 and 1.7 percent last year.
The number of newly registered businesses fell 4.1 percent from a year earlier to 1.17 million as of the end of last year, the lowest number since 2014. This also marked the fifth consecutive year of decline.
A total of 975,681 businesses closed during the same period, 3.2 percent fewer than a year earlier. However, there were 83.5 closures for every 100 new businesses, the highest ratio since 2013.
Some 317,406 businesses that had been operating for at least five years closed last year, the highest figure since 2005. They accounted for 32.5 percent of all business closures, meaning roughly one in three businesses that closed had been open for more than five years.
Of the total number of shut-down businesses, 491,966, or 50.4 percent, cited poor business performance as the reason for their closure — the highest share since 2009, during the aftermath of the global financial crisis. This was also the second straight year that more than half of all closures were attributed to weak business conditions.
The restaurant industry specifically saw a sharp downturn, with the number of active restaurant businesses falling 1.9 percent from a year earlier to 798,969 in 2025.
Secondhand pots and cooking utensils are stacked outside a shop in Hwanghak-dong of Jung District, central Seoul, on Nov. 18, 2025. Hwanghak-dong is an area known for its kitchenware shops.NEWS1
New restaurant openings fell 13.6 percent to 130,114, the steepest annual decline since 2011. Over the same period, a total of 142,557 restaurants closed. As a result, the sector posted a net decline of 12,443 businesses, nearly five times more than a year earlier.
Even long-established eateries were not spared.
A total of 41,659 restaurants that had been operating for at least five years closed in 2025, the highest number since 2007. Closures of restaurants that had been in business for more than 20 years also reached a record high of 2,797, up 61 percent from 2021.
Meanwhile, the Seoul Bankruptcy Court terminated Homeplus’s corporate rehabilitation proceedings on Friday, and concerns are growing that the fallout could spread across the self-employed sector and affect the store operators inside Homeplus branches and suppliers.
Following the termination, the government will provide 440 billion won ($286.9 million) in emergency liquidity support for small- and medium-sized enterprises (SMEs) that partner with Homeplus. The package includes 90 billion won in emergency management stabilization funds through the Small Enterprise and Market Service and the Korea SMEs and Startups Agency, as well as 350 billion won in special guarantees through the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation.
The government also plans to raise the financing limit for small business owners from 70 million won to 100 million won and lower their loan interest rates by 0.5 percentage points.
BY JEONG JAE-HONG [lee.taehee2@joongang.co.kr]
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
