Comedian Cho Hye-ryun expanded her shaved-ice dessert business to five stores before closing all of them, while fellow comedian Lee Bong-won took on 700 million won ($504,000) in debt after a string of failed ventures. Their accounts mirror a harsher reality for South Korea's small business owners: more than 975,000 businesses shut down last year, and closures among restaurants that had operated for two decades or longer hit a record high.
Restaurant Closure Rate Tops 15%
According to National Tax Service statistics, 975,681 businesses closed last year, down 3.2% from a year earlier. New business registrations fell 4.1% to 1,168,273, marking a fifth straight annual decline. For every 100 new businesses, 83.5 closed — the highest ratio since 2013.
Long-established operators were not spared. Some 317,406 businesses that had been running for five years or more shut down, the most since 2005 and 32.5% of all closures, or roughly one in three. Poor business performance was cited in 491,966 cases, or 50.4% of the total.
Restaurants fared especially poorly. The number of operating food service businesses fell 1.9% to 798,969 last year, dropping below 800,000. New openings declined 13.6% to 130,114, while closures reached 142,557. Among restaurants that had operated for five years or more, 41,659 closed, and 2,797 closures came from restaurants open for 20 years or longer — both records in the relevant statistics.
A survey of closed businesses released by the Ministry of SMEs and Startups in June also showed the restaurant closure rate at 15.14%, far above the 8.64% rate across all businesses. Of 1,500 small business owners who had closed shop, 70.9% pointed to deteriorating profitability and weak sales as the reason.
'We Grew to Five Stores'
Owners who expand quickly on the strength of early success often run into unexpected sales declines. Recent accounts of past business failures by television personalities echo that pattern.
Cho, in particular, described how she grew a shaved-ice dessert business that once drew lines of customers to five stores, only to have to unwind all of them.
In a video posted on the 16th to her YouTube channel, when host Kim Gu-ra said, "You used to run five shaved-ice shops," Cho replied, "I did. Lost it all. Winters were just too cold."
Cho entered the business more than a decade ago, when a well-known shaved-ice franchise was in the early stages of its expansion. In an earlier YouTube appearance, she recalled opening a store "when there were only 13 outlets nationwide." Business was strong enough at first that customers queued outside, and she eventually built up to five locations.
The problem was seasonality. "In winter it's cold, so people don't eat it," Cho said of the time. She had added stores quickly but could not weather the drop in winter demand, and said that "eventually it got so difficult that I sold them off one by one, taking a loss on each."
Lee Bong-won's Six Failures and 6 Million Won in Monthly Interest
Lee has also gone through repeated business failures. Asked in March on the YouTube channel Alddalddalhan Chamgyeon how many ventures he had attempted, he said, "I've blown six of them, and this is the seventh."
The failures left him with substantial debt. Lee has previously spoken about unsuccessful ventures including a large barbecue restaurant, a coffee shop and a production company. "It was so hard when the business collapsed. I borrowed heavily from private lenders, not banks," he said, adding that at one point he was paying about 6 million won a month in interest.
He denied accounts that his wife, comedian Park Mi-sun, paid off the debt on his behalf. "I never asked Park Mi-sun for help," Lee said. "I paid off 700 million won in debt over about 10 years by appearing at events and night venues." He later returned to the restaurant business and now runs a jjamppong noodle restaurant in Cheonan, Chungcheongnam-do.
Average Debt of 85.3 Million Won as Government Targets 2028 Safety Net
Cases like Lee's — failing and then returning to the food service industry — remain common. Last year's 142,557 restaurant closures exceeded the 130,114 new openings, but more than 130,000 restaurants still opened their doors within a single year, showing that many continue to enter the industry despite the high risk of failure.
Across the broader startup market, however, the mix of sectors is shifting. According to a report on startup trends for the first half of 2026, released by the Ministry of SMEs and Startups on the 27th of last month, 565,640 businesses were founded in the first six months of this year, down 1.5% from a year earlier. Startups in wholesale and retail fell 10.7% and manufacturing declined 2.8%, extending weakness in sectors closely tied to domestic demand.
The government is focusing on easing the burden that small business owners face when a venture fails. The ministry is preparing a framework in the second half of this year to institutionalize a basic social safety net for small business owners, and is reviewing child care subsidies for sole proprietors and a new health care allowance.
Next year, it plans to expand support for unemployment insurance premiums for the self-employed and to give priority in policy financing to borrowers with mid-to-low credit scores and to small businesses with growth potential. The additional interest rate applied to policy loans is set to fall to a range of 0.0% to 1.2% from the current 0.0% to 1.6%.
The ministry aims to have the social safety net for small business owners fully operational no later than 2028. With nearly seven in 10 of those closing shop doing so while carrying debt, the challenge remains reducing a structure in which the self-employed shoulder the risk alone, from startup through closure and any attempt to start again.
