As food fads come and go, small businesses trying to catch the latest wave end up drowning in debt

A store selling tanghulu, candied fruit coated in sugar syrup, is seen in Mapo District, western Seoul, on Oct. 10, 2023. [JOONGANG ILBO]

 
Low barriers to entry and loan-heavy government support are fueling a cycle of trend-driven “blind startups” among small business owners, leaving many buried in debt when short-lived food fads fade and closures follow.
 
For example, stores selling tanghulu, candied fruit coated in sugar syrup, surged in popularity to the point that 150 new shops opened in 2023 alone, according to statistics from the Ministry of the Interior and Safety. Yet within two years, the trend had effectively disappeared.
 
 
The number of tanghulu shops that closed reached 620 in 2024 and 380 last year. This pattern has repeated itself over the past decade whenever a specific food craze emerges, including giant castella cakes and brown sugar bubble tea.
 
A more serious issue is that money borrowed to start a business often becomes a lasting burden. Industry insiders point out that the government is allowing this vicious cycle to continue unchecked.
 
This year’s small-business budget under the Ministry of SMEs and Startups, the main government body overseeing self-employed policies, totals 5.4 trillion won ($3.7 billion). Of that amount, roughly 62 percent, or 3.36 trillion won, is concentrated on loan support through policy funds.
 
Lee Seung-yeon, who runs a restaurant in Eunpyeong District, northern Seoul, received a government-backed loan at an interest rate in the low 1 percent range during the Covid-19 pandemic in 2021. Since then, the rate has climbed to the mid-to-high 3 percent range.
 

Tanghulu, candied fruit coated in sugar syrup, is seen displayed at a store in Seoul on Oct. 17, 2023. [NEWS1]

 
“I borrowed 50 million won back then, but the economy feels even worse now and I have not repaid even half of it,” Lee said. “One million won goes out every month for principal and interest. If I had known it would turn out like this, I would have tightened my belt more and not taken out the loan.”
 
The government allows temporary deferral of loan repayments when a business closes, but former owners face bleak prospects for repaying debt afterward, while the cost of shutting down itself is a heavy burden.
 
A survey of 820 self-employed workers who closed their businesses, conducted by the Korea Federation of Small and Medium Business, showed that average debt at the time of closure stood at 102.36 million won. Average closure costs amounted to 21.88 million won.
 
Criticism has also grown that while support programs are vast in number, their management and substance are lacking. More than 1,000 support programs for small business owners are currently run by the central government, local governments and public institutions, covering everything from startup assistance to management improvement.
 

Visitors to a traditional market in Mapo District, western Seoul, are seen shopping on Oct. 1, 2025. [YONHAP]

 
The Ministry of SMEs and Startups provides information on these programs through its “Small Business 24” portal, but given that four out of every 10 self-employed people are aged 60 or older, practical use remains difficult.
 
Support programs run by different local governments and institutions also have fragmented application channels, making them hard to track even for public officials.
 
Guidebooks issued by the ministry are hundreds of pages long, prompting complaints among small business owners that the approach looks good on paper but fails to reflect realities on the ground.
 
“It is hard to properly understand what kinds of support are available, and the application procedures are so complicated that I gave up,” said Joo Sung-ha, 60, who operates a cafe in Gunpo, Gyeonggi.
 

A sign about vouchers that can be used at local shops is seen on a street in Dongdaemun District, central Seoul, on Dec. 29, 2025. [YONHAP]

 
In the case of the restart support program, which is designed to help self-employed people facing real management crises, those aged 60 or older accounted for just 11.5 percent of the 11,067 applications filed last year.
 
“We plan to advance the guidance and application process by using AI,” a ministry official said in response.
 
Experts argue that support measures need to be fundamentally redesigned starting from the business entry stage.
 
“Entry barriers should be raised, such as requiring completion of training related to the chosen industry before a business can be launched,” said Lee Sang-baek, head of the Gyeonggi Small Business Federation.
 

People are lined up to buy Dubai chewy cookies, the latest food craze, in front of a store in Jongno District, central Seoul, on Jan. 30. [YONHAP]

 
In the United States and Japan, experts assess the likelihood of recovery for self-employed people based on financial data and then provide customized support for either restarting or closing a business.
 
In contrast, Korea operates a system in which self-employed people must decide on their own whether to apply for closure or restart assistance, a structure that undermines the effectiveness of support.
 
“Loan-centered support is only a temporary fix, and current support programs fall short of fundamentally resolving the difficulties faced by the self-employed,” said Kim Yong-jin, a professor of business administration at Sogang University. “A major shift should be actively considered, such as fostering commercial districts as units by referring to overseas examples like cooperative models in Europe.”

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.
BY LIM SUN-YOUNG, CHOI HYUN-JU, NOH YU-RIM [[email protected]]