Population Grows, but Korean Businesses Struggle: “Experiential Commerce Is the Way Forward”

Koreatown Business Shift is accelerating as Los Angeles Koreatown grows while its Korean commercial base continues to contract.

High-rise apartments are springing up across the neighborhood, increasing both the residential population and foot traffic. Yet the number of Korean residents and Korean-owned businesses is declining. The long-standing assumption that development would automatically strengthen the Korean business district no longer holds.

The biggest change is the customer base. Younger, multiethnic residents have replaced many Korean residents who moved to suburban communities, but their spending habits are different. Their money goes less toward traditional Korean restaurants and neighborhood service businesses and more toward cafes, dessert shops and destination restaurants. They also spend on atmosphere, design and social media-worthy experiences. Experts say this explains why Korean businesses are not gaining customers even as the neighborhood’s population grows.

The business environment has also deteriorated. Remote and hybrid work has reduced demand for weekday lunches, while rents, labor costs and food prices have risen.

Generational succession has stalled as well. First-generation business owners are aging, but their children often avoid taking over demanding family businesses, particularly when they are offered responsibility without meaningful control over operations.

Experts, however, do not view the changes solely as a decline of the Korean commercial district. Korean residents and businesses are expanding into Orange County and other areas, while young, non-Korean residents are emerging as a new customer base in LA Koreatown.

The central question is who will capture that new market. Instead of waiting for former Korean customers to return, businesses must develop menus, spaces and experience-driven services that appeal to today’s consumers. They must also move beyond short-lived trends and build loyal customer bases and enduring brands.

Ultimately, the Korean business community must both preserve its foundation and broaden its reach. In LA Koreatown, businesses must attract new consumers while connecting Korean entrepreneurs and younger generations expanding beyond the neighborhood through a broader economic network.

The era when more buildings and residents automatically meant growth for Korean businesses is over. Unless merchants adapt to changing customers and a new generation, the benefits of development may go elsewhere.

Why The Korea Daily Convened the Panel

The commercial landscape of LA Koreatown is changing rapidly.

In the past, Korean residents and businesses were concentrated within the neighborhood, allowing money and jobs to circulate within the community. Over the past decade, however, large-scale residential development and demographic changes have disrupted this Korean-centered commercial structure.

Although the neighborhood has grown physically, concerns are mounting that the Korean community’s economic foundation and cultural identity could weaken. The Korea Daily convened a panel of experts to examine the causes of these changes and identify strategies for sustainable growth.

The panel included Sean Mo, Co-CEO of architecture and design firm Andmore; Albert Chang, Managing Partner at Kim & Lee CPA; Joann Lee, CEO of Kabuki Group; David Kim, Chief Banking Officer at PCB Bank; and Kathy Lee, a real estate agent at Dream Realty.

The panelists concluded that Koreatown is not simply declining. Instead, it is transitioning from a Korean-centered neighborhood business district into an experience-driven commercial destination shaped by young, multiethnic consumers. Korean businesses that fail to adapt are increasingly being left behind.

Koreatown Business Shift and Changing Consumer Demand

Q: Why are Korean businesses struggling even though housing and foot traffic have increased?

Sean Mo: More apartments do not automatically translate into more customers for established Korean businesses. Young, non-Korean residents have different spending habits from the Korean residents who lived here in the past. Their spending is concentrated at cafes and trendy food and beverage businesses rather than traditional Korean establishments. The problem is not a lack of people. Existing businesses are failing to attract the new consumer base.

Kathy Lee: Korean residents have moved to outlying communities, while younger, non-Korean residents have moved in. The residential population and the customer base for Korean businesses have become disconnected.

Albert Chang: Products that were once available only in Koreatown can now be purchased easily online. Consumers have fewer reasons to visit Koreatown, placing Korean-focused retailers in an increasingly difficult position.

Q: How have the customer base and spending habits changed?

Sean Mo: At a Japanese market near Wilshire Boulevard, young customers line up to buy eel dishes priced at around $10. A Taiwanese cafe on 6th Street also draws crowds late at night. These customers are purchasing more than food. They are paying for the space, atmosphere and overall experience. Koreatown has not become less attractive; the people consuming what it offers have changed.

Kathy Lee: For younger consumers, Koreatown is a place to take photos and share experiences on social media. Spending has shifted away from everyday meals and household necessities toward coffee, desserts, destination restaurants and signature menu items.

Joann Lee: Business owners cannot simply say, “Our food is good, so why aren’t customers coming?” They must study the side dishes, menus and dining formats that appeal to a diverse customer base.

Q: How have office districts and traditional business practices changed?

Sean Mo: In the past, parking structures were full up to the sixth floor by 9 a.m. Today, they are about half empty. Hybrid work has become widespread, and a single lunch can cost $25, prompting office workers to choose convenience foods or delivery. The structure in which weekday lunch traffic supported surrounding businesses has collapsed.

Albert Chang: As referral-based business networks expand beyond the Korean community, traditional sales strategies built around personal connections and geographic proximity are changing.

Joann Lee: In Koreatown, customers repeatedly flock to new businesses and then move on. By contrast, many of Kabuki’s non-Korean customers return throughout the year as regular patrons.

Kathy Lee: When one business succeeds, similar businesses and franchises quickly open nearby. Once the market becomes oversaturated, they often close together. This culture of excessive imitation makes it difficult for Koreatown to develop enduring brands.

Q: Why are first-generation businesses not being passed down to the second generation?

Albert Zhang: The approach of saying, “I’ll give you the business, so come and run it,” no longer works with the next generation. Families should share the company’s core values while allowing the second generation to decide how to operate it. If owners transfer a business but insist that everything continue to be done the old way, younger family members will leave.

Joann Lee: I spent 35 years building my business, but all of my children chose their own professional fields. First-generation owners are aging, while the second generation often avoids the physically demanding restaurant industry. As a result, business succession is breaking down.

Q: What impact are rents, aging buildings and current real estate and financial conditions having?

Kathy Lee: If property values and rents increase, building maintenance should improve as well, but often only the prices go up. Tenants’ financial difficulties then contribute to further deterioration of the commercial district, creating a vicious cycle. Increased construction of rental apartments has also weakened the condominium investment market. The number of available listings, normally around 60 to 70, has risen to approximately 200 this year.

Sean Mo: Some buildings place stores deep inside their properties, separating them from the street, while wide roads also discourage pedestrian activity. Koreatown needs walkable commercial areas similar to Little Tokyo and Old Pasadena.

David Kim: Five-year commercial loans issued in 2020 and 2021 at interest rates of around 3% are now reaching their refinancing deadlines. Higher interest rates and stagnant property income have made extensions more difficult. Lenders are also applying stricter standards to SBA loans, with greater scrutiny of cash flow and repayment capacity.

Albert Chang: Unlike first-generation entrepreneurs, who often depended on Korean American banks or capital from Korea, second-generation entrepreneurs are raising funds through venture investment and other financing channels.

Q: Is the Korean commercial district shrinking, or is it expanding beyond its traditional boundaries?

Albert Chang: It is becoming difficult to define the Korean commercial district solely through physical boundaries such as Wilshire Boulevard and Olympic Boulevard. Korean companies are also choosing locations such as Century City and Orange County. What matters is not simply the location or number of Korean businesses, but the connections among Korean entrepreneurs and younger generations, as well as the identity of the Korean American community.

Kathy Lee: The geographic expansion of the Korean commercial community reflects the growth of the population and businesses built by the first generation. At the same time, businesses in LA Koreatown are turning over more rapidly, and fewer long-standing brands remain. Geographic expansion and the weakening of the central business district are occurring simultaneously.

Sean Mo: Koreatown already has many residents and visitors who are not Korean. Rather than waiting for former Korean customers to return, businesses must turn these consumers into their new customer base.