Author(s): Hyeong-Gyu Choi
This case examines the lease negotiation between the landlord, KoRailRetail Ltd., and the tenant, Sungsimdang Bakery, a cultural landmark brand in Daejeon, South Korea. Established in 1956, Sungsimdang faces a significant rent increase from â??©100 million Korean Won (KRW) to â??©441 million per month under KoRailRetail’s minimum 17% permonthly-sale lease. This case explores the impact of this rent hike on the bakery’s operations, the local economy, and the preservation of its cultural heritage branding. Through narratives from key stakeholders—including the bakery’s management, local government officials, and the community—the case highlights broader issues of surrounding commercial real estate practices and their effects on small businesses. It raises critical questions about whether lease agreements that rely on transactions, like percentage leases, are sustainable for culturally significant businesses that contribute to employment, economic synergy, and substantial customer foot traffic.