Hanwha Group is pursuing the sale of the domestic business rights of the American gourmet burger brand Five Guys. Five Guys is led by Kim Dong-sun, the third son of the Hanwha Group owner and vice president of Hanwha Galleria, who has taken lead on all procedures from the introduction of Five Guys to the country through to the contract, marking this as Kim's first new business venture.
On the 17th, according to the investment banking (IB) industry, FG Korea, which holds the domestic business rights for Five Guys, recently selected Samil Accounting Corporation as the sale's lead advisor and distributed teaser letters to some private equity fund (PEF) managers. It is highly likely that the target for sale will be 100% of FG Korea's equity, but no specific acquisition structure or corporate value has been determined at this stage.
This sale comes just over two years after Five Guys entered Korea in June 2023. Hanwha Galleria established FG Korea Inc., a 100% subsidiary, in accordance with the principle from the U.S. headquarters that 'a specialized operating company must be established in the country when expanding overseas operations' to operate Five Guys.
Five Guys currently operates a total of seven stores, including its first location in Gangnam, Seoul, with five stores in Seoul and two in Gyeonggi Province. Last year, based on annual performance, it recorded sales of 46.5 billion won and an operating profit of 3.4 billion won, successfully turning a profit. FG Korea also plans to establish a Japanese subsidiary and open seven stores in places like Tokyo by the second half of this year.
This sale of Five Guys is interpreted as part of Hanwha Galleria's strategy to focus more on its core business rather than new ventures. The fees paid to the U.S. headquarters also seem to be a burden. Even if the company makes a profit, it becomes difficult to maintain net profit after deducting the fee expenses.
However, the IB industry anticipates that it may take some time for the sale of Five Guys to be finalized. This is because many food and beverage franchises are on the market. An IB industry official noted, “The industry as a whole is struggling with the sale of food and beverage franchises,” and added, “Companies that are consistently improving their performance find it hard to receive a fair value.”
Hanwha Galleria said in a clarification announcement through the Financial Supervisory Service's electronic disclosure system that afternoon, “We are reviewing various options with the global headquarters to enhance Five Guys' brand competitiveness, but no direction has been decided.”