Five Guys in Korea: Is a Major Sale on the Horizon?

Hanwha Galleria, the retail arm of Hanwha Group, is reportedly exploring the sale of FG Korea, operator of US burger franchise Five Guys in South Korea, just two years after introducing the brand to the country.

Sources revealed Thursday that FG Korea, a wholly owned subsidiary of Hanwha Galleria, has recently circulated documents to private equity firms through local accounting firm Samil PwC, signaling a potential sale process.

While no specific deal terms or valuation have been finalized, insiders suggest that a full sale of the 100 percent stake is likely if an agreement materializes.

Five Guys entered the Korean market in June 2023 as one of the flagship projects spearheaded by Hanwha Galleria Vice President Kim Dong-seon, the youngest son of Hanwha Group Chairman Kim Seung-youn.

The potential divestment comes as Hanwha Galleria seeks to streamline its portfolio and reduce costs, including royalty payments to Five Guys’ US headquarters. However, contractual obligations with the franchisor limit unilateral decision-making.

“We are evaluating a range of options in collaboration with our global headquarters to strengthen the brand’s competitive position,” Hanwha Galleria stated in a regulatory filing. The company added that no final decisions have been made and further developments will be disclosed within a month.

Since its Korean debut, the company has expanded from its initial location in Gangnam, southern Seoul, to seven stores. An eighth outlet is set to open later this month at IPark Mall in Yongsan, central Seoul.

Last year, the company inked a memorandum of understanding with Five Guys International to spearhead the brand’s expansion into Japan, with plans to open over 20 stores within seven years.

FG Korea turned profitable last year, reporting revenue of 46.5 billion won ($33.4 million), operating profit of 3.4 billion won ($2.55 million), and net income of 2 billion won ($1.5 million).