Two years in, Hanwha mulls sale of Five Guys Korea

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, two years after bringing the brand into the country.

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

Although no deal terms or valuation have been finalized, a full sale of the 100 percent stake appears likely if a deal materializes, the sources explained.

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

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

“We are reviewing a range of options in consultation with the global headquarters to reinforce the brand’s competitive edge,” Hanwha Galleria said in a regulatory filing, adding that no final decisions have been made and that further developments will be disclosed within a month.

Since entering the Korean market, the company has expanded from its first location in Gangnam, southern Seoul, to seven stores, with an eighth set to open later this month at IPark Mall in Yongsan, central Seoul.

Last year, the company signed a memorandum of understanding with Five Guys International to lead the brand’s expansion into Japan, with a goal of opening over 20 stores in seven years.

FG Korea turned a profit last year, posting 46.5 billion won ($33.4 million) in revenue, 3.4 billion won in operating profit and 2 billion won in net income.