Hanwha says Five Guys Korea leads in sales, but divestment still on table

Hanwha Galleria, the retail unit of South Korea’s Hanwha Group, said Five Guys Korea is the burger brand’s top performer globally, dismissing speculation that a potential sale is tied to weak financials.

In a statement released Thursday, the company pushed back on rumors of declining profitability at Five Guys Korea, calling them "baseless," and cited steady growth supported by globally leading sales figures.

Sources earlier indicated that FG Korea, a wholly owned subsidiary of Hanwha Galleria, had engaged local accounting firm Samil PwC to circulate sale documents to private equity firms, though the company maintains that no final decision has been made.

“Our stores in Korea currently rank first in average sales per store among more than 1,900 Five Guys outlets worldwide,” the company said. “Multiple locations are listed among the global top five in sales.”

Addressing concerns over profitability, Hanwha Galleria countered that its royalty structure aligns with global franchise standards and is not disproportionately high.

The company pointed to FG Korea’s financial performance in support of its claims. The unit posted 46.5 billion won ($33.4 million) in revenue last year, with 3.4 billion won in operating profit and 2 billion won in net income.

Since launching in June 2023, Five Guys Korea has opened seven locations across key commercial districts in the Greater Seoul area, encompassing the capital, Incheon and Gyeonggi Province. An eighth store recently opened at IPark Mall in Yongsan, central Seoul, and the company is on track to operate nine stores by year-end.

Five Guys’ strong debut in Korea has already spurred plans for regional expansion. Hanwha signed a memorandum of understanding with Five Guys International to lead the brand’s entry into the Japanese market.

While acknowledging that a sale of FG Korea is under consideration, the company emphasized that it is not a step away from the business, but rather a move aligned with its long-term growth goals.

"Any consideration of a sale is a sound business decision that serves the interests of the company and its shareholders," the company noted.

Should a sale proceed, Hanwha said the funds would be directed toward new growth initiatives and strengthening its retail portfolio.

"We are exploring a full range of possibilities as we deliberate the strategic path forward," the company added. “We will share further details once our direction becomes clearer.”