Private equity appetite grows for Korean restaurants

Private equity firms are paying closer attention to South Korea’s restaurant scene, a fast-moving market adept at turning both Korean and foreign food franchises into scalable businesses.

In particular, the pattern has involved what financiers call bolt-on acquisitions, in which private equity firms buy smaller, related businesses and fold them together as part of a larger platform.

MBK Partners, for instance, backed Dining Brands Group around BHC Chicken, later adding brands such as Outback Steakhouse Korea, while Orchestra Private Equity operates Pizza & Company, owner of Banolim Pizza and Ogu Pizza.

One recent example is Carlyle Group’s agreement to acquire KFC Korea from Orchestra Private Equity for about 200 billion won ($140 million), a deal expected to close in the first quarter of next year. KFC Korea operates under a master franchise agreement with Yum! Brands.

“With its established brand heritage and market presence, KFC Korea is well placed to keep expanding and growing alongside rising demand for quick-service restaurants in Korea,” said John Kim, managing director of the group’s Asia Buyout Team.

KFC posted record first-half results, with revenue up 19.2 percent on-year to 167.8 billion won and operating profit rising 39.7 percent to about 9.3 billion won.

The acquisition of KFC Korea is expected to generate synergies with Carlyle’s existing holdings, including cafe chain Twosome Place and KFC Holdings Japan. KFC Korea has also secured priority rights to operate Taco Bell Korea once the brand’s current franchise agreement expires.

“Buyout firms have already improved operations and unlocked synergies at a range of food and beverage businesses, from BHC Chicken to Mom’s Touch and Gong Cha,” said one industry official. “The rise of K-food has put Korea on the global map as a proving ground for scaling food brands.”

Homegrown private equity firms are also broadening their exposure, looking toward longer-term upside.

Local private-equity firm H&Q Equity Partners has agreed to acquire the Korean business of Five Guys for about 60 billion to 70 billion won. The US-based burger chain entered the Korean market in June 2023 under the leadership of Kim Dong-seon, vice president of Hanwha Galleria and third son of Hanwha Group Chairman Kim Seung-youn.

The deal reflects H&Q Equity Partners’ confidence in Five Guys’ Korean operations and its operating rights in Japan, following FG Korea’s establishment of FG Japan G.K. in January 2025. The parties plan to proceed with due diligence before finalizing the agreement.

Another high-profile deal came in July, when JKL Partners acquired a 100 percent stake in London Bagel Museum for about 230 billion won. The bakery, often credited with sparking a “K-bagel” moment, has developed an outsized presence in Korea’s cafe landscape.

Dealmaking prospects, however, remain uncertain for some older franchises with deep local roots, though not necessarily Korean in origin.

Popeyes Korea, operated locally by Shilla Co., has recently been put up for sale after growth fell short of expectations, with Samil PwC advising on the process, according to industry sources. The seller has approached a number of domestic and overseas private equity firms.

Meanwhile, Pizza Hut Korea, under court-led rehabilitation, is seeking a new owner through a preliminary bidding process, with initial due diligence running through Jan. 15.

“With interest rates at current levels, buyers are prioritizing assets that can deliver cash flow immediately after an acquisition,” said an industry insider, adding that food and beverage deals often depend on proven profit growth or clear upside.