McDonald’s Looks to Sell Its Korea Based Franchises Due to Increased Costs

Anyone want to buy the McDonalds franchises in South Korea?:

Customers order set menus at a McDonald’s restaurant in Seoul on May 27, last year. Korea Times file

McDonald’s is moving to sell its Korean branches as more companies enter the overly-crowded fast food market here, the company said Friday. The U.S. fast food giant first attempted to dispose of its Korean business back in 2016 but failed to do so as potential buyers opted out, due to high sales prices and other reasons.

Mirae Asset Securities has been selected as a sales manager to find the new owner of McDonald’s Korea, which has seen its profitability deteriorate, despite rising revenue, because of rising wages and higher raw materials costs, amid intensifying competition. 

“McDonald’s is looking for a strategic partner in Korea to improve the company’s growth. We are working with an external consulting firm to review various options. We will provide more details on the sell off at the appropriate time,” a McDonald’s Korea official said. 

McDonald’s sales in Korea have actually increased from 724.8 billion won ($570.4 million) in 2019 to 867.8 billion won in 2021. This increase is only counting the revenue created from the restaurants McDonald’s Korea directly managed, and if sales created with franchisees are included, the figure reaches over 1 trillion won. It is the largest sales achieved by the American fast food restaurant chain in Korea. Its operating losses reached 44 billion won in 2019, 48.3 billion won in 2020 and 27.7 billion won in 2021. 

Various factors are attributable to McDonald’s money-losing business in Korea. Higher delivery service fees here during COVID-19 have increased its business expenses, along with soaring costs of labor and raw materials. 

Korea Times

You can read more at the link.

0 0 votes
Article Rating
Subscribe
Notify of
guest

This site uses Akismet to reduce spam. Learn how your comment data is processed.

2 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Korean Person
Korean Person
2 years ago

In the past if you wanted a burger in Korea it was either McDs, BK, and Lotteria or an expensive restaurant that claimed that their patties are made from Black Angus beef.

Take into account the price, people would naturally flock to McDs and such if they wanted a burger.

Now, you see a lot of Korean burger joints that serve burgers made from freshly made patties and not the frozen factory made ones served by McDs at a price comparable to McDs, and tastier to boot.

So, it’s no wonder McDs is losing ground in Korea.

ChickenHead
ChickenHead
2 years ago

Zombie movies and burgers are two things Koreans are getting really good at.

2
0
Would love your thoughts, please comment.x
()
x