Five Guys "Profitability Decline Sale Not True.. Considering Luxury Store Reconstruction Plan"

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[Financial News] Hanwha Galleria, which owns the premium burger brand Five Guys, clarified on the 24th through an explanatory material that reports such as "considering selling Five Guys due to profitability decline" are not true.
According to the company, FG Korea, which operates Five Guys, recorded sales of 46.5 billion won and an operating profit of 3.4 billion won last year. Based on the performance of 5 stores, they explained that as they are currently increasing the number of stores, profitability is expected to improve in the future.
A Hanwha Galleria official said, "Although we declared at the time of launch that we would open more than 15 stores within 5 years, store expansion is progressing at a much faster pace," adding, "FG Korea plans to open 2 additional stores, including a new store at Yongsan Station on the 25th of this month, increasing the number of stores to 9 by the end of the year."
Regarding concerns about future profitability decline due to royalties provided to the U.S. headquarters, they clarified that it is at the average level of global franchises.
They further emphasized, "Currently, multiple stores in Korea are included in the top 5 group in terms of sales among the 1,900 stores worldwide," and highlighted that the first store in Gangnam, Seoul, achieved 'global number one in average store sales' at the time of opening. The company explained that the recent proposal by the U.S. headquarters to FG Korea to enter the Japanese market is also due to the growth of Five Guys in Korea so far.
However, at this point of growth, the company is open to the plan of using the realization of profits through sale as a growth engine for the overall growth of the Hanwha Galleria Group in the future. It can be used to raise funds for the reconstruction of the luxury store in Seoul, which is being pursued at the group level.
A Hanwha Galleria official emphasized, "There was a judgment that profit creation through the sale of business rights could also be a rational business strategy that aligns with the interests of the company and shareholders," adding, "If the sale is pursued, it is expected to contribute to strengthening the business portfolio through the discovery of new growth engines and enhancing the competitiveness of the department store sector, including the reconstruction of the luxury store in Seoul."
Meanwhile, earlier media reports suggested that the popularity of premium burgers was declining, and due to headquarters fees, the profitability of Five Guys was feared to deteriorate, leading to it being put on the market. 



hwlee@fnnews.com Lee Hwan-joo Reporter