Doubts grow over Five Guys' potential in Korea
Kim Dong-sun, head of strategic management at Hanwha Galleria, speaks during the opening ceremony for Five Guys' first restaurant in southern Seoul, Monday. Newsis
By Kim Jae-heun
Doubts have been raised over the success of Five Guys in Korea as the U.S. burger brand is facing severe competition with other premium franchises amid soaring wages and higher costs of ingredients, according to some food and beverage industry officials, Monday.
The U.S. fast food chain opened its first restaurant near southern Seoul's Gangnam Station, Monday, under a master franchise contract that was signed with FG Korea, a subsidiary of Hanwha Galleria.
The area has become the most popular business destination for international fast food franchises to open their first stores. Another U.S. fast food restaurant chain, Shake Shack, had a successful start in the district in 2016. Shake Shack, operated by local food firm SPC, has now expanded its business, opening 25 restaurants in the country.
However, not all American fast food chains have achieved the same success as Shake Shack.
Good Stuff Eatery, which made its name known in Korea as a burger restaurant frequently visited by former U.S. President Barack Obama, had to stop its business here only five months after its launch in May 2022. Heightened competition with Shake Shack and Super Duper, which opened its first store in Gangnam last December, is considered to have been the main obstacle to Good Stuff Eatery settling in the local market.
Five Guys' first restaurant in southern Seoul / Courtesy of Hanwha Galleria
Additionally, Five Guys' high menu prices are a key issue.
The cheapest single burger is priced at 13,400 won ($10.26) and if sides and a beverage are added, the total price increases to a minimum of 24,200 won.
“I wouldn't pay 25,000 won for fast food, especially these days when people are suffering from food inflation,” a 32-year-old office worker surnamed Han said. “Most office workers, not to mention students, will be hesitant to spend over 10,000 won for a meal if they are eating fast food.”
Hanwha Galleria said the meals are expensive because of the large size of the burgers, as well as the premium quality.
“We are not too concerned about food inflation here. Instead, we focus on providing quality meals to our customers. We want to make sure people experience the same taste of Five Guys burgers that are sold in the U.S.,” a Hanwha Galleria official said. “Besides, the size of one single burger meal is more than enough for a normal Korean consumer.”
At Shake Shack, the prices of a single burger meal are set between 7,700 won and 14,900 won. The brand's cheapest burger set is 10,000 won cheaper than that of Five Guys'.
“People may rush to try Five Guys in the first few days to try one of the so-called three most popular burger restaurants in America,” a local food firm official said. “But their prices are too expensive. I don't know if people will keep going back to eat expensive fast food. Five Guys is not even recognized as a premium burger brand in the U.S. I don't know why they have set such high prices for fast food.”
Kim Dong-sun, the head of Strategic Management at Hanwha Galleria, who brought Five Guys to Korea, is confident in the success of the fast food franchise, saying it has no rivals in the domestic market.
“I have tried many burgers in Gangnam District, and there is no place that serves distinguished food like ours',” Kim said during a press conference in Seoul last Thursday.
Kim is the third son of Hanwha Group Chairman Kim Seung-youn.