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Theborn Korea's profit soars while franchisees close down
Theborn Korea CEO Paik Jong-won
By Ko Dong-hwan
Celebrity restaurateur Paik Jong-won's food franchise business, Theborn Korea, has seen a significant leap in sales.
However, despite his popularity, it appears that his franchisees are not benefiting, as an increasing number of them are closing their businesses.
According to the Korea Franchise Union (FKU) Tuesday, Theborn Korea's franchisees lasted, on average, 3.3 years in 2020, 3.2 years in 2021 and 3.1 years in 2022.
The figures fall short of the typical time it takes for franchisees in Korea to start making a profit. According to the Korea Chamber of Commerce and Industry, franchisees on average invest 159 million won ($115,000) in their businesses and require 3.6 years to recover their initial investment.
The franchisees of Theborn Korea tend to shut down their businesses earlier compared to the average operational period of all franchisees in the country. According to Statistics Korea and the Ministry of Agriculture, Food and Rural Affairs, the average lifespan of franchise businesses in South Korea was 7.7 years in 2022.
As for sales, franchisees and Theborn Korea showed contrary trends. The Seoul-based company's sales last year registered 388 billion won, over a nine-fold increase from 2010 when it was 43 billion won.
The company's franchisees during the same period, on the other hand, saw their sales fall by more than 50 percent on average, to 387 million won from 875 million won. Only a few popular brands, like Paik's Coffee, saw their sales rise.
Theborn Korea currently runs 25 brands in the market of food and beverage, restaurant, bar and more. It had registered 50 brands under the Fair Trade Commission since 2008 and reduced the list. The number of brands is far higher than the average number of brands under a franchise company here which was 1.45 in 2022.
Theborn Korea has refuted the speculation, saying that the figures are "just numbers from the past" and that the country's food and beverage and restaurant industries are currently changing fast.
"We've halted some of our underperforming brands in these fast-changing markets," the company said in a statement. "Adopting to such markets fast by introducing new brands and food menus is our key strength. So past statistical data doesn't really mean much."
The company added that some of its franchisees had seen slowing sales because markets for low-priced items like coffee and beverage drinks have grown big, and competition has become fiercer.
Last month, Theborn Korea faced a protest from owners of Yeondon Ball Katsu, a takeout food brand under the company. The protesters alleged that their sales fell short of what the company had promised during consultations prior to opening their businesses. They demanded restitution from the company to cover their losses.
However, the company rejected the demand, saying it had never promised the figures mentioned by the protesters.