Hanwha Galleria open to selling Five Guys

Hanwha Galleria Vice President Kim Dong-seon prepares a burger at a Five Guys restaurant in Hong Kong, May 9, 2023, one month before the brand’s first outlet opened in Seoul. Courtesy of Hanwha Galleria

Hanwha Galleria, a major player in the food and retail sector, said Thursday it is open to selling the operating rights of its premium burger brand, Five Guys.

However, the Hanwha Group subsidiary dismissed rumors that the potential sale is due to poor performance in Korea, saying the brand has actually exceeded expectations and recorded globally outstanding sales.

Hanwha Galleria said that while it has hosted the brand in the fast food market here since its launch in 2023 and can be assured of continuing the business, it wanted to “approach the brand from an opposite point of view” and came up with the option to sell it.

“Five Guys has maintained strong brand value and continued sustainable growth. At the same time, there have been views that selling the brand at this point to maximize revenue could be a sound business strategy in the best interests of the company and its shareholders,” Hanwha Galleria said in a press statement.

“If the brand is sold, we will further diversify our business portfolio and enhance the market competitiveness of our shopping mall sector by redeveloping Galleria Luxury Hall,” the company added, referring to its luxury shopping mall in Seoul’s Gangnam District. Built in 1990, the mall was the country’s first department store dedicated exclusively to imported luxury brands.

Hanwha Galleria said FG Korea, its wholly-owned subsidiary operating the brand, has managed all seven Five Guys restaurants in Seoul and Gyeonggi Province so successfully that their sales are among the highest in the brand’s global network of 1,900 locations.

“All our restaurants have consistently ranked among the world’s top 10 in sales per location, with some still placing in the top five globally. Currently, our restaurants boast the highest average sales worldwide. This strong market performance even led the brand’s headquarters in the United States to propose that FG Korea expand into the Japanese market,” the company said.

Last year, FG Korea posted sales of 46.5 billion won ($34 million) and operating profit of 3.4 billion won. Hanwha Galleria highlighted the operating profit was achieved after royalty payments to the brand’s headquarters which is “around the average of global franchise brands.”

"Some news reports claimed we were trying to sell Five Guys due to high royalty payments to the headquarters, which allegedly made the brand unprofitable. That is not true,” the company said.

Hanwha Galleria Vice President Kim Dong-seon, the third son of Hanwha Group Chairman Kim Seung-youn, launched Five Guys. Together with its premium ice cream brand, Benson, launched under new subsidiary Better Scoop Creamery in May, the company has been bolstering its food businesses. The company also runs a beverage brand, Pure Plus.