Lotte's reshuffle indicates less likelihood of Morgan Stanley's exit from Nolboo

A Nolboo restaurant selling "bossam," boiled pork belly, and "budae jjigae," sausage stew. Courtesy of Nolboo

By Park Jae-hyuk

Lotte Group's appointment of former Nolboo CEO Ahn Se-jin as the new leader of the group's hotel business in its latest reshuffle of top executives has unintentionally signaled that Morgan Stanley has become less likely to unload Nolboo in the near future.

Nolboo is a Korean food restaurant franchise which was acquired by the U.S. investment bank's private equity investment team here for about 120 billion won ($100 million) in 2011.

Ahn has been known for his expertise in devising business strategies, as he previously worked for global consulting firms ― A.T. Kearney and AlixPartners ― and served as an executive in charge of strategies at LG and LS. Those who led Nolboo before Ahn built most of their careers at the company or other restaurant franchises.

When he started managing Nolboo from 2018 as the leader of an in-house operation team of Morgan Stanley Private Equity Asia's Seoul office, he was therefore expected to enable the U.S. firm to sell the restaurant franchise that has suffered snowballing losses since 2017.

In October, it was reported that Morgan Stanley was in talks with SL&C to sell Nolboo to the Samchully Group's restaurant business unit which operates the Chai797 Chinese food restaurant chain and Just Butcher's Korean barbeque restaurant chain.

Morgan Stanley apparently tried to sell Nolboo for a price much lower than that what it paid to buy it, although both Nolboo and SL&C have denied it. According to industry sources and media reports, Morgan Stanley and SL&C failed to reach an agreement on the price of Nolboo.

Two weeks after news reports came out about the failure in their negotiations, Nolboo announced that Cho Gap-sool, who joined the company in 1991 as a chef, was appointed as the new CEO, indicating that its largest shareholder decided once again to entrust restaurant business experts to manage the chain.

"Ahn worked for our company until the first week of November," a Nolboo spokesperson said. "Our new CEO will focus on the company's expansion in other countries, as he has contributed to our company's growth in other Asian nations."

Industry experts said Morgan Stanley will continue to face difficulties trying to sell Nolboo unless it increases the franchise's enterprise value, considering that buyers are still concerned about uncertainties surrounding the restaurant industry amid the coronavirus pandemic.

"Fierce competition in the restaurant industry has lowered the valuations of restaurant franchises," said Suh Yong-gu, a professor of marketing at Sookmyung Women's University. "This is not an appropriate moment to sell restaurant franchises as it is still difficult to offer face-to-face services."

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