Shown above is a McDonald’s restaurant in South Korea. McDonald’s Korea is up for sales after recording losses for three consecutive years. Photo courtesy of McDonald’s Korea

Money-losing food company up for sales

South Korea’s leading food corporation Dongwon Industries announced on Feb. 6 that it was thinking of acquiring money-losing McDonald’s Korea.

In response to media reports, the Seoul-based company said in a regulatory filing, “We are checking the purchase of McDonald’s Korea. But nothing is decided yet.”

For last month’s preliminary bid for McDonald’s Korea whose value is estimated at around $400 million, only Dongwon Industries reportedly took part. South Korean brokerage Mirae Asset Securities works as a lead manager of the deal.

Both Dongwon and McDonald’s Korea refused to confirm any details, though.

McDonald’s Korea is 100% owned by its U.S. parent company, which tried to sell the Korean subsidiary in 2016 to little avail.

In 2021, McDonald’s Korea managed to chalk up $690 million in sales, up 9.7% from a year before. But it failed to turn a profit for three straight years by logging a $22 million operating loss.

This compares to Burger King Korea, which saw its 2021 operating income more than double to $20 million from 2020. Its 2021 turnover amounted to $540 million, up 18.7% year-on-year.

Observers pointed out that the acquisition of McDonald’s Korea would offer a synergy effect to Dongwon Industries.

“McDonald’s has failed to win the hearts and minds of young customers in South Korea. It is required to change here,” Sookmyung Women’s University business administration professor Seo Yong-gu said.

“From the perspective of Dongwon, it will be able to acquire sales outlets across the country where the food corporations showcase its own products.”

McDonald’s operates around 400 restaurants in Korea. The brand first tapped into the country in 1988.

The share price of Dongwon Industries went up 3.78 percent on Feb. 6 on the South Korean stock exchange.
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