Orchestra Private Equity, headquartered in Singapore, is to buy the KFC South Korea unit, local sources reported.
Orchestra and KG Group, the operator of KFC South Korea, were reported to sign the acquisition agreement last week, a deal estimated to be worth about US$50 million. The company also entered into a separate agreement with Yum! Brands to change the direct management structure to a franchise model.
The agreement came about a year after KG Group put KFC Korea on sale. The South Korean chaebol acquired KFC South Korea in 2017 from private equity firm CVC Capital Partners for 50 billion won ($40.5 million at today’s exchange rate).
The American fried chicken chain currently has 190 stores across South Korea.
According to The Korea Economic Daily, KFC ranks fifth in South Korea’s fast food market by revenue after Lotteria, Burger King and McDonald’s. In 2020, KFC Korea’s operating profit fell to about 700 million won ($567,000), or one-tenth of its 2014 result.
Local sources said the chain has been struggling in the market due to a lack of localisation with all decisions having to be made after consulting with the American headquarters.
Meanwhile, the country’s fast-food market has seen fierce competition as more international chains enter the country, including Five Guys, Popeyes and Gordon Ramsay’s Street Burger.
Last week, Hong Kong investment company Pacific Alliance Group reportedly entered the bidding for 100 per cent of South Korean fast-food business Mom’s Touch & Co.