'No Brand Burger' Franchise Expansion
Focus on 'Distribution Services' Sector
CEO Kang Seunghyeop's Full Commitment to Reducing Debt
Shinsegae Food is accelerating the restructuring of its dining business portfolio. Brands that are not profitable are being boldly withdrawn, and the company appears to be focusing its franchise business mainly on 'No Brand Burger.' As CEO Kang Seung-hyeop is driving strong efforts to resolve the high debt ratio, there are expectations that additional dining brands such as 'Oslo' may be closed.
According to industry sources on the 13th, Shinsegae Food is showing a passive stance toward increasing franchise stores for dining brands other than No Brand Burger.
Currently, Shinsegae Food operates four dining brands: 'No Brand Burger,' 'Oslo,' 'Becchia Enubo,' and 'Devil's Door.' No Brand Burger added 10 franchise stores in the fourth quarter of last year and is also expanding its apartment meal service contracts. However, the other brands have been reducing the number of stores for several years. In fact, Shinsegae Food currently operates approximately 250 No Brand Burger stores, 6 Oslo stores, 5 Becchia Enubo stores, and 2 Devil's Door stores.
Industry insiders predict that Shinsegae Food will gradually discontinue its dining business brands one by one. This is to focus more on the 'distribution services' sector, which is more profitable than the dining business. The distribution services business involves supplying vegetables, fruits, livestock and seafood, and home meal replacement (HMR) products to E-Mart, as well as providing finished food and bakery products to Starbucks. As of the third quarter of last year, 61% of Shinsegae Food's cumulative sales were generated from the distribution services sector.
It is also analyzed that CEO Kang Seung-hyeop, the new head of Shinsegae Food, has a strong will in this direction. Kang, a financial expert, has been focusing all efforts on reducing debt by promoting changes centered on profitable businesses since his appointment in October last year. According to a disclosure by Shinsegae Food on the 10th, the company's debt stood at 540.1 billion KRW as of last year. The debt ratio was 184%, down from 202% (585.5 billion KRW) in 2023, but still far exceeds the average debt ratio of 80-100% in the food industry.
Shinsegae Food has strengthened profitability by closing a significant number of dining stores over time. The seafood restaurant 'Bonobono,' launched in 2006, and the handmade burger specialty store 'Johnny Rockets,' launched in 2011, have already completely disappeared.
Recently, Shinsegae Food also announced the termination of the No Brand Pizza and Smoothie King brand businesses. The company completely withdrew from the dining brand 'No Brand Pizza' business in November last year and canceled the 'No Brand Pizza' disclosure document registered with the Fair Trade Commission. In October this year, it decided to end the franchise business of the beverage brand 'Smoothie King,' which currently operates about 90 stores nationwide.
Among the remaining brands, the withdrawal of Oslo is considered the most likely. Oslo is a premium ice cream brand operated by Shinsegae Food since 2015, gaining attention through a technical partnership with Japan's Shiroichisa. Until 2017, it operated 10 stores, but now the number has nearly halved. Due to the contraction of the domestic ice cream market and rising raw milk prices, it is expected to be difficult to sustain the brand for long. An industry insider said, "Brands other than No Brand Burger have not shown remarkable performance for quite some time," adding, "Considering the fast trends in the food industry and Shinsegae Food's recent moves, brand reduction was a foreseeable step."
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