"Theborn Korea: 'Actual Performance Excluding Win-Win Support Funds Was Solid'"
Theborn Korea posted an operating loss in the second quarter, turning to the red. Jongwon Baek, CEO of Theborn Korea, has been embroiled in various controversies since the beginning of the year, and the company invested approximately 30 billion KRW in win-win support funds-including the 500 KRW coffee event at Baekdabang-to restore its brand image, which impacted profitability.
On August 14, Theborn Korea reported an operating loss of 22.47542 billion KRW for the second quarter of this year. During the same period, revenue reached 74.18847 billion KRW, representing a 34.54% decrease compared to the same period last year. According to the separate financial statements for the first half, revenue stood at 174 billion KRW, and the operating loss was 16.9 billion KRW.
The half-year results reflect the full impact of the 30 billion KRW win-win support fund, which has been allocated since May to boost franchise sales by brand. Excluding the 30 billion KRW support fund, the actual operating profit would be around 13 billion KRW.
A representative from Theborn Korea explained, "The decline in second-quarter results was due to the simultaneous reflection of the 30 billion KRW win-win support fund in both revenue and operating profit for the quarter." The company added, "Considering the recent consumption slump, rising costs, and the various circumstances surrounding Theborn Korea, we internally evaluate that the actual results-excluding the 30 billion KRW support fund-were relatively solid." They also noted, "The temporary reduction in unit prices due to promotions also contributed to the decrease in revenue."
The company continued, "In the second half of the year, we will aggressively implement policies to revitalize various business sectors in order to normalize performance." They added, "From the third quarter, we expect to see the effects of efficient sales activation promotions and livelihood recovery consumption coupons."
Led by CEO Jongwon Baek, Theborn Korea also suffered a blow to its revenue amid various controversies, including alleged violations of the Farmland Act and disputes over country-of-origin labeling. In response, Theborn Korea is implementing a range of support measures totaling 30 billion KRW to help franchisees recover sales, including royalty exemptions, ingredient price discounts, new menu marketing, joint promotions, integrated membership programs, and enhanced brand discounts.
Additionally, Theborn Korea has decided to take strong action against distorted information and defamatory content from certain YouTubers in order to block negative public opinion and establish a foundation for long-term sales recovery. On August 13, Theborn Korea met with the Franchisee Council, which consists of franchise owners nationwide, and agreed to jointly respond to the spread of false information by malicious YouTubers. The Franchisee Council is preparing to issue a joint statement with the consent of franchisees across the country.
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