McDonald’s Looks to Sell Korea Business; Lady M Seeks $20 Million Financing Round

This is an English adaptation of a FoodBud historical article originally published on June 10, 2022.

McDonald’s is seeking to sell its Korea business and has hired Mirae Asset Securities to advise on finding a buyer, including for the full stake in McDonald’s Korea. Potential buyers were expected to receive invitations as early as the following month.

McDonald’s had tried to sell its Korea stake in 2016, appointing Morgan Stanley and holding talks with a consortium formed by Maeil Dairies and Carlyle Group, but no agreement was reached.

Market reports cited fundraising needs as one possible reason for the renewed sale effort, while also suggesting headquarters may view Korea as a non-core asset.

McDonald’s Korea Financials

McDonald’s Korea was established in 1986. It was described as the largest fast-food chain in Korea by sales, but it had remained loss-making.

Key figures cited in the article:

• 2021 operating loss: RMB 150 million
• 2021 net loss: RMB 180 million
• 2021 sales: RMB 4.6 billion
• 2020 operating loss: RMB 260 million
• 2020 net loss: RMB 350 million

In 2020, the article attributed the losses to rising raw material, labor, and delivery costs.

McDonald’s Korea paid RMB 270 million and RMB 290 million in franchise fees to headquarters over the previous two years.

Starbucks Korea as a Comparable Transaction

The article also pointed to Starbucks’ 2021 sale of control in its Korea joint venture.

During fiscal 2021, Starbucks sold equity in its Korea joint venture and recorded a net gain of US$865 million. Starbucks sold its 50% stake in Starbucks Korea in two parts: 17.5% to its Korean partner E-Mart Inc. and 32.5% to Singapore sovereign wealth fund GIC Private Limited.

The total consideration was US$1.175 billion, or about RMB 7.45 billion, implying a Starbucks Korea valuation of US$2.35 billion, or about RMB 14.9 billion.

Outside North America, Korea was Starbucks’ largest licensed-store market. As of October 3, 2021, Starbucks had 6,965 stores in North America and 1,611 stores in Korea. The article noted that Starbucks’ China stores were company-operated.

Lady M Seeks New Financing

Bloomberg reported that bakery chain Lady M was seeking a new US$20 million financing round that could value the New York-based chain at US$600 million.

People familiar with the matter said the round was intended to support expansion in Asia, especially opening more stores in China. The company could also pursue strategic acquisitions of other bakery chains.

Lady M was founded in 2001 and had more than 50 stores globally. It entered China in 2017 with its first store there and had 30 stores in Greater China at the time of the article.

Note: financing, valuation, expansion, and transaction figures are historical as of the June 10, 2022 source article.