McDonald's will sell Korean business?! The resale price is as high as 2.5 billion!

Amid rising labor costs and fierce competition for food distribution, US fast food giant McDonald's is selecting more than a dozen candidates from South Korean private equity funds and medium-sized companies to sell the management of its South Korean business. and a preliminary tender will be held next month.

McDonald's is considering selling its Korean business, South Korea's Daily Business News reported today. McDonald's sent a warning letter to about 10 potential buyers last month for the sale of its South Korean business and is expected to receive preliminary bids in October, the report said, citing anonymous investment bank sources.

The target of the transaction is McDonald's 100% stake in South Korea owned by McDonald's Singapore Investment and the right to operate in the country. This is the second time that American fast food giant McDonald's has tried to sell its South Korean business. Back in 2016, McDonald's had lengthy negotiations with Maeil Dairies and Carlyle Group, but buyers opted out due to exorbitant prices and other reasons, so McDonald's failed to sell its South Korean business.

McDonald's South Korean business is valued at 500 billion won (2.53 billion yuan), close to the valuation six years ago, according to a report by the South Korean newspaper the Daily Business News on Sept. 5.

McDonald's is one of the first American fast food brands to enter Korea in 1986, and it is now the fast food chain with the largest number of stores in South Korea, occupying a high dominant position. It is for this reason that some medium-sized companies that want to enter the food and beverage industry are considering bidding. Considering that McDonald's operates in many business districts, McDonald's South Korea has made the real estate value of its stores the marketing focus of the sale.

Although McDonald's is now a leader in South Korea, McDonald's South Korea business lost 27.7 billion won on turnover and 34.9 billion won on sales of 867.8 billion won in 2021. McDonald's South Korean business is suffering from operating losses because of high delivery service fees and soaring labor and raw material costs.

In response to the surge in costs, McDonald's in South Korea announced a price increase on August 19, with the prices of 68 commodities, including drinks and desserts, rising by an average of 4.8%. This is the second time that McDonald's in South Korea has raised its price in half a year.

Photo Source: Internet

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