As inflation thins consumers' wallets, meat franchises are seeing their business conditions deteriorate. Companies are cutting company dinners to reduce expense, and families are dining out less.
According to the related industry on the 6th, the audit opinion for Banaba F&B, which operates the beef charcoal grill franchise "Hanyang Hwaro" that had actor Ma Dong-seok as its model, was rejected in Apr. The accounting firm Cham Accounting, which handled the audit, said, "We did not receive from company management the various materials necessary to conduct audit procedures, including the balance sheet as of Dec. 31, 2024, the income statement for the reporting period, the statement of changes in equity, the cash flow statement, and the notes."
Banaba F&B posted an operating loss of 8.8 billion won last year. The net loss was 8.9 billion won. Banaba F&B has consistently posted net losses over the past five years and has fallen into capital erosion, with liabilities exceeding assets. Banaba F&B's assets last year were 7.5 billion won and its liability was 27 billion won.
To make matters worse, the CEO and some members of the management of Banaba F&B were arrested on fraud charges. The investigation division of the Seoul Gangnam Police Station said on the 10th of 4th that it would refer three people, including the CEO and vice president of Banaba F&B, the operator of Hanyang Hwaro, to the prosecution under arrest, and the remaining four employees without detention. They are suspected of deceiving franchise owners by saying they could generate revenue by importing Canadian beef at low prices. They promised to pay 10% of the investment each month as revenue and to return the principal after 10 months, but this turned out not to be true.
Dareum Plus, a franchise restaurant that operated the Korean meat specialty brand "Ichadols," also applied to the Seoul Bankruptcy Court for corporate rehabilitation early this year. On Mar. 19, the Seoul Bankruptcy Court decided to commence rehabilitation proceedings for Dareum Plus.
This is not unrelated to the steady decline in the dining-out industry business index. The "dining-out industry business trend index," which the Ministry of Agriculture, Food and Rural Affairs and the Korea Agro-Fisheries & Food Trade Corporation (aT) compile and release by surveying various items such as sales, ingredient costs, and employment in the dining-out industry, has not seen the actual business index exceed the outlook even once since the first quarter of 2023. The dining-out industry business trend index uses 100 as the baseline, and a reading below 100 means there are more businesses whose sales decreased year over year than those whose sales increased. The business index for the second quarter of this year was 72.76.
In the industry, some also see that aggressively expanding their footprint or entering new businesses such as home meal replacement (HMR) to break out of the slump may have pushed these companies into deeper trouble. Banaba F&B started its business in 2022 with four stores, opening one each in Gyeonggi, South Chungcheong, North Jeolla, and South Gyeongsang, but by 2024 increased the number of franchise locations nationwide to 66.
Dareum Plus also increased stores aggressively. Ichadols was founded in Jul. 2017. Less than two years after starting the business, it surpassed 200 locations and grew into a large franchise with 300 locations in 2020. On top of that, as it entered the home meal replacement market with items such as yukgaejang, it was reported to have incurred a heavy burden from maintaining fixed facilities such as factories.
A dining-out industry official said, "While there are cases where some members of management go astray when the company's business is tough, the basic problem is that the dining-out industry has worsened and consumers have less capacity to dine out for meat."
Recently in Seoul, the price of one serving (200 grams) of pork belly has risen to around 20,000 won, meaning that when a family of four dines out once, the cost for meat alone approaches 80,000 won. If they order more meat or add a bowl of rice or doenjang stew, a family meal costs 100,000 won.
A dining-out industry official said, "Assuming an urban resident eats only two meals a day, the average monthly meal cost and discretionary money totals around 600,000 won. Wallets have gotten tighter," adding, "That is why people have no choice but to cut back on dining out for meat."