Jollibee to buy chicken chain Norang Tongdak amid global K-food frenzy

Jollibee Foods Corp., a household name in Southeast Asia’s food market, has been named the preferred buyer of Norang Tongdak, a South Korean fried chicken brand, in a deal estimated at 140 billion won ($100 million), according to industry sources.

The upcoming deal follows the Philippines-based food chain operator’s foray into South Korea in 2024 through the acquisition of the homegrown chain Compose Coffee Co. for 370 billion won in partnership with Seoul-based Elevation Equity Partners.

Amid the growing appetite for Korean cuisine buoyed by the popularity of K-pop and Korean TV series, Jollibee again teamed up with Elevation Equity to purchase Norang Tongdak. Norang means yellow and Tongdak refers to fried chicken.

On Tuesday, Jollibee signed a memorandum of understanding with Q Capital Partners and Corstone Asia to acquire the chicken franchise from the two Korean private equity firms.

The deal values Norang Tongdak at 10 times its 2023 earnings before interest, tax, depreciation and amortization (EBITDA) of 15 billion won.

The price tag is double the 70 billion won the Q Capital-Corstone consortium paid for a 100% stake in the fried chicken brand in 2020.

The acquisition comes as Korean spicy and sweet flavors continue to attract global palates.

Korean-style fried chicken was ranked the favorite Korean food among foreign respondents in a 2023 survey conducted by South Korea’s agricultural ministry, followed by ramen and kimchi, a traditional Korean dish.

It marked its fourth consecutive year that fried chicken topped the list since the survey began in 2020.

Jollibee has chosen Norang Tongdak over several other fried chicken franchises operating in South Korea, including the local operations of KFC and Burger King. Jollibee holds the license for Burger King in the Philippines.

Homegrown burger franchise Mom's Touch has been up for grabs as well. Its M&A deal faltered in 2022.

Norang Tongdak has expanded to 750 franchise stores, up from 400 in 2020. Its revenue climbed to 97.3 billion in 2023, compared to 50.2 billion won in 2019, with operating profit jumping to 11.5 billion won from 6.5 billion won over the same period.

For Q Capital Partners and Corstone Asia, their divestment is expected to deliver an internal rate of return of around 30%, including dividend income.

Founded in 1978, Jollibee operates a wide range of franchises across Southeast Asia, spanning hamburgers and Chinese and Japanese fast food, as well as coffee.

In 2019, it bought the Coffee Bean & Tea Leaf, a US coffee franchise, from a Mirae Asset Global Investments-led consortium for $350 million.

Write to Jong-Kwan Park and Da-Eun Choi at max@hankyung.com
 

Yeonhee Kim edited this article.