Invest1 publisher3 min readPublished
Theborn Korea's headquarters pays for franchise discounts as stores fall below 3,000
Theborn Korea shares closed 57% below their 34,000 won IPO price after revenue fell 22% and the company swung to a 23.7 billion won operating loss. Its response, discounts paid for by headquarters plus a regional push, spends the listed company's cash before any comes back.
The Investor · Invest desk
Drafted by a language model from the sources cited here and checked against its claim ledger before publication. How we use AISend a correction
What happened
- Store numbers fell for the first time in the company's history, from 3,080 in 2024 to 3,068 last year and 2,993 at the end of June.
- Paik's Coffee was the only brand to add stores, rising to 1,841 from 1,821, while Paik Boy Pizza fell to 205 from 227 and Saemaul Sikdang to 59 from 68.
- The regional development business lost a cumulative 5 billion won from 2023 to 2025, and its early Yesan market stores run at 80% to 90% self-sufficiency.
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Why it matters
- cost Each subsidised order is paid for by a franchisor already at about minus 6.6% operating margin, so the promotion adds to the loss unless it brings back enough sales to cover itself.
- constraint Regional development's three-year loss is about a tenth of one year's profit swing, so shutting it down would not return the company to profit by itself.
- exposure Paik's Coffee is about 61.5% of locations and the only brand still adding stores, so any growth in the network now depends on that one brand.
Divide consolidated revenue by the store count and the 2025 decline shows up inside the stores. The network lost 12 locations that year, about 0.4%, while revenue per location fell from roughly 150.7 million won to 117.7 million won [1]. The ratio is crude, because a franchisor's consolidated revenue need not come only from its domestic outlets. Even so, closures cannot explain a 22% revenue fall in a year when the store base barely moved [4][7].
Profit fell faster than sales. Revenue dropped by 103.0 billion won and operating profit by 49.3 billion won, so about 48 won of profit went with every 100 won of lost sales [2]. The source does not break down the 2025 costs or report a first-half operating result, so there is no way to check whether the loss came from fixed costs or one-off charges.
Against a loss that size, the lunchbox offer at Yeondon Twigim Deopbap is narrow. According to the company, headquarters is covering the whole 3,000 won so franchisees bear none of it [13]. If the 3,000 won comes off the list price of the cheapest 4,900 won dish, that item lists at 7,900 won and the cut is about 38% [7]. A franchisor that funds the discount is spending its own margin on traffic at stores run by franchisees, and those franchisees decide whether to stay open [13]. The counter-reading is that this is a short launch offer on seven new items at one brand, too small to move a 361.2 billion won revenue line [4][12].
The company has launched no restaurant brand since Hong Kong Bunsik in 2023 and says it is putting existing brands first [10]. Its new outlets are abroad: Paik's Coffee in Japan and Taiwan, plus a sauce business selling to companies in Canada [11]. At home, the brands other than coffee went from 1,247 stores last year to 1,152 at the end of June, a fall of about 7.6% [5]. It is also opening regional development centers in Mungyeong, Sangju, Gunsan, Gangjin and Yeoju, modelled on a Yesan market that went from 10 visitors a day to 10 million cumulative visitors [14]. Chief executive Paik Jong-won said the regional effort is "an investment to show the direction of the business, not something to make money right away" [16][17].
At 214.9 billion won, the market values the company at about 0.6 times last year's revenue and about 8.4 times its 2024 operating profit [6]. If the 2025 loss included one-off costs, 8.4 times a recovered profit is a low price. The discounts may also work. Operating leverage cuts both ways: if about 48 won of profit left with each 100 won of sales, some of it should come back when sales do [2]. Or the closures continue, and the website tally of 2,930 on Sept. 29, already 63 below the June count and 150 below the 2024 peak, keeps falling [8][8]. I think that third path fits the evidence best, since first-half revenue was still shrinking and only the coffee brand is adding stores [6][9]. A first-half operating result near breakeven would prove that view wrong.
What to watch
- Whether headquarters-paid discounts spread from Yeondon Twigim Deopbap to shrinking brands such as Paik Boy Pizza or Hong Kong Banjum.
- Whether the year-end store count holds above 2,900 or the smaller restaurant brands keep closing.
- How fast Paik's Coffee opens in Japan and Taiwan, now that the company has stopped launching restaurant brands at home.