[비즈한국] It has been one year since Immanuel Corporation acquired MFG Korea, the operator of Mad for Garlic. Despite controversies during the acquisition process, such as allegations of proxy management, the company promised a new leap forward through a rebranding of Mad for Garlic. However, with store closures continuing this year, the results have been lackluster, leading to skepticism about the effectiveness of the acquisition.
Mad for Garlic Replaces TGI Fridays
It has been confirmed that approximately 8 Mad for Garlic locations have closed this year. The Seohyeon branch ceased operations on the 17th of this month, and the Yeoksam branch closed last month. Other locations, including Changwon, Konkuk University Star City, Shinsegae South City, Hapjeong, Anyang Beomgye, and Ilsan Western Dome, also ended operations this year. Given that Mad for Garlic has about 40 stores in total, the closure scale this year reaches nearly 20%.
MFG Korea has been pushing for a major rebranding since its acquisition by Immanuel Corporation last September. Moving away from the image of a wine-centric dining spot, they have rebranded as a "Korean-style Italian restaurant" targeting family customers, updating their menu and store atmosphere. However, with the succession of store closures this year, questions are being raised about the effectiveness of this rebranding.
MFG Korea explained that the recent closures are part of "scheduled procedures." A company official stated, "There were already stores with sluggish sales at the time of the acquisition, but it was difficult to close them immediately due to issues like lease agreements. The branches that closed recently are being organized according to a planned process," adding, "There is a possibility of additional closures, but nothing is confirmed."
MFG Korea emphasized that they are balancing closures with new openings and renovations. The aforementioned official explained, "We are carrying out store renovations, and there are not a few stores that opened this year. As a result, the total number of stores is being maintained at a level similar to the past."
However, some point out that many of the new openings are simply conversions of locations vacated by TGI Fridays (TGI). According to the corporate registry, 17 TGI stores closed this year, and 8 of them were converted into Mad for Garlic locations. Consequently, skeptical views persist that this is not store expansion based on Mad for Garlic's growth, but rather replacement openings to fill the void left by TGI.
Regarding this, an MFG Korea official explained, "Although we stopped operating TGI, some of those locations have excellent positioning. We determined there was no need to give up those assets, so we converted them into Mad for Garlic stores."
Sales Rising Until Last Year, Then Declining and Turning to Deficit
MFG Korea’s brand portfolio is effectively limited to just Mad for Garlic. M Steakhouse, introduced in 2019, operated one direct store before closing at the end of last year. The brunch and coffee specialty brand ‘LEAFY’ also expanded to 5 locations at one point but is now down to just one. With TGI also pulling out this year, the company’s performance now hinges almost entirely on Mad for Garlic.
An MFG Korea official said, "We acquired the company because we see the potential in Mad for Garlic, so we will increase our focus. Since there were areas with poor performance before, we intend to focus on the brand renewal process through this year. Because we invested and acquired it boldly based on Mad for Garlic's potential, we expect performance to improve starting next year."
MFG Korea had maintained a trend of rising sales for the past several years. Annual revenue grew from 64.8 billion won in 2020 to 91.2 billion won in 2021, 124.6 billion won in 2022, and 128.5 billion won in 2023. However, the atmosphere shifted starting last year. In 2024, MFG Korea's revenue was 105.7 billion won, a 17.7% decrease from the previous year (128.5 billion won). The operating profit of 4.1 billion won in 2023 turned into an operating loss of 7.5 billion won last year. Net losses also reached 9.6 billion won, marking a significant deterioration in performance.
Amidst growing management uncertainty due to poor performance, MFG Korea reached a turning point with its acquisition by Immanuel Corporation last September. Immanuel Corporation was founded by CEO Yoon Da-ye, a former executive at Outback Steakhouse Korea. CEO Yoon resigned from Outback in January 2024 and established Immanuel Corporation in July of the same year.
However, noise and controversy have surrounded MFG Korea since the acquisition. Immediately after the takeover, CEO Yoon faced a non-compete dispute with Dining Brands Group (formerly bhc Group). Following a court injunction, she stepped down from her position for three months before returning as CEO in January this year.
After the acquisition, suspicions also surfaced regarding a proxy acquisition and management involvement by former bhc Chairman Park Hyun-jong. Since the contract signed when former Chairman Park was appointed as a bhc executive included a 3-year non-compete clause, restrictions on employment in the same industry fueled suspicions that he might be managing the company through aides.
The suspicion deepened as all executives of Immanuel Corporation are known to be aides of Chairman Park from Dining Brands Group, and it was confirmed that the church where former Chairman Park serves as an elder is named "Immanuel Church." Dining Brands Group filed for an injunction against former Chairman Park for violating the non-compete clause, but the court dismissed it, stating, "The fact or intention of the acquisition of MFG Korea shares has not been confirmed."
Former Chairman Park drew attention by taking office as an inside director of Hwan-gong Eomuk Bakery, a former subsidiary of MFG Korea, last October. He still holds that position today. MFG Korea sold off its subsidiaries Hwan-gong Eomuk Bakery and S&Q Plus last year. MFG Korea stated, "Hwan-gong Eomuk Bakery is currently unrelated to MFG Korea."