[BizHanKook] It has been confirmed that GFFG, a company reportedly pushing for the sale of its donut brand ‘Knotted,’ has recently downsized and relocated its headquarters. Amidst worsening financial performance caused in part by the burden of expansion into the U.S. market, interest is growing as to whether this office relocation is a measure for cost-cutting and management efficiency.
Relocating Headquarters to R&D Office: ‘Tightening the Belt’?
According to Bizhankook’s report, GFFG, the restaurant company that operates brands such as ‘Knotted,’ relocated its headquarters from Samseong-dong to Sinsa-dong in Gangnam-gu, Seoul, earlier this month. The new headquarters is located in an office that previously housed GFFG’s Research & Development (R&D) staff. It has been identified that another company is currently using the Samseong-dong office, which GFFG had occupied until last month, as its registered address.
The size of the headquarters office also appears to have shrunk. While the former Samseong-dong office was 289㎡ (approximately 87 pyeong), the new Sinsa-dong office is only 144㎡ (approximately 44 pyeong). The fact that the company relocated its headquarters to an existing R&D workspace rather than securing a separate office has led to interpretations that this is a move to reduce rental costs and streamline the organization.
GFFG has been experiencing a recent decline in performance. According to GFFG’s 2025 audit report, last year’s revenue was 50.1 billion KRW, a decrease of approximately 20% compared to the previous year’s 63.0 billion KRW. The operating profit of 470 million KRW in 2024 turned into a deficit of 8.55 billion KRW last year. The net loss also widened significantly from 1.15 billion KRW to 15.64 billion KRW.
The financial condition has also deteriorated significantly. Total equity, which stood at 16.5 billion KRW at the end of 2024, plummeted to 1.1 billion KRW by the end of last year. During the same period, cash and cash equivalents fell from 5.0 billion KRW to 1.6 billion KRW. As of the end of last year, current liabilities were approximately 19.1 billion KRW, exceeding current assets by 9.1 billion KRW.
Regarding this financial situation, the external auditor pointed out that there is significant uncertainty regarding GFFG’s ability to continue as a going concern. While GFFG presented plans to secure operating funds through bond issuance, expand sales, and improve profitability, the external auditor explained that the realization of these plans is also uncertain.
Industry analysts suggest that GFFG’s entry into the U.S. market has exacerbated its financial burden. GFFG began targeting overseas markets by opening a Knotted store in Los Angeles, USA, last year. Stating a plan to secure competitiveness with Korean-style donuts in the U.S., the world’s largest donut market, the company opened its first store at Westfield Century City in LA, followed by a second store in the Arts District.
However, substantial investment costs incurred during the process of expanding its U.S. business increased its funding burden. It is known that significant expenses, including local office operation costs and personnel expenses, were incurred as key executives stayed in the U.S. for long periods, and large-scale construction costs were invested to create flagship stores. GFFG’s U.S. subsidiary (GFFG America) recorded a net loss of approximately 3.7 billion KRW last year. GFFG’s loans to its U.S. subsidiary also increased from approximately 9.4 billion KRW at the end of 2024 to approximately 11.9 billion KRW at the end of last year.
Brand Count Drops from 11 to 5… Even Rumors of a Knotted Sale
GFFG is a restaurant company established in 2015. It started its business with the handmade burger shop ‘5BEY’ and began to make a name for itself by introducing Knotted in 2017. Starting from a small cafe near Dosan Park in Seoul, Knotted gained immense popularity, and based on this, GFFG grew rapidly. Revenue, which was just 2.2 billion KRW in 2019, increased to 67.6 billion KRW in 2023. The number of Knotted stores expanded from about 10 in 2022 to 45 in 2024.
GFFG aggressively increased the number of Knotted stores, focusing on department stores and large shopping malls. However, some evaluate this expansion strategy as a poison. As the number of stores increased, the brand’s scarcity declined, and the cost burden grew as all stores were operated directly by the company.
Since then, GFFG has revised its business expansion plans. It prepared for entry into the franchise market by registering a disclosure document for the Knotted franchise business in December 2024, but cancelled the registration and withdrew the plan in March of this year.
The number of stores is also decreasing. This year alone, many branches have closed, including Knotted Anguk, Gangnam Station, Daegu The Hyundai, Cheonan Galleria, and Busan Lotte Main branches. Currently, there are about 28 Knotted stores in operation.
While GFFG expanded its business by introducing various dining brands in addition to Knotted, it has recently been focusing on reducing the number of brands. The number of operating brands, which once reached 11, decreased to 5 by the end of 2024. The whiskey bar Open End ceased operations, and the fusion Chinese brand Wokstery sold its stake. In December 2024, the company sold an 80% stake in the operator of the handmade burger brand Downtowner to Salady for 8.0 billion KRW, and it is known that the remaining 20% stake was also disposed of this year.
Rumors regarding the sale of its flagship brand, Knotted, are also being persistently raised. Reports surfaced in May of last year that GFFG was pushing for the sale of Knotted, but the company denied it at the time, calling it groundless. However, interest is mounting as there is speculation that the company is once again sounding out potential buyers regarding a sale.
Bizhankook inquired with GFFG regarding the background of the headquarters relocation and the rumors of a Knotted sale, but did not receive a response.