[비즈한국] Lotteria appears to be ramping up its expansion, extending its reach from the U.S. market into Malaysia and Singapore. However, it faces the dual challenge of securing profitability and accelerating store openings, as it continues to see net losses in Vietnam—its primary overseas market—and has been unable to open additional stores in the U.S. for over a year since launching its first location.
Targeting the U.S. with ‘K-Burgers’… But No Further Openings Yet
Lotte GRS is accelerating the overseas expansion of Lotteria. It is aggressively targeting international markets by extending its operations, previously centered in Southeast Asia, into the United States. In August of last year, Lotte GRS opened the first U.S. Lotteria in Fullerton, Orange County, California. The opening came two years after the establishment of its U.S. corporate entity.
As a domestic burger brand entering the U.S., the “home of the burger,” market interest was high. Lotteria entered the U.S. market with the “Original K-Burger” as its main selling point. Its strategy is to differentiate itself from local brands by showcasing menu items with strong Korean flair, such as the Bulgogi Burger, Shrimp Burger, and Bibim Rice Burger.
Initial reactions were not bad. At the time of the first store’s opening, there was significant interest from local consumers, evidenced by long queues. However, as the novelty of the opening has faded, the company seems to be grappling with how to settle into the local market. Over the past year, Lotteria has successively adjusted its patty size, cooking methods, and menu composition, and recently even adjusted its pricing.
Starting in September of this year, the company introduced a lunch special, offering the Shrimp Burger set for $9.99, down from the original $12.77. This is interpreted as a response to criticisms regarding the price-to-value ratio, aimed at boosting repeat visits.
There is still no momentum in expanding store locations. Since opening its first store in Fullerton last year, Lotteria has not managed to open any additional locations for over a year. While the company left the door open for future expansion upon its U.S. entry, it has not yet disclosed specific plans regarding locations or timelines for a second store. In terms of performance, results remain unclear. According to Lotte GRS's audit report, the U.S. subsidiary recorded 2.8 billion won in revenue and a net loss of 900 million won last year.
Investment, however, continues. Lotte GRS decided to increase capital for its U.S. Lotteria entity in November of last year and carried out a further capital increase this past February. It is also providing a 1.8 billion won payment guarantee related to local U.S. leasing contracts.
A Lotte GRS official stated, “Due to the U.S. market’s commercial characteristics—centered on drive-thrus and vehicle-based traffic—we must consider multiple factors such as site selection, permitting, and supply chain construction,” adding, “Rather than simply increasing the number of stores, we are focusing on stabilizing the first location and perfecting our local business model.”
Net Losses Amidst Vietnam Business Expansion… Lotte Claims "Core Business is Profitable"
Prior to its U.S. expansion, Southeast Asia was where Lotteria laid the foundation for its overseas business. It currently operates in Vietnam, Myanmar, Laos, Mongolia, Malaysia, and Singapore. Among these, Vietnam is considered the hub of Lotteria’s overseas operations. Lotteria entered Vietnam in 1998 and has been conducting business there for nearly 30 years.
Recently, the importance of the Vietnam business has grown significantly, as Vietnam Lotteria was brought under the Lotte GRS umbrella. Last year, Lotte GRS acquired a 100% stake in Vietnam Lotteria, which had been held by Lotte Corporation. This comes seven years after the stake was transferred to Lotte Corporation during the conversion to Lotte Group's holding company structure in 2018. As the structure changed so that the Vietnam subsidiary’s revenue and earnings are directly reflected in Lotte GRS’s consolidated financial statements, the improvement of local business profitability has become even more critical.
The problem is that Vietnam Lotteria continues to post losses. After recording a net loss of 5.6 billion won in 2023, Vietnam Lotteria’s net loss widened to 6.9 billion won in 2024. Amidst these continuing losses, the value of the stake also decreased significantly. In 2024, Lotte Corporation determined that the stake value of Vietnam Lotteria had fallen below its existing book value and reflected a loss of 23.7 billion won. As of the end of 2024, the book value of the stake also shrunk from 39.7 billion won to 15.9 billion won.
Net losses continued even after the integration into Lotte GRS. Since being incorporated into Lotte GRS last October, Vietnam Lotteria recorded a net loss of 2.6 billion won over approximately three months. Since the annual performance of the Vietnam subsidiary is being reflected starting this year, the extent to which the local business can reduce its net loss is expected to have a considerable impact on Lotte GRS's overall performance.
However, Lotte GRS explained that the Vietnam subsidiary is generating profits at the operating level. A Lotte GRS official explained, “The Vietnam subsidiary maintained an operating profit, recording 119.7 billion won in annual revenue and 2.2 billion won in operating profit for 2025. The net loss on the financial statements is a result of differences in the timing of accounting recognition during the acquisition process and one-time settlement costs,” adding, “We believe the trend of performance improvement will become more evident starting this year.”
Regarding overseas business, the official added, “Currently, overseas revenue accounts for about 10% of total revenue,” and “Instead of simple outward expansion, we plan to broaden our global portfolio by stabilizing business models in hub countries and then expanding into surrounding nations.”