[비즈한국] The unmanned cafe franchise 'Manwolgyeong' is facing deepening financial difficulties. Although it rapidly expanded its footprint, announcing it had surpassed 500 locations last year, it has been confirmed that a creditor recently filed for the commencement of rehabilitation procedures for the company with the court. The situation is further complicated as some "direct-investment" store contractors have begun taking legal action after paying their investments without being able to open their stores.
Seoul Bankruptcy Court reviewing rehabilitation commencement
On August 7, the Seoul Bankruptcy Court issued a preservation order and a comprehensive prohibition order against the unmanned cafe franchise 'Manwolgyeong'. This action followed an application for the commencement of rehabilitation procedures filed against the company on July 23. Consequently, until the court decides whether to initiate the rehabilitation process, forced execution by rehabilitation creditors and security holders, as well as provisional seizures, injunctions, and auctions for the execution of security rights, are prohibited. The court is currently reviewing whether to grant the rehabilitation process.
According to Bizhankook's coverage, this application for rehabilitation was not filed by Manwolgyeong itself, but by a creditor. The Debtor Rehabilitation and Bankruptcy Act allows creditors who meet certain requirements to apply for the commencement of rehabilitation procedures against a debtor.
Manwolgyeong stated, "We are faithfully participating in the court's procedures. The court issued a preservation order and a comprehensive prohibition order simultaneously with a hearing on August 7, and the decision on the commencement of rehabilitation has not yet been made." They added, "We plan to proceed with merger and acquisition (M&A) negotiations based on the premise of the court's procedures and necessary approvals."
Manwolgyeong is an unmanned cafe franchise brand established in 2021. It started business during a period of rapid growth in the unmanned cafe market, steadily increasing the number of its stores, and currently operates over 500 locations nationwide. It also successfully attracted external investment one after another, receiving a 1 billion KRW seed investment in 2022, followed by a 1.6 billion KRW Series A investment from Hyundai Technology Investment in 2024. In March of this year, it received an additional 1.5 billion KRW investment from Hyundai Technology Investment.
However, unlike its outward growth, profitability has deteriorated. In 2023, Manwolgyeong recorded 8.3 billion KRW in revenue and 700 million KRW in operating profit. In contrast, in 2024, although revenue increased to 12.6 billion KRW, it shifted to a deficit with an operating loss of 1.1 billion KRW. Net income also swung from a profit of 600 million KRW to a net loss of 1.2 billion KRW during the same period.
“Paid 60 million KRW but can’t even open a store”: Direct-investment contractors take legal action
It is also notable that some direct-investment store contractors have taken legal action against Manwolgyeong. They claim that although they paid investment funds to the headquarters to open stores, they have been unable to open them even after several months have passed.
In March 2025, Manwolgyeong introduced a "direct-investment model." Under this system, if a contractor pays approximately 50 million to 60 million KRW to the headquarters, Manwolgyeong handles everything from interior work to installing equipment like coffee and dessert machines, and even takes charge of operating the store. The contractor receives a portion of the store's monthly revenue as profit, and if they provide their own commercial property for the store, they can also receive separate rent.
Mr. A, who signed a direct-investment contract with Manwolgyeong early this year, claimed that he paid the investment money to open a store in a property he owns, but it has yet to be opened. Mr. A said, "After I paid 60 million KRW, the headquarters delayed the store opening citing various reasons," adding, "I understood the investment would be used for store interiors and purchasing machines, so I wonder if it was used for other purposes."
Mr. A claimed there are more contractors in similar situations. He stated, "I have identified more than 20 people who paid the investment but were unable to open their stores. Among them, there are cases where the contract was signed last November and the store still hasn't opened." Some contractors are currently seeking to file criminal charges against Manwolgyeong.
Among store owners who have already opened and are operating direct-investment stores, there are claims that profit settlements are being delayed. According to multiple store owners, Manwolgyeong has allegedly failed to settle profits on time for some owners since last June.
Manwolgyeong acknowledged the issues regarding delayed profit settlements and unopened stores. Kim Jae-hwan, CEO of Manwolgyeong, said, "Funds that the company is supposed to receive are not coming in on time while expenses continue, and it is difficult to utilize the secured funds because of seizures caused by unpaid costs."
Regarding stores that failed to open, he explained, "Many investors for unopened stores hope to pay the balance after the opening is complete, but the company needs upfront capital to proceed with installation. A vicious cycle has occurred where the matching of conditions from both sides delays the securing of installation funds, which in turn delays construction and opening."
CEO Kim pointed to the limitations of their revenue structure as the background for the company's management crisis. He stated, "Instead of charging franchise fees, marketing fees, royalties, or training fees, Manwolgyeong has used the supply of raw and subsidiary materials as its main source of income. However, from September 2024 to June 2026, the volume of 'independent purchases' (where franchisees buy raw materials externally without headquarters consent) amounted to approximately 1.525 billion KRW over 22 months. The outstanding balance for maintenance costs such as AS, server fees, and ARS reached 112.88 million KRW as of August 5."
He continued, "We have been in a structure where logistics, IT, and AS costs keep occurring even while revenue is not coming in properly. I don't intend to shift the responsibility onto the store owners. It is the headquarters' responsibility for failing to block such a structure through a system."
Amid worsening financial conditions, Manwolgyeong is pushing for business normalization through M&A. CEO Kim said, "We are negotiating to lower the sale price in exchange for requesting that the buyer assume all debts, including those owed to direct-investment contractors," adding, "I am very sorry for causing disappointment to many people. I believe that ensuring the company continues under better management and capital is the responsibility I can take now, and I will fulfill my responsibility to the end."