K-Bakery Expanding Globally... The Hidden Struggles Behind the Success

CJ Foodville Achieves Record High Performance... Tous Les Jours Continues Profit Streak
Paris Baguette Expands to Italy, Exporting Baking Technology Back
SPC Group Chairman Huh Young-in Arrested VS CJ Foodville Faces Fair Trade Commission Sanctions

Domestic franchise bakery companies have encountered obstacles in the domestic market. SPC Group Chairman Heo Young-in was arrested on charges of forcing Paris Baguette bakers to withdraw from the Korean Confederation of Trade Unions, and CJ Foodville, which recorded its highest-ever performance last year, faced corrective orders from the Fair Trade Commission for Tous Les Jours due to violations of the Franchise Business Act.

Cross-border K-Bakeries... Tous Les Jours Takes 'Flight' in the U.S. VS Paris Baguette Expands in the European Market

Local customers visiting Tous Les Jours' 100th store in the United States, the 'Bronxville Branch.'

According to the distribution industry on the 6th, CJ Foodville achieved a profit in all business sectors last year, recording the highest performance since its establishment. Sales reached 844.7 billion KRW, and operating profit was 45.3 billion KRW, increasing by 11.2% and 73.6% respectively compared to the previous year. In particular, the bakery overseas business showed strong growth. It turned a profit in all major countries of entry such as the U.S., Indonesia, and Vietnam, with overseas business accounting for 60% of total operating profit.

Currently, Tous Les Jours operates stores in more than half of the U.S. states?26 states including LA, New York, New Jersey, and Massachusetts?making it the franchise bakery with the most extensive presence in the U.S. last year, it surpassed 100 stores and is gaining momentum in franchise store openings, aiming to secure 1,000 stores in the U.S. by 2030. By 2025, it plans to complete a factory in Georgia, U.S., with an annual production capacity of over 100 million units.

Indonesia and Vietnam also recorded profits for two consecutive years following a turnaround to profitability last year. Indonesia's sales increased by 20% and operating profit by 27% compared to the previous year. Despite a sluggish market environment due to economic slowdown, Vietnam maintained profitability. A CJ Foodville official explained, "Due to rising raw material prices and restrictions on store openings, bakery growth was limited domestically, but we achieved good results through overseas business performance."

Paris Baguette recently confirmed its entry into Italy. It signed an MOU (Memorandum of Understanding) with the Italian coffee brand Pascucci for the 'Master Franchise of Paris Baguette in Italy.' If Paris Baguette opens stores in Italy, it will become the third European country after France and the UK. Italy has the largest bakery market size among EU countries. According to Euromonitor, the market was approximately $21.1 billion (about 28.3 trillion KRW) as of 2021.

Paris Baguette currently plans to diversify its overseas business, which has been centered on China, into the U.S. and Europe. After facing difficulties due to continued consumer downturn in China even after the COVID-19 endemic, the company aims to shift its business focus to the U.S. and Europe, where there is strong interest in K-food.

Heo Young-in, Chairman of SPC Group / Photo by Kang Jin-hyeong aymsdream@

Management Vacuum Realized with SPC Chairman Heo Young-in's Arrest... CJ Foodville Struggles under Fair Trade Commission Sanctions

However, amid the globalization of K-bakery, neither Paris Baguette nor Tous Les Jours is entirely optimistic. SPC Group is facing a management vacuum due to 'judicial risks.' Recently, SPC Group Chairman Heo Young-in was arrested on charges of forcing Paris Baguette bakers to withdraw from the Korean Confederation of Trade Unions. With CEO Hwang Jae-bok already detained, the top management has all been removed from management. Accordingly, the industry anticipates delays in decision-making on major management issues and inevitable setbacks in overseas businesses that the group had prioritized, such as Paris Baguette's entry into Italy.

CJ Foodville was recently caught hiding violations of the Franchise Business Act from prospective franchisees and received corrective orders and franchisee notification orders from the Fair Trade Commission. The FTC investigation revealed that although CJ Foodville lost a civil lawsuit related to violations of the Franchise Business Act in November 2021, it did not disclose this in its information disclosure documents from December 2021 to July 2022. The FTC judged that "such actions constitute deceptive information provision that hides information significantly affecting the conclusion and maintenance of franchise contracts."

Previously, in July 2019, CJ Foodville immediately terminated a franchise contract and stopped supplying goods, alleging that a franchisee violated the Food Sanitation Act. However, in the related lawsuit, the Supreme Court ruled that the contract termination was not lawful and that the suspension of goods supply was unfair.

A CJ Foodville official explained, "The store repeatedly failed to comply with important business policies such as using expired products, so we had no choice but to terminate the franchise contract," adding, "The delay in disclosure occurred during the process of inquiring with the Seoul Metropolitan Government about whether the loss should be recorded in the information disclosure document." The related information disclosure document was prepared in September 2022.

This content was produced with the assistance of AI translation services.