Sale of Outback Steakhouse Korea to resume in Feb with higher price tag

Outback Steakhouse Korea, the Korean operation of the namesake U.S family restaurant chain, will be out on the market for sale again after its first sale attempt was withdrawn last year due to concerns over the restaurant chain’s growth during the Covid-19 pandemic.

SkyLake Investment Co., a Seoul-based private equity fund that acquired Outback Steakhouse Korea for 57 billion won ($51.8 million) in 2016, is expected to resume the sale process of the family restaurant chain as early as next month, according to investment bank industry sources on Tuesday.

The PEF held a preliminary tender for the family restaurant chain in May last year, and the steakhouse proved its popularity by attracting more than seven preliminary bids last year. But some investors soon raised questions whether the steakhouse could sustain growth amid rising uncertainties from the Covid-19 downturn. On top of this, the owner entered into other urgent buyout deals so that the steakhouse sale had been put on hold.

Despite the difficulties, Outback Steakhouse Korea saw its earnings improve thanks to its successful delivery operations, leading the seller to resume the sale process this year. This also raised expectations for the sale price.

Previously, the seller was said to be eyeing around 260 billion won for the steakhouse chain. The price tag, however, is expected to go higher up this time given its solid 2020 annual earnings, said a market watcher.

In 2020, Outback Steakhouse Korea’s operating income is estimated to have jumped 43 percent on year to 24 billion won and revenue up 18 percent to 300 billion won. The Earnings before interest, taxes, depreciation, and amortization (EBITDA) is estimated to have surged 30 percent to 34 billion won.

Given that the value of a restaurant is typically determined at around 10 times its EBITA, the sale of Outback Steakhouse Korea will likely fetch up to 340 billion won, market experts projected. This would be nearly six times the price SkyLake Investment paid for the steakhouse chain in 2016.

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