DOUGHNUT DYNASTY
In less than a decade, Lee Jun-beom has built GFFG from a single burger joint into a titan of South Korean F&B, with 42 outlets across 11 different restaurant chains. Now, armed with a major cash injection, he’s got his sights set on the rest of the world
Lee Jun-beom has accidentally birthed an F&B empire. After an abortive career in fashion, the South Korean entrepreneur has gone from setting up and cooking in his own restaurant in 2014 to owning and running 42 of them less than a decade later. They fall under the umbrella of his food and lifestyle brand GFFG, which stands for Good Food For Good—“for good” in the sense of “permanently”: quite the corporate statement of intent.
GFFG has become known for a wide range of mostly American-style F&B concepts, combining stylish surroundings, approachable prices and a range of extremely Insta-friendly menu items—first and foremost, bakery chain Cafe Knotted’s range of visually sumptuous doughnuts, served in brightly coloured cups emblazoned with a lip-licking smiley, that it’s more or less impossible not to be cheered by.
Those 42 outlets are spread across 11 brands: Downtowner (burgers), Littleneck (steaks), Cafe Knotted (a bakery café), Woktionary (American-style Chinese food), Any Occasion (brunch), KYMA (sushi), Openend (a whisky bar), Minute Papillon (churros), Bakery Blair (er, bakery again), Hojokban (Korean fusion) and Clap Pizza (Korean fusion pizza—yes, it’s a thing). The company, which employs about 800 people, generated revenue of US$72 million in 2022, up from US$57 million in 2021—itself a 133 per cent rise on the previous year. It also ended 2022 with its first ever institutional funding round, worth about US$23 million, which it intends to use to turbo charge its expansion, including quite possibly a high street or entertainment district near you.
The genesis of GFFG’S journey into culinary Americana began when Lee moved to the US aged 12 for his schooling; he ended up spending 16 years there.
He specialised in economics and statistics at university, which might suggest that a business career would follow; a career in the creative industries, not so much. Nonetheless, that was what he was planning: while he might have built an F&B giant, his original love involved a different creative outlet—fashion. In fact, his career started out after college with a job in the production department of now defunct label Liz Claiborne in New York.
“I’ve always been a fashion guy,” he says. “I like following trends. Also, my parents were in the toy business, I wanted to learn something about production, and I thought fashion would be more complex than toys.”
A few years later, he headed back to Korea and, after completing his military service, worked for two more years in fashion, for e-commerce company W Concept.
“I thought I would continue to work in the fashion industry, but I realised I wasn’t a designer. The trends pass so fast; it was all just too fast for me. I was interested in something more stable.”
He’d always been keen on the food business, but knew that he lacked experience. After spending four years working for various F&B companies, soaking up information and learning in particular about the importance of service, he eventually decided in 2014 to take the leap and launch his own restaurant.
That restaurant, Obey, sold what had become his favourite food in the US while he was living there: burgers. (He admits to such a fascination with the original branch of Shake Shack, in New York’s Madison Square Park, that when he visited during the time he lived in New York, he would linger for up to three hours.) Funded with a bank loan he took out of about US$120,000, plus some backing from his parents, Obey opened in Seoul’s Itaewon nightlife district, and featured Lee himself in the kitchen.
“I still only get three or four hours’ sleep a night these days, but then it was down to about two hours,” he says. “Every day I was hectic. I was making my own patties. My wife worked by my side. But every day was a joy. On the first day, the revenue was US$200, and we just went from there. It kept going up and up. I remember after four or five months, there was one Saturday when we did US$5,000. That’s when I realised: I’m good at this.”
He spent a couple of years ensuring that he could produce food to a consistent quality, he says, before deciding that he was ready to expand. He did so by following the multibrand model the company has become known for: Downtowner was the first brand he established, followed by Littleneck, then Cafe Knotted, then Hojokban and then Clap Pizza.
Korea is a particularly challenging place to be in the F&B business. It’s a highly discerning market where food is concerned, and the competition is fierce—partly, he says, because unlike in many richer nations in Asia, it’s really not that difficult to start a restaurant there. “The barriers to entry in the F&B business here are just so low. Almost anyone can do it. I just wanted to bring some equity into the F&B business by creating a portfolio of brands. I found that I wanted to involve myself in this industry for longer and longer. I wanted to run my company with my vision.”
Knotted is the company’s number one brand, shifting an artery-hardening 30,000 doughnuts a day (the company’s other biggest selling menu items are Downtowner’s avocado burgers and Littleneck’s steaks). It started off, though, as a more traditional bakery café. Its cakes were always popular, he says, but at first, as a sit-in café, its turnover was disappointing, while any takeaway business was hampered by the fact that the cakes kept falling over inside their packaging, ruining their appearance. The bakery became particularly popular for its distinctive fresh cream, he says; the breakthrough was putting it inside the doughnuts, and also developing more robust packaging. That packaging, of course, is a key part of the doughnuts’ aesthetic appeal, which has made them social media stars.
“Knotted is the brand that really knotted everything together for me,” says Lee. “The timing was very fortunate. I came up with that look for the doughnuts at a time that was the peak of Instagram. Although it began as a cake shop, everyone really liked the taste of our cream, so I just tried to leverage that as much as possible and put it inside the dough, so people can take away a box of six or seven. You can’t just buy one doughnut at a time; they’re so pretty and so decorative that you have to buy a bunch.”
Various GFFG brands’ visual appeal has also been key to the company’s highly successful adventures in that quintessential contemporary added revenue stream: merch. It has collaborated with everyone from Samsung to fashion companies like Musinsa and SPAO, but its biggest-selling item remains the first one it ever created: a toy version of Sugar Bear, Cafe Knotted’s mascot, who Lee himself came up with, in a happy dovetailing of smart business strategy and just being a nice dad.
“It just means so much to me,” he says. “We didn’t start the brand with that logo when we first opened as a dessert shop, but I came up with Sugar Bear after I
“Knotted is the brand that really knotted everything together for me. The timing was very fortunate”
had my daughter; every time she came to Cafe Knotted, she seemed really bored. I wanted to make something she could draw or paint. I came up with the idea so that all kids’ parents could have freedom. It came from thinking about our customers and what I can do for them whenever they visit our restaurants. That’s what I want to continue to do in the future.”
The pandemic notoriously tore massive chunks out of the F&B industry in most places around the world, but GFFG was a rare exception. In fact, 2020 and 2021 were the years the company really took off, fuelled by Cafe Knotted’s viral popularity as an online takeaway option during the era of pandemic restrictions.
“It was also the time that my son [was born], so that made my life extra crazy,” says Lee. “But we made our most profits during Covid, and we’re very fortunate; I’m very thankful. We moved to a new office and got investment. Looking back, it was hectic, but at the same time, I think I cherished it.”
The investment he mentions is the 30 billion won (US$23.2 million) Series A GFFG raised in December 2022, led by Silicon Valley venture capital firm Altos Ventures, which more often invests in tech companies, with Korean firm Quad Investment Management also taking part. It’s the first time the company has gone down the institutional funding route, something it has done both to fuel both a sharp increase in manpower at its Seoul headquarters and, as Lee puts it, “Because I want to go global.
“I wanted to make it similar to what I saw in the US, especially a company like Union Square Hospitality
Group [which operates the likes of Shake Shack, the Union Square Cafe and the Gramercy Tavern]. They have a franchise model, they have restaurant services, they have a catering service: there are all kinds of models they can use.”
First, the company is planning to expand to the US, with its debut outlet there already in the offing: a brand of Hojokban in New York, set to open in October, for which it is currently going through the process of store and menu design. The plan is to follow that up with a launch for Cafe Knotted on the US west coast sometime early next year.
It sounds like a hard route to go down, he admits, exporting American-inspired concepts back to the source. “I wanted to learn the hard way. And the US is the only other country I’m familiar with; I was more confident doing it there than any other country.”
The company is also looking at other places around Asia, targeting a franchising model rather than owning its own outlets. It is currently in talks with potential partners in locations including Hong Kong, Singapore and Indonesia.
And rather than using the new funds to launch more brands, GFFG is planning on scaling back the number it operates, and focusing on the most popular and successful. For its overseas expansion, that largely means Cafe Knotted and Hojokban. “Getting the investment changed a lot of tactics for me, the way I strategise, how to monetise each of my brands,” says Lee. “I want to shorten the list of brands, and I’m not thinking about new brands. I just want my brands to live as long as possible.”