South Korea’s Compose Coffee formally launches its first store in the Philippines this week. The company’s mere association with Taehyung Kim – better known as V from boyband BTS – is likely to attract a crowd.

A version of this story has played out before. When Compose opened in Taiwan in March, V featured heavily in promotional campaigns as brand ambassador. The event drew huge crowds keen for limited-edition menu items and merchandise bearing the popstar’s name.

“We didn’t call any reporters in advance but 20-plus came along and then we had three-hour customer line-ups,” said Gordon Cho, a managing partner at Korean private equity firm Elevation Equity Partners.

Elevation acquired Compose, a leader in Korea’s value-for-money coffee shop chain segment, for KRW 470bn (USD 340m) in mid-2024 as junior partner in a deal featuring Philippines-headquartered food and beverage (F&B) player Jollibee Group. In addition to consolidating the company’s position in Korea, where it has around 3,000 stores, headline objectives include a cross-border push.

Compose is on track to open 19 outlets in Taiwan in 2026 and Cho believes that – with Jollibee’s operational smarts and strong local affinity for all things Korean – there is scope to rollout at least 50 per year in the Philippines. For reference, BTS is visiting the country in March as part of its ongoing world tour. A third date has already been added because the first two sold out so quickly.

“We are leveraging K-pop to sell K-food,” added Cho. “The ambassador is the lure; then they taste the coffee. Once you get to 100 stores in an overseas market, it’s a self-fulfilling prophecy, the growth keeps on going. But it’s hard to reach that threshold, and we think our positioning enables us to do that.”

Cross-border blues

Elevation has completed two Korea-based F&B deals with Jollibee in the past 24 months – Compose and the USD 87m of hotpot restaurant chain All Day Fresh, which closed in May. This has led to a stream of inbound enquiries, with Cho noting that “everything F&B-related is coming to us.”

But the private equity firm established its industry bona fides much earlier with BHC, one of the country’s largest fried chicken restaurant franchisors. Cho acquired a majority stake in the business in 2013, while working for Citi Venture Capital International (CVCI). The Rohatyn Group bought CVCI’s PE operation later the same year, and then the Korea team spun out in 2019 to form Elevation.

The relationship with BHC persisted. When the company’s CEO took out the Rohatyn position in 2019, Elevation contributed equity via a project fund. A year later, it exited with a 2.6x return as Ontario Teachers’ Pension Plan (OTPP) came in at a KRW 1.8trn (USD 1.6bn) enterprise valuation.

Between CVCI’s investment and Elevation’s exit, BHC grew from 730 to more than 2,100 outlets – and EBITDA increased over fivefold – spurred by expansion of the flagship BHC brand and acquisitions of several smaller brands. BHC also opened a couple of stores in Hong Kong.

Six years on, the cross-border expansion initiative remains but progress has been fitful. In addition to 2,262 outlets in Korea, there are 12 in Malaysia, one in Singapore, and 12 in Thailand, plus the two in Hong Kong, according to the company’s website.

“BHC has fewer than 50 stores overseas and they have around USD 300m in EBITDA. It shows that overseas expansion isn’t easy,” said Cho. “As a private equity investor in a F&B business, you must start on it immediately. It’s not so much a money problem as an execution problem.”

A survey by the Ministry of Agriculture, Food and Rural Affairs and the Korea Agro-Fisheries & Food Trade Corporation found that 122 local food services companies operated 4,644 outlets – across 139 brands – in 56 countries as of December 2025. About two-thirds offered fried chicken or baked goods.

Southeast Asia was the most popular target region, on 36.2%, led by Vietnam, the Philippines, and Thailand. The survey noted that the US has overtaken China as the single largest market in the past six years. Large brands are primarily responsible for this growth, specifically BBQ and Bonchon Chicken in the chicken segment and Paris Baguette and Tous les Jours in the bakery segment.

Execution issues

For the most part, Korean F&B companies roll out no more than a couple of dozen outlets in any one market. Mega MGC Coffee is the largest domestic player in value-for-money coffee with more than 4,200 outlets, yet its overseas footprint amounts to eight stores in Mongolia. Market entry is being explored in Japan and the US.

“Korean companies underestimate the amount of detail, time, and resources needed when going from a handful of stores to a real business with proper infrastructure,” said Hyungil Han, a senior managing director at Compose. “Early success with a few stores leads to overconfidence. But the key is keeping momentum and constantly working with overseas franchisees.”

Poor partner selection can cripple expansion plans. The prevailing model is far removed from the high touch, heavily contracted arrangements used globally by the likes of McDonald’s and Yum Brands. Korean franchise agreements often come with little supporting infrastructure and knowledge-sharing, according to Cho, so overseas franchise partners are left to their own devices.

In this sense, Korean F&B is “a blessing and a curse.” On one hand, brands with strong cash flows are available for attractive valuations – Compose was sold for 8x EBITDA based on pro forma earnings of KRW 58bn for FY23 – and they are well-positioned to leverage the international appeal of Korean culture. On the other, the industry doesn’t have much of a track record of delivering on this promise.

“What we would love to do is prove these brands can go overseas, and with that break the ceiling and bring about a re-rating on the sector,” Cho added. “Cosmetics is easy to do because you can go through platforms like Amazon. For packaged goods, there’s the Cosco channel. With restaurants, there’s so much demand, but few brands have done it.”

Perfect partner?

When the Compose opportunity emerged, Elevation recognized it would need a partner equipped with operational expertise as well as financial muscle. Jollibee, best known for its eponymous chicken brand, had identified coffee and tea as a strategic pillar and was keen to engage in M&A. It took a 70% stake in Compose while another 5% went to an investment vehicle it controls. Elevation got 25%.

Jollibee is every inch the F&B behemoth with more than 10,300 stores across 18 brands in 33 countries as of December 2025. Revenue reached PHP 305.1bn (USD 5bn) for the year, of which less than one-third came from overseas operations. Growing the international footprint is a priority.

The other brands include multi-market player The Coffee Bean & Tea Leaf, Vietnam-based Highlands Coffee, Taiwan bubble tea chain Milksha, and Philippines-only Common Man Coffee Roasters. Compose had more outlets than those four combined at time of acquisition. And it offered a route into Korea.

“This strategic, rapid growth, financially lucrative investment serves as gateway in unlocking the fast-growing international value coffee market in South Korea which ranks third globally in terms of coffee consumption per capita,” Jollibee said in a briefing that accompanied the announcement of the deal.

It also highlighted Compose’s debt-free balance sheet, robust cash flows, high double-digit EBTIDA margins, and appealing 100% franchised business model. The company received a KRW 7m signup fee and KRW 200,000 in monthly royalty payments from franchise partners and then made most of its money selling coffee beans to them, according to a presentation.

Priorities for the domestic business centre on maintaining competitive position. Han identified further store openings – an average of 30 per month – as a key objective, along with introducing more diverse menu options while continuing to deliver quality at a reasonable price.

Jollibee noted in its 1Q26 earnings statement that Compose’s system-wide sales hit PHP 8bn, up 31% year-on-year. That’s faster than any other brand in the portfolio. The company generated PHP 12.2bn (USD 199.8m) in revenue and PHP 1.7bn in net income for FY25. The earlier presentation referenced a pro forma revenue figure of KRW 137.5bn (USD 96.2m) for FY23.

Ramping up

The significant overlap between receptiveness to Korean culture and countries in which Jollibee already operates meant overseas expansion was always on the agenda, with Asia a logical starting point. Han noted that processes can be accelerated thanks to Jollibee’s competencies across contract negotiations, staff training, store layout, and research and development.

“They know that, especially in F&B, there is a need for localised detail and execution, so they understand that day-to-day decisions need to rest with management,” he said. “However, given their years of experience globally, and being able to see trends from a global perspective, their input on direction, strategy and major business decisions is very insightful.”

Cost competitiveness is also a factor. In Korea, Composeʼs standard iced Americano costs KRW 1,500 per cup, approximately 50% cheaper than convenience store canned coffee. Cho noted that pricing in Taiwan is similar to local 7Eleven outlets, while Compose is “almost on par” with incumbents in the value-for-money segment in Southeast Asia.

Elevation and Jollibee will look to repeat the trick with All Day Fresh, though the playbook is likely to be modified. Execution is harder for hotpot than coffee – there are more moving pieces from an operational perspective given the product type. Store count will not increase at the same pace as Compose, but profit per store is likely to be higher.

Cho described it as more of a calculated strategy, rooted in domestic growth with overseas expansion “the icing on the cake.” Nevertheless, All Day Fresh is a further demonstration of Elevation’s dealmaking capabilities in F&B and part of a planned ramp-up in activity.

The firm has completed six investments to date, all on a project fund basis, but its equity contributions to Compose and All Day Fresh are larger than the rest. Moreover, there are now some global names in what used to be Korean-only LP bases. While this should lead to Elevation delivering on its longstanding objective to raise a blind pool fund, Cho doesn’t want to get ahead of himself.

“If you’re forcing it, there’s something wrong. This is a reputation game, and once you have that reputation, it’s a smoother process,” he said. “We are entering a new phase. There’s more deal activity, we’re building out the team, and we’re getting a lot of traction in F&B, which is one of our pillar industries. Now is the moment to seize on that momentum.”