Having agreed to sell 100% of KFC Korea to Carlyle – a deal set to generate a 3x return – Orchestra Private Equity is doubling down on a discount Korea consumer thesis with the 100% acquisition of low-cost cafe chain Mammoth Coffee.

Jay Kim, a Singapore-based managing director at Orchestra, said the two deals reflect confidence in the idea that consumers are increasingly seeking value options. In South Korea, global trends around inflation pressure on daily goods and cost of living have coincided with a weakening won.

“Buckwheat noodles, naengmyeon, is a typical lunch for all Korean restaurants, and it used to be very cheap. Now you have to pay KRW 11,000-KRW 12,000 (USD 7.50-USD 8.20). So, with KFC, we’re offering lunch sets at KRW 6,000-KRW 9,000,” he said.

“Young people, especially, are buying a lot of discounted lunches in urban areas. That’s one of the reasons why KFC did very well in Korea.”

Orchestra acquired KFC Korea in 2023 for USD 52m via a Cayman Islands-domiciled project fund backed by European, Australian, and US institutions, including KFC’s global franchisor Yum Brands. The exit was agreed in December and is expected to close in February or March.

The Mammoth acquisition, signed on 8 January, is likely to be finalized in the same timeframe. All LPs in the KFC Korea project fund have committed to the project fund for Mammoth along with a few newcomers, according to Kim.

The enterprise value is KRW 100bn, and the equity component is about USD 45m. Korea Economic Daily reported that the deal also encompasses the 100% acquisition of Seojin Roasters, a coffee bean supplier to Mammoth.

Orchestra is expected to close at least one more transaction in the coming months. The firm also hopes to revive longstanding plans for a debut comingled fund in the second half of the year. The target is USD 300m, including USD 100m of co-invest.

Kim identified Carlyle as the highest bidder of five organizations pursuing KFC, including two Korean funds and two overseas strategics. A Twosome Place, a Korean dessert café chain owned by Carlyle, was reportedly among the interested parties. Yum Brands encouraged Orchestra to work with Carlyle, which acquired KFC Japan in 2024.

Deal conditions include permission from Yum to transfer the master franchise agreement. Also pending is a government merger approval determining that any perceived crossover between the business models of KFC and Twosome Place does not constitute unfair market dominance. Kim, who projected the 3x return for his firm, considers these low-risk formalities.

KFC Korea had approximately 190 locations at the time of Orchestra’s acquisition, about 20% of which were not profitable at the store level. All those locations, some 40 stores, were shut down during the 2.5-year holding period.

The key to the growth plan was the initial arrangement with Yum. Orchestra had secured rights to change store formats and menus, as well as to sub-franchise stores. The latter allowed for a more capital-light expansion. There are currently 245 locations across Korea.

EBITDA more than doubled during the holding period and same-store sales grew by 17% during 2025, according to Kim.

This was driven significantly by unexpected growth in the delivery business, which went from 10%-15% of revenue to almost 40% as more store managers were hired to accommodate longer opening hours. Historically, the delivery segment in Korea’s competitive chicken space has been dominated by pricier beer-focused outfits such as Genesis BBQ and BHC.

“You get odd pieces at some of those places, where you don’t know what part of the chicken it came from,” Kim said. “We did very well with our bucket delivery because we serve the best pieces, like drumsticks.”

About half of the new stores were established in small-box formats, allowing for more economic entries in prime foot traffic locations. The company also opened three Taco Bell stores – another brand licensed by Yum. There are long-term plans to set up Taco Bell cafeteria counters and to launch double-branded KFC-Taco Bell stores.

Negotiating control of the menu allowed Orchestra to relaunch expired but unforgotten items such as a buttery biscuit and various types of chicken burgers. It also granted the company a substantial marketing budget, which facilitated high-profile branding tie-ups such as with the Netflix series Stranger Things.

“We were true to our menu architecture, offering good value and then offering enough consumer interest on the premium side,” Kim said. “Interestingly, bringing back hit items from 10-20 years ago brought elders to the store, including myself. I used to have a lot of spicy wings at KFC Korea two decades ago. It’s great they’ve brought them back.”