Hanam Pig House, one of South Korea's leading pork belly restaurant franchises, is under a special tax audit by the National Tax Service over suspected tax evasion. The chain's founder is alleged to have run outlets under employees' names to split income and to have bought supercars worth hundreds of millions of won each through the company for personal use.
The Central Regional Tax Office is conducting a non-routine audit of Hanam F&B, which operates the Hanam Pig House chain, according to industry sources on the 2nd.
Hanam Pig House was among the companies named on Sept. 14 in the tax agency's list of businesses suspected of evading taxes while fueling inflation. It was one of three restaurant franchisors on the list, alongside BHC and Puradak. The agency said at the time that it had selected a total of 41 companies for audits, with suspected unpaid taxes amounting to about 1 trillion won.
The tax agency believes the founder of Hanam Pig House ran outlets under employees' names to split income, and inflated the cost of sales at those outlets relative to other locations to underreport income. Also under scrutiny are allegations that the company acquired three supercars, each worth hundreds of millions of won, for personal use, and paid a salary to the founder's spouse, who did not actually work there.
Money that changed hands in the franchise business is also being examined. The agency is investigating allegations that Hanam Pig House received supervision fees and various kickbacks from contractors handling interior work at its outlets and concealed them, and that it booked startup consulting fees paid by prospective franchisees as head-office expenses to underreport income.
The tax agency plans to closely review suspected evasion including unreported revenue at Hanam F&B and the diversion of corporate funds by the founder's family, and to examine whether names were lent in connection with the outlets held under others' names.
Hanam Pig House is a mid-sized pork belly franchise that CEO Jang Bo-hwan has run for 17 years since opening the first location in Hanam, Gyeonggi Province, in 2010. Hanam F&B posted revenue of 13.609 billion won last year. According to the Fair Trade Commission, Hanam Pig House had 150 outlets nationwide as of the end of 2024, with average annual revenue per outlet of about 630 million won.
The company has also been penalized by the Fair Trade Commission over its franchise operations. The commission last year imposed a corrective order and a fine of 80 million won, saying Hanam F&B designated 26 additional items as mandatory purchases, including kimchi, thin noodles, broth and delivery containers, which had not been in existing contracts, and then cut off supplies of meat and charcoal to outlets that did not buy them from designated suppliers, going so far as to terminate their franchise agreements.
Hanam F&B said it was difficult to disclose details because the tax audit is ongoing, adding that it is cooperating fully with the investigation and providing any necessary explanations through the relevant procedures.
