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What happened to the Super 乙 Mill Tower, where even the department store was struggling…

On the 5th, the Milltop store in the restaurant area on the 10th floor of the Hyundai Department Store Trade Center branch in Samseong-dong, Seoul is empty. Miltop closed 14 of the 17 directly-managed stores operated by Hyundai Department Store and Outlet at the end of last month. Correspondent Yerin Choi

“I can’t believe the mill tower I’ve been going to for over 30 years is closing. ”

A restaurant on the 5th floor of the Apgujeong branch of Hyundai Department Store, which is popular as a ‘jeongmo’ place for residents of Gangnam, such as Apgujeong and Cheongdam. At lunchtime, even in this restaurant, where there are a lot of people waiting, the place that occupies the largest area in the center of the restaurant was the Miltop of the red bean shaved ice shop.

However, you can no longer taste Miltop’s ‘milk shaved ice’ here. This is because Miltop, which operated 17 directly managed stores only at Hyundai Department Store and Outlet, closed 14 stores at the end of last month. On the 5th, Kim (55), who met in front of the empty Milltop store, turned away saying, “It’s a pity that I deliberately chose the shopping location at Hyundai Department Store to eat wheattop shaved ice.”

Bleeding deepens in ‘Bingsu War’

What happened to the 'super 乙' mill tower, where even department stores were struggling...

Miltop was the epitome of premium shaved ice, which earned 12 billion won in annual sales only from red bean shaved ice in its heyday from the 1990s to the mid-2010s. Milk Bingsu, which contains only the highest quality ‘core’ such as ice, red beans, condensed milk, and rice cakes without any other ingredients, captivated the taste buds of the wealthy in Gangnam. Hundreds of people wait in line in the middle of summer, and when it comes to department store store (MD) reorganization season, whether or not to renew a contract has risen to the point of being the most important concern in the department store industry.

It was around the mid-2010s that the atmosphere changed. Competition has intensified with the advent of specialty shaved ice franchises such as Sulbing, which featured ‘Snow Flower Bingsu’. Miltop’s premium image was eroded by hotel shaved ice, such as the Shilla Hotel’s apple mango shaved ice.

As a result, Miltop started to record a net loss in 2015 and continued to lose every year, except for the fact that it posted a sparkling net profit (500 million won) in 2019 until last year. The financial structure, which deteriorated after falling into a state of capital erosion in 2015, is hardly recovering. An employee at a restaurant in the Apgujeong branch of Hyundai Department Store said, “Miltop’s financial difficulties are not the result of COVID-19. I heard that there was an internal problem within the company,” he said.

Frequent management change

According to the Korea Economic Daily, what this employee said is mostly true. In the restaurant industry, it is pointed out that “The decline of wheat tower is due to the failure to respond properly to the rapid changes in the market environment, but the biggest reason is the loss of the original focus on taste.” In the already difficult market environment, it was said that it caused its decline due to unreasonable expansion and management of funds.

Milltop founder Kim Kyung-i and son Ramo handed over management rights to Daily Financial Group in 2016, leaving only 1% of the stake. Daily Financial Group, which took over Miltop from the founder, was a subsidiary of Yellow Mobile, which claimed to be a ‘Venture Alliance’ by purchasing dozens of venture companies. After the acquisition, the company handed over management rights to Youjoy Green Holdings in 2018 without being able to properly use it for revival.

Miltop became the largest shareholder by taking over a stake in Melfas, a KOSDAQ-listed company, with a stock-secured loan in August, but lost its largest shareholder position as the stock price plummeted afterward. Since then, they are in a legal battle with other shareholders over the management rights of Melfas.

Can we taste milk bingsu again?

Last year, Miltop received an audit opinion from an external auditor, Dongong, an accounting firm, saying, “Total debt exceeds total assets of KRW 3.2 billion, raising questions about its ability to continue as a going concern.” It is analyzed that this is related to the money borrowed from the founder, Mr. Kim and his son, Mr. La. LaCie is the CEO of an entertainment management company.

According to the Financial Supervisory Service, Kim and La borrowed a total of 7.8 billion won from Miltop in 2013. Since then, with the exception of last year, Miltop has loaned 200-3.1 billion won every year. By the end of last year, the outstanding amount was about 4 billion won. The interest that Miltop did not receive from them was also 1.08 billion won. Of the borrowed money, the money that the accounting firm expected to be impossible to recover (provision for bad debt) is set at 2.73 billion won.

Miltop plans to shift its direction to the franchise business instead of direct management, which has a large financial burden when opening a store. Another merger and acquisition (M&A) possibility remains. An official from a restaurant company said, “Miltop’s brand recognition is still quite high, so there are some companies that are paying attention.”

By Yang Gil-seong, staff reporter vertigo@hankyung.com

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