Skin Food filed for court receivership after four consecutive years of losses

Skin Food was founded in 2004 as a first-generation K-beauty brand built around the concept of 'food-grade' ingredients in cosmetics. It grew rapidly through its road-shop format — standalone branded stores on Korea's busiest shopping streets — and expanded into 19 countries including the US, China, and Japan. By 2012, annual sales reached approximately 200 billion won (US$176 million) with operating profits of 15 billion won. The brand was a defining face of the Korean Wave in beauty.

But the same strategy that drove growth became unsustainable. Skin Food stuck to a no-sale-promotion policy while competitors ran aggressive discounts. The 2015 MERS outbreak sharply reduced tourist foot traffic to its road-shop stores. The 2016 diplomatic row over THAAD missile deployment triggered a Chinese consumer boycott of Korean brands, devastating Skin Food's China sales. Competition in the budget cosmetics market intensified as newer brands targeted the same young consumers with lower prices and faster product cycles.

By 2017, Skin Food's sales had fallen 25% year-on-year to 126.9 billion won. It posted an operating loss of 98 billion won. The company had been losing money for four consecutive years since 2014. Its debt reached 43.4 billion won, pushing its debt-equity ratio to 781%. Skin Food also failed to pay 2 billion won to 14 contracted suppliers, who obtained an injunction against the company's factory. On October 8, 2018, Skin Food filed for court receivership (corporate rehabilitation) at the Seoul Bankruptcy Court.

In 2020, founder and former CEO Cho Yoon-ho was sentenced to five years in prison for breach of trust. He had stolen approximately 12 billion won (US$9.7 million) from Skin Food's online sales revenue, funneling more than 10 billion won to his private company and using corporate funds for personal expenses including horse purchases and maintenance.