A traditional tea drink from Taiwan, bubble tea has spread across the world in recent years and in Australia, shopping centres across the country feature a bubble tea franchise – most likely, global giant Chatime. In fact, Chatime is one of the largest teahouses in the world and now operates in 2500 locations in 38 countries around the world. Here, Andrew Benefield chief development officer at Chatime Group reveals the future plans for the business in Australia. Inside Retail:
Retail: How did Chatime business boom through 2020?
Andrew Benefield: Chatime persistently strives for excellence – even with the uncertain times that Covid brought throughout 2020. Over that year we opened six new sites across Australia with one location being a second site for existing franchisees. Some key stats for last year are: 31 per cent of our sites returned a positive Like for Like over the course of 2020, we achieved a five-year sales compound annual growth rate (CAGR) of +14.2 per cent and reached a 5-year store count CAGR of +14.9 per cent.
IR: How many stores are in Australia now and what’s the target for the next 12–24 months?
AB: We currently have 126 Chatime franchises located across Australia with 29 more to come over the course of 2021. As of right now, we currently have over 50 per cent of our target locked in.
IR: How do you plan to expand the network?
AB: We aim to expand our network through franchising as we have found that stores run by driven, dedicated business partners who are heavily involved in their own businesses tend to perform better. We aim to branch out right across Australia and to be in every major shopping centre and city.
As well as this, we are currently working on an exciting project to expand into rural Australia, hitting locations such as Orange, Bathurst, Bendigo and Ballarat.
IR: Who is the customer and how is the demographic changing?
AB: From researching into our customer base, we’ve made some really awesome discoveries that have allowed us to really tune into our demographic. For example 78 per cent of our customers are women with 71 per cent between the age of 18 to 35; while 43 per cent (and increasing) are Australian, however 42 per cent (and declining) come from an Asiatic background.
We’ve also established that our customers are high-level digital natives and although they are brand loyal, they are mainly driven by innovation. So we can see that although we have roots stemming from Taiwan, our products are definitely appealing to the western market and this is undeniably on the rise.
IR: How is Chatime distinct from other tea brands in the market?
AB: Chatime aims to delight current and new customers via delivering superior, tailored and digitally-supported experiences. Through our tastefully provocative marketing, we highlight issues in a witty way, sparking curiosity and getting our audiences to think, often leading to change.
Unique to Chatime is our Loyal-Tea app, which allows our customers to get the most out of their Chatime experience. They can earn tea-riffic awards with points earned for every dollar spent, jump the queue and order via the app for pronto pick-up, locate their nearest T-brewery as well as app exclusive offers and promotions.
IR: What’s key for success in this market?
AB: Chatime’s secret to success is in the consistency of our product, with all our drinks served having the same amazing taste no matter what location you visit. Chatime also demystifies the concept of bubble tea, opening it up to others and appealing to the masses. This is reflected in the fact that 60 per cent of our customer base come from non-Asian backgrounds.
As well as this, we focus on the concept of freshly brewed tea, making sure to brew fresh tea frequently through the day, with our most popular mix-in being the tapioca pearls cooked fresh every four hours.
IR: What are your expectations for the marketplace in the next five years?
AB: Our expectations are that the market will consolidate to two to three key players, Chatime of course included. Our goal is set high with the aim to hit 250 stores across Australia. We believe quality operators with good systems will shine through, with fresh iced tea becoming an accepted staple end competitor to other beverages such as juice.
Another growing push in the market is for brands to be more environmentally friendly and reduce plastic waste. Chatime is currently working on Project Happy Turtle, which aims for us to completely eradicate single-use plastic within our stores across Australia. We’ve trialled this through the introduction of reusable bubble tea cups, as well as paper straws across the network.
This article was originally published in Inside Franchise Business.
