Taiwanese Bubble Tea Brand Gong cha’s Playbook for Global Expansion
APRIL 20, 2022 | EMILY LANG
A Q&A WITH ANDREW STERNBURG, CHIEF DEVELOPMENT OFFICER, AMERICAS, GONG CHA
Founded in Taiwan in 1996, Gong cha is the world’s premier bubble tea brand, as well as one of the fastest-growing, with more than 1,660 locations worldwide (projected to reach 2,000+ stores by the end of 2022). Since 2014 Gong cha has opened over 150 stores in the U.S. across 11 states and Washington, D.C., and plans to reach more than 200 stores in 18 states by the end of 2022, attracting entrepreneurs across the country to its lucrative franchise program. In this post, Emily talks with Andy about Gong cha’s incredible growth and unique model.
Emily: Let’s start by talking about the “bubble tea” category. Why is this category growing so rapidly and how is Gong cha differentiating in the space?
Andy: It’s wildly popular, especially with Gen-Z. I think a huge part of that has to do with how customizable it is. Within a very small location footprint, with a limited number of products and very few staff, we can offer over over 600 different drink combinations. Customers can choose their tea, the toppings, their sweetness and their ice level. This means that every bubble tea fan can make the product their own, without causing the kind of operational strain that you might see in another product.
Emily: So the business model is easier to operate than other quick-service?
Andy: Absolutely. We also have a brand that is rooted in quality and dedicated to sourcing our teas from the finest tea estates across Asia. Our tea and tapioca pearls are prepared fresh in each store throughout the day, so there is, of course, a very high commitment to quality, which is absolutely something our customers are drawn to.
Emily: Gong cha’s growth in the US is being driven by a master franchisee model. Tell us more about this.
Andy: During my more than 25 years at Dunkin’ (formerly Dunkin’ Donuts), I had the opportunity to help grow the brand from approximately 5,000 stores to over 13,000 stores in 41 countries. In the US, Dunkin’ utilized direct franchising to expand, while the master franchising model was the primary growth vehicle internationally. Every country has its own nuances to the business environment and this model helps account for that. Just as Dunkin’ did not have the organizational infrastructure in countries outside the US, similarly, Gong cha does not have the infrastructure in the US to drive the rate of growth the brand is aiming to achieve. By utilizing a master franchising model, global brands with strong reputations can expand more quickly and in more places without having to make substantial investments in human capital and other infrastructure in all of these regions.
Emily: So how does this work in practice?
Andy: When executed successfully, this model creates a win-win-win business proposition for all constituents within the three-layered system: franchisor, master franchisee, and sub-franchisee. To create a successful master franchising model, it is essential to select high-quality, experienced partners, with proven successful track records. The master franchisee is given the rights to develop the brand in a certain region, commits to opening a certain number of stores (usually some of their own as well as their sub franchisees), and develops a support structure to attract sub franchise partners to their region. Essentially the model shares both risk and rewards across the partners, all with the common goal of growing the brand.
Emily: How do you determine the right partners to be a Master Franchisee for Gong cha?
Andy: When a Franchisor essentially relinquishes its rights to franchise its own brand in a distant part of the world, it must first gain the confidence that the proposed Master Franchisee has the strengths, skill set, capabilities, and competency to successfully build and grow the brand in a strategic and thoughtful way. We look for experienced operators with a proven track record in their own businesses. I look at the businesses, the physical appearance of their current stores: Are they clean, well-maintained with only modest signs of wear and tear? Do they have a service philosophy and attitude that matches ours? Do employees greet you upon entry through the front door or at the front counter? Do employees smile when speaking with you? Do they understand product quality? Do they show genuine care and passion for offering only the finest quality products? These are obvious questions, but as every operator knows, especially in today’s world, these things are much easier said than done. So we are looking for partners who can deliver on Gong cha’s brand promise of “Brewing Happiness.”
To learn more about Gong cha check out
QSR’s 14 Franchises in Growth Mode
World Tea News’ Q&A: Talking Bubble Tea with Gong cha Master Franchisee Anchal Lamba
Nation’s Restaurant News’ Global Bubble Tea Franchise Eyes Massive Growth in U.S.