Chatime CEO: regional growth, US development and franchise performance

Chatime regional growth includes Mildura
Chatime is heading to the regions. Image supplied.

Chatime is on track to open a further 100 stores in Australia by 2025. The local business is also tackling growth in the US, reveals Chatime Australia CEO Carlos Antonius.

The beverage business will open another 20 stores in Australia this year, bringing the total of stores opening in 2022 to 31. These new stores will extend the bubble tea chain’s footprint here to 250 outlets.

Chatime’s extended footprint will include new metro locations as well as regional sites. The business has capitalised on the recent trend for city dwellers to shift to the regions.

Regional expansion crucial to Chatime growth

Regional migration is at the heart of the expansion plan. New sites include Townsville, Byron and Mildura. 

Queensland is a key market as Chatime has a minimal presence in the sunshine state.

Antonius told Franchise Executives “Some of our competitors were in regional markets a little earlier than us. We weren’t ready until we had established our business and brand credentials from a metro perspective to support local growth.

“Gong Cha were well ahead. We were late to the party, but that’s OK.”

Chatime Australia to lead US development

Chatime is making up for lost time with its regional plan. At the same time it is spearheading the Taiwan-based bubble tea brand’s growth in the US. 

The business dipped its toe in the American market in 2012 and has a sprinkling of stores across the states.

Antonius said there are 26 locations trading with a mixture of single-unit and multi-unit franchisees.

“The decision has been made to support the existing network and drive growth,” he said.

“We will be opening our first corporate locations early Q2 with area developers and multi-unit franchising. Chatime Australia is overseeing this.”

The Australian leadership team were chosen based on their track record/success in the Australian domestic operation.  

“We will second team members from Australia and Taiwan operations, and there will be a country lead appointed.”

Chatime will invest in the operation to ensure the business is set up for success. This will include developing a local team around the leadership team. 

“Depending on council approvals, we can open early April in California. This is an exciting opportunity for the team as well as the brand,” said Antonius.

The key to speedy rollouts in hospitality

“As planned as we are with our development, it never works to plan. A site in Cronulla is six months late, now we have the DA. How do you resource that? We made a decision to invest ahead of the curve in people. We can flex if we need to open in a compressed period of time.”

Chatime is continuing to seek single-unit franchisees while putting more of a focus on multi-unit ownership.

“We are striving to drive multi-unit growth which is now about 14 per cent. We want to achieve 30 per cent plus working with existing partners. There are efficiencies in multi-unit operations.”

Strategic franchise growth

He said the franchise is strategic about its expansion and avoiding possible brand cannibalisation.

“We have policies in place to protect franchisees’ investments but we’ve never had to leverage the clauses. We are very considered and take strategic view.”

Meteoric growth was key to the early store expansion strategy, Antonius said.  Since Covid, the emphasis has changed.

“While we still have some CBD stores, we’ve divested quite a number. We were able to do that through negotiations with landlords.”

Antonius said the franchisor is “structuring franchise agreements to reflect the opportunity for growth”.

He cites the business model’s capacity to deliver consistent returns as key to its position as a good investment vehicle.

“The economic dynamic continues to be a challenge. But Chatime has delivered consistently.”

Self-service helps performance

The bubble tea chain has invested in self-service ordering kiosks for a number of years. Today in some stores 80 per cent of transactions are self-service. 

“We are able to get higher rates of return from the efficiency on labour, and financials with higher rates of returns in digital,” said Antonius.

Antonius reports the brand is punching well above its weight compared to overall category performance, exceeding the CAGR globally of 7.2 per cent (2019-2027) by at least 3 points to 10.5 per cent.

“The category as a whole in domestic market is growing. Bubble tea and iced tea. It provides growth and awareness of the category, there is innovation and consumer choice.

“The other element is because of the Chatime brand. We launched FMCG a year ago through Woolworths.”

The question now is that sales channel will boost Chatime growth.