With its origins in Taiwan and Hong Kong, the milk tea craze has formally made its solution to the US with the trade projections of a compound annual progress charge (or CAGR) of 8.9% via 2030. One milk tea model that’s been gaining traction in United States and all over the world is Gong Cha. Consider it or not, this model already has greater than 1,900 places globally because it was based in 2006.

How a lot does it price to open Gong Cha? To franchise this milk tea chain, you’ll want a liquid capital of $150,000 to $2,000,000 and a internet price of $300,000 – $4,000,000. The funding vary to start out a Gong Cha franchise is $177,430 – $335,400 with a franchise payment of $41,500.

On this publish, I evaluate the benefits and challenges in entrance of Gong Cha as a enterprise alternative in the US. Click on right here to take a 7-minute franchise quiz to be paired with a bubble tea alternative that matches your funding degree and private curiosity.

Monetary Necessities and Charges

Under are the charges and bills to anticipate once you franchise Gong Cha:

Different charges to anticipate are their royalty payment which is 5.5% of gross sales and their advertising and promoting payment which is 1% of gross sales. The time period of settlement to run a Gong Cha franchise is 5 to 10 years.

Common Gross sales / Income per 12 months

Based on experiences, Gong Cha has reached over $380,434,326 in international gross sales. At current, there isn’t any official file as to how a lot Gong Cha’s U.S. gross sales. Hold this in thoughts earlier than investing in the US.

As you undergo franchise interview course of be sure that to get details about the income models in the US are producing. If doable, I counsel getting details about income numbers from quite a lot of places to gauge success in quite a lot of areas. In spite of everything, the annual income of a franchise unit working in Taiwan could possibly be very totally different than models promoting in Texas.

Gong Cha Franchise Info

Gong Cha originated in Kaohsiung, Taiwan in 1996 by Huang and Wu. The title of the model interprets to “tribute tea for the emperor” which may additionally imply that Gong Cha serves solely the best and highest high quality tea match sufficient for royalty.

The menu at Gong Cha consists of brewed teas constituted of inexperienced, black, oolong or earl gray. They’ve the essential milk tea, fruit teas, milk foam sequence (which incorporates milk and foam), slushed milk and fruit teas, tea lattes, and their espresso sequence. Their toppings embrace the basic pearls or boba, coconut jelly, pudding, natural jelly, ai-yu jelly, basil seeds, and Oreo crumbs. You can too change the sugar grade from 100 being the common sugar content material they normally put, to 70%, 50%, 30% or right down to no sugar in any respect.

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To franchise Gong Cha, you will need to full a franchise utility type right here. As soon as the appliance is obtained and reviewed by the corporate, you’ll obtain a name and have an preliminary dialogue with a franchise consultant. You’ll undergo a qualification course of which entails Gong Cha checking the paperwork you’ll be submitting in addition to focus on the operations of the enterprise.

If every little thing goes nicely and you discover that every one your questions have been met with good solutions, you’ll undergo their franchise settlement signing, location approval, after which a structure evaluate. Afterwards you’ll undergo coaching, buying of kit and stock, a mushy launch, after which your grand opening.

Strawberry yogurt slush.

Gong Cha’s obtainable markets for franchising are:

• New York
• New Jersey
• Pennsylvania
• Connecticut
• Massachusetts
• Rhode Island
• New Hampshire
• Oklahoma
• Texas
• Georgia
• North Carolina
• South Carolina
• Florida

Gong Cha’s U.S. headquarters are positioned in Boston whereas their international headquarters is positioned in London. Their CEO is Paul Reynish who beforehand labored with 5 Guys and Dunkin Manufacturers.

How A lot Does Gong Cha Make in Revenue?

There isn’t a official monetary info as to how a lot Gong Cha makes in revenue. However an estimated quantity is $370,000 for a single unit. This may characterize a mean revenue margin of 18% and may take about 8.1 years so that you can get well your funding.

Benefits of a Gong Cha Franchise

Franchising Gong Cha can result in a whole lot of benefits. Listed here are a number of:

World Model

Gong Cha isn’t simply huge in the US. They’re turning into a worldwide model. They’ve shops in South Korea, Philippines, Vietnam, New Zealand, Australia, United Kingdom, Macau, Japan, Singapore, and lots of extra.

As well as, Gong Cha has been a preferred milk tea model via the years. Listed here are a number of of the awards they’ve obtained:

• Ranked #1 within the Tea class on Entrepreneur’s prestigious Franchise 500® record (2022)
• Chosen as a finalist for Franchise Occasions’ record of Prime Beverage Franchises To Purchase (2022)
• Chosen as a finalist for one of many Prime 10 World Meals & Drink Franchises by the World Franchise Awards (2022)
• Ranked #193 on Franchise Occasions’ Prime 500 Record, annual rating of the five hundred largest U.S.-based franchise programs by international system extensive gross sales (2022)

Milk Tea Varieties

Gong Cha doesn’t simply promote basic milk tea. They produce other variations of teas similar to brewed teas, fruit teas, slushies, and tea lattes. A menu with a lot selection could be advantageous because it brings in prospects who’ve totally different preferences. Gong Cha additionally affords quite a lot of pre-mixed milk tea drinks, such because the Gong Cha Particular and the Earl Gray Milk Tea with 3Js.

Gong Cha bubble tea.

Milk Tea Demand and Progress

As talked about above, the milk tea trade has a compound annual progress charge of 8.9% to 2030. The craze isn’t simply short-term as nicely. Gong Cha has additionally introduced that they’re planning to open 80 new shops with a goal of 500 shops within the U.S. by 2025.

Challenges of Gong Cha Franchise

Earlier than franchising a model, you’ll must know what the challenges are so you possibly can anticipate them beforehand. Listed here are some challenges you possibly can anticipate once you franchise Gong Cha:

Competitors

Gong Cha isn’t the one milk tea model that’s spreading everywhere in the U.S. quickly. You’ve acquired huge manufacturers like Share Tea, The Alley, Coco, and Blissful Lemon. The milk tea trade is kind of well-liked so you possibly can anticipate to see an in depth combat amongst all of those milk tea manufacturers to turn into the go-to model in the US.

American Style: American shoppers could have totally different style preferences than shoppers in different nations. Gong Cha could must adapt its menu and recipes to attraction to American shoppers if it hopes to turn into a family title.

Model consciousness: Gong Cha is a well known model in lots of nations all over the world, however it’s not as well-known in the US. Which means that potential franchisees and prospects is probably not acquainted with the model.

Monetary Necessities: The monetary requirement to open a Gong Cha retailer is fairly steep and may price upwards of $2 million to open a single location. You’d must have a great monetary backing as a way to move the preliminary assembly with Gong Cha. And for a model that principally sells drinks competitor ideas begin at funding degree of $300K so you may in lots of circumstances get began for much less with a unique enterprise alternative.

Is the Gong Cha Franchise Proper For You?

Gong Cha is a world famend model. However the idea is just not but confirmed in the US. As talked about earlier, I strongly counsel you consider the monetary efficiency of US-based places earlier than investing. The corporate ought to have the ability to give you an up to date Monetary Disclosure Doc that features this info earlier than signing on the dotted line.

What’s an alternate Gong Cha franchise?

One other milk tea model you might need to try is Share Tea. The model additionally originated in Taiwan in 1992. In addition they use prime quality teas for his or her drinks. Share Tea has grown to over 400 shops all over the world.

To franchise Share Tea, their minimal monetary necessities is $100,000 in liquid capital and a minimal of $300,000 in investments. You’ll be able to learn my full evaluate of the Share Tea franchise alternative right here.

Gong Cha seems to be like a powerful model with regards to competing with the opposite milk tea manufacturers on the market however do take extra time in deciding if it’s the fitting franchise you need to convey to your space.