The chief development officer says there were four legacy master franchisees in place prior to TA Associates putting a team on the ground in the U.S. Gong cha wants to expand that group to 15 operators commanding regional pockets across the country. Some examples include the Mid-Atlantic (Pennsylvania, Delaware, West Virginia), Aloha (Hawaii), Sun Belt Triad (Arizona, Nevada, New Mexico), Great Lakes, (Michigan, Indiana, Ohio), and Bourbon Road (Tennessee, Kentucky, Arkansas).
Sternburg says it can be challenging to find a company that fits the profile of a master franchisee since the role comes with a level of sophistication that rises above a “mom and pop mentality.” Because it requires enterprise-level experience, Gong cha targets multi-unit franchisees that have the requisite infrastructure, such as a back office, administrative and financial staff, and field-based operations team.
“There is a very specific skill set that we look for,” Sternburg says. “And it isn’t for everybody. If you run one or two, let's name a brand, a Subway or Auntie Anne’s, it's probably not for you. We really are looking for that sort of higher level, dare I say, sophisticated mentality to really execute this.”
“We work very collaboratively with our master franchises in many different ways, not the least of which is we help them identify, recruit, and onboard new subfranchisees who ultimately open the stores,” he continues.
Gong cha stores range from 800–1,000 square feet and are usually located in strip centers, malls, college campuses, and suburban kiosks. The chain is not looking to build freestanding stores or drive-thrus. Recently, the chain rolled out a more modern and engaging prototype called Wu Sian, which translates to “limitless” or “infinite” in Chinese. Sternburg says it’s a global design, but Gong cha is adding a North American supplement to ensure the model fits within each operating region.
The brand skews to a younger demographic, but as more stores open, the composition of guests is becoming more diverse in terms of gender, age, and ethnicity.
“It's a great pick-me-up and a nice balance of sweetness and caffeine as a product, and people can personalize it,” Sternburg says. “With all the combinations of different flavors, toppings, milk foams, of course, the signature tapioca pearls, it makes for a very social thing. Anybody who is really interested in grabbing a bubble tea with a friend and catching up with them—that's what the product is for.”
Bubble tea maintains its largest market share in Asia-Pacific, according to data from Fortune Business Insights, but North America is expected to be second in the coming years.
The forecast confirms much of what Sternburg already knows—Gong cha is “on the precipice of doing some great things here in this country.”
“Their research suggests there's still a great deal of growth ahead of us,” he says. “And so we want to take that opportunity in what we think is obviously a huge underdeveloped and untapped market in the U.S.”