The owner of Gong cha is reportedly considering a sale of the bubble tea concept, according to Bloomberg.
Private equity firm TA Associates, which acquired a majority stake in Gong cha seven years ago, is working with JPMorgan Chase & Co. on a deal that could value the brand at around $2 billion. Bloomberg also reported that talks are still early and no decision has been made yet.
Gong cha was founded in Taiwan in 2006. It has since expanded to roughly 2,200 shops across 33 international markets, including over 240 U.S. locations.
The chain has a long-term goal of reaching 1,000 U.S. stores. Gong cha recently took a big step toward that objective by acquiring 170 units across 13 states from a master franchisee. The company views the move as a way to “accelerate franchise development and strengthen long-term growth across the United States,” according to a news release.
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Notably, most of the units are based in the Southeast, which Gong cha describes as an important region of growth. It cited data from the International Franchise Association showing that nearly 30 percent of all U.S. franchise businesses are based in the Southeast, making the region a leader in national franchise expansion.
“As we continue to grow toward our goal of 1,000 U.S. locations, bringing this territory in-house allows us to further sharpen our development strategy and strengthen support for our franchise partners,” Geoff Henry, president of Gong cha Americas, said in a statement. “By engaging larger multi-unit developers, we can strengthen our national supply chain network, better manage costs for franchisees and continue improving the digital tools that power both our operations and the customer experience.”
Leading up to the acquisition, Gong cha spent the past three years heavily investing in operations, teams, and systems to simplify the business.
A primary initiative is “Gong cha 2.0,” which revamps the concept’s digital infrastructure, operations, and store design to improve profits, efficiency, and growth potential. The brand piloted the system for more than two years across 40 stores in 13 countries. It’s currently being rolled out in the U.S. and certain international markets.
The upgraded prototype involves a streamlined beverage preparation system and two self-ordering kiosks.
The new drink technology has increased productivity by up to 65 percent during peak hours and reduced average drink prep time by nearly a full minute. It works so well that stores with the enhanced platform can operate with only two team members. In addition to speed and efficiency, operators can track data in real time, which helps with inventory management, forecasting, and cost control.
Meanwhile, Gong cha 2.0 stores have seen kiosks account for 70 percent of transactions and increase average check by 10 to 15 percent. More than 80 percent of customers opt into the loyalty program by entering their phone number, helping the brand access more customer data, boost engagement, and send targeted offers.
The technology gives employees more time to focus on hospitality, including a new “drink hand-off” initiative training workers to present drinks with both hands and address customers by name.
In terms of design, the prototype is brighter and features an open layout so that guests can see the drink-making process. There are also larger digital menu boards, warmer red and white colors, and a new grab-and-go section offering bottled drinks and more food options.
Additionally, Gong cha expanded its menu with two new tea-infused soups, Tom Yum Soup and Mushroom Truffle Soup.
The follows ongoing movement in the beverage arena, which recently saw Luckin target Blue Bottle, Dutch Bros scoop up regional chain Clutch Coffee, and widespread growth throughout the segment.
