Here is how beverage franchise Chatime is tapping into the Australian market.

A few years ago Australians didn’t know about bubble tea, with many of us yet to still encounter the concept that developed in Taiwan in the 1980s.

Introduced to the Australian market through its core Asian demographic, it has yet to really hit the mainstream.

So what is bubble tea? There are typically two types: milk teas similar to smoothies, and fruit-flavoured teas, both served cold. It is also known as pearl milk tea, boba milk tea and tapioca tea.

According to Wikipedia, the oldest-known bubble tea was a mixture of Taiwanese black tea, tapioca pearls, condensed milk and syrup or honey. The first popular version was based on jasmine-infused green tea.

For a relatively small niche in the food and beverage sector, the market is very competitive, says Cha Time group GM Carlos Antonius, who has been with the brand just 15 months. Coming from franchise chains Gelatissimo and Nando’s, he acknowledges the difficulties of moving the Cha Time brand on to the next level.

“When I came on board, there were two key challenges – firstly, how to take what has been developed over six years and give it Western appeal but not make it westernised; secondly, change management.”

If bubble tea all looks the same to western eyes, how can a brand be distinguished? Antonius’ concern was to do things differently and find a distinct market.

“How do we flip this?” he says. “While bubble tea is a category, we want to own the space in iced tea. We’ve been in core Asian demographic areas, so for the shareholders it’s a leap of faith.”

$4b business

Perceived as a healthy option, the iced tea concept is a $4 billion global business, with Lipton the best-known brand. That has meant culling some products and simplifying the business model.

Antonius has also introduced brand value, a refined mission statement and clear strategy.

“It’s had an amazing impact,” he says.

Responding to the key trends of premium product, indulgence and customisation, the franchise has put marketing front and centre.

“When brands are in the same category they need a clear and concise proposition, and to ensure customer relevance. For me, the business model is profitable if it’s profitable for all shareholders. If franchisees are profitable, the system works.

“Be sure of the business model, and maintain quality and consistent operational standards. Franchisors need to develop and invest in their brand and grow market share sustainably. It’s about getting retail partners on board and location. It’s a range of things.”

Independent research has shown that price is important to the core audience of young adults, but they consider convenience first, then experience, then brand innovation.

“We want to be the brand leader in iced tea. We can establish price premium, but have to deliver on that,” says Antonius. “There’s not much room for movement in a price level of $5.50.”

With 1100 units globally, 90 per cent of Cha Time’s products are sourced from Taiwan. Controlling costs at all levels means regular conversations with suppliers, says Antonius.

“It’s about sharing the spoils. We’re entitled to a margin, too.”

Frontline changes

There have been changes to store layouts and processes to improve the experience for the customer. Previously staff members would take an order through point of sale, then turn their backs on customers to make the tea. In the redesigned stores, the service staff now take an order and serve the tea, all the time facing the customer.

This helps drive engagement and show the quality of products and mix-ins, says Antonius.

There has been increased engagement since the launch in April.

Sales figures are up, too. There has been close to a 15 per cent increase in like-for-like sales so far this year.

“We are starting to hit great KPIs, but we’re a long way from where we need to be,” says Antonius.

Expect to see more innovations, perhaps herbs and fruit pieces, he says. The brand could also be playing with the mocktails trend. “Everything we do reflects the brand: fun, fresh and flavour.”

As people start to understand the category, the brand messages establish a brand voice and personality. “When we are new to the market, how do we get product in people’s hands? With every renovation and new site, we do a free iced-tea session.”

Do the consumers try other teas on the menu? “It’s too early to say,” says Antonius. “When I look at the locations, the perception is that this brand is only for Asian consumers. That’s not the case.”

By next year the business will have 70 outlets, with 12 stores renovated. Of 25 planned stores, 12 are already in commercial negotiations.

“We’re in centres for presence, and we’re taking bigger strip locations. In Footscray station in Melbourne there will be an 80 sqm franchised outlet open from November.”

In the Northern Territory, the Casuarina outlet has proved itself the highest performer in the network. Ten further locations this year have helped widen the brand exposure.