Bubble Tea brand on the block

Nick Hall

Multinational bubble tea business, Gong Cha Tea is up for sale, following an announcement from South Korean private equity firm and owner, Unison Capital.

The deal is expected to fetch US$442m and comes just four years after the brand was purchased by Unison Capital for KRW34bn ($30m), and just two years after the firm took over Gong Cha’s global headquarters in Taiwan in a KRW40 billion ($35.45 million) deal.

Gong Cha operates in 16 countries across the globe, including Australia, where the brand is quickly developing nationwide representation.

In September, Inside Franchise Business reported the business had targeted 60 Australian outlets by mid-2019, to compliment the brand’s 600-strong international store portfolio.

The latest announcement from Unison Capital has attracted interest from major South Korean F&B players, considering the brand’s stable cash flows and EBITDA margin of 24–25 per cent, compared with Starbucks’ 21 per cent.

The brand runs 448 outlets within South Korea, and derives 70 per cent of its sales from directly managed stores within Korea and Japan. The firm plans to expand its global store count from 900 to 1700 by 2021, expanding into 10 more countries during the period – with concrete plans to establish stores in the UK, Mexico, Thailand, Indonesia and Cambodia.

Sales are forecast at KRW180 billion ($159.54 million) this year, compared to KRW134 billion ($118.77 million) last year.

Author: Michael Arnold

This is an edited version of an article that appeared on Inside Retail Asia, a sibling publication to Inside Franchise Business.