Gong cha inks 50-store franchise deal in Texas

The agreement will significantly expand the bubble tea chain’s U.S. footprint, and comes after the brand bought 170 stores from its master franchisee in March.

• Gong cha has signed a 50-unit franchising deal in Texas, marking the bubble tea brand’s largest direct franchising agreement, according to an emailed press release.

• Bakers Acres & Cattle Company, a ranching and real estate company that also operates a dozen Nothing Bundt Cake locations, will develop the tea stores in Houston, Dallas, San Antonio and Austin over the next seven years, per the press release.

Growth strategy

• The deal comes several months after Gong cha acquired 170 locations in the U.S. from its master franchisee in a deal meant to speed up the chain’s growth to 1,000 U.S. units.

As consumers turn to customizable, cold, caffeinated drinks, brands like Gong cha and its coffee-based competitors, Dutch Bros. and 7 Brew, have seen significant growth in the U.S.

Gong cha is hoping to sustain and accelerate its growth through multi-unit franchising deals.

Franchise appeal

“Franchisees are looking for concepts with operational simplicity, strong consumer demand and the ability to scale efficiently at relatively low cost,” said Geoff Henry, president of Gong cha Americas. “From our flexible footprint and efficient labor model to the strength of our global brand recognition, we’ve built a platform designed to help operators grow strategically and sustainably across high-potential markets.”

Gong cha recently redesigned its store layout and drinks preparation processes. The chain added an automated drinks maker that shaved almost a minute off of ticket times. This simplification of operations could help prepare the brand for faster growth in the U.S.

While 50 units is not a particularly large fraction of Gong cha’s global system — 2,200 stores in 33 markets — it is equivalent to about one-fifth of the brand’s 240-store U.S. footprint.

Texas, replete with growing metro areas, has become a major target for franchisors seeking multi-unit development. Starbird, a premium fast chicken brand, recently signed a 36-unit deal covering the Lone Star state. Late last year, Oakberry, a Brazil-based açaí bowl and smoothie brand, signed a 100-store franchise agreement in Texas.