With its origins in Taiwan and Hong Kong, the milk tea craze has officially made its way to the United States with the industry projections of a compound annual growth rate (or CAGR) of 8.9% through 2030. One milk tea brand that’s been gaining traction in United States and around the world is Gong Cha. Believe it or not, this brand already has more than 1,900 locations globally since it was founded in 2006.
How much does it cost to open Gong Cha? To franchise this milk tea chain, you’ll need a liquid capital of $150,000 to $2,000,000 and a net worth of $300,000 – $4,000,000. The investment range to start a Gong Cha franchise is $177,430 – $335,400 with a franchise fee of $41,500.
In this post, I review the advantages and challenges in front of Gong Cha as a business opportunity in the United States. Click here to take a 7-minute franchise quiz to be paired with a bubble tea opportunity that matches your investment level and personal interest.
Financial Requirements and Fees
Below are the fees and expenses to expect when you franchise Gong Cha:
|Fees / Expenses
||$150,000 to $2,000,000
||$300,000 to $4,000,000
||$177,430 to $335,400
Other fees to expect are their royalty fee which is 5.5% of sales and their marketing and advertising fee which is 1% of sales. The term of agreement to run a Gong Cha franchise is 5 to 10 years.
Average Sales / Revenue per Year
According to reports, Gong Cha has reached over $380,434,326 in global sales. At present, there is no official record as to how much Gong Cha’s U.S. sales. Keep this in mind before investing in the United States.
As you go through franchise interview process make sure to get information about the revenue units in the United States are generating. If possible, I suggest getting information about revenue numbers from a variety of locations to gauge success in a variety of regions. After all, the annual revenue of a franchise unit operating in Taiwan could be very different than units selling in Texas.
Gong Cha Franchise Facts
||1,900 (190 U.S.A.)
Gong Cha originated in Kaohsiung, Taiwan in 1996 by Huang and Wu. The name of the brand translates to “tribute tea for the emperor” which can also mean that Gong Cha serves only the finest and highest quality tea fit enough for royalty.
The menu at Gong Cha includes brewed teas made from green, black, oolong or earl grey. They have the basic milk tea, fruit teas, milk foam series (which contains milk and foam), slushed milk and fruit teas, tea lattes, and their coffee series. Their toppings include the classic pearls or boba, coconut jelly, pudding, herbal jelly, ai-yu jelly, basil seeds, and Oreo crumbs. You can also change the sugar grade from 100 being the regular sugar content they usually put, to 70%, 50%, 30% or down to no sugar at all.
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To franchise Gong Cha, you must complete a franchise application form here. Once the application is received and reviewed by the company, you’ll receive a call and have an initial discussion with a franchise representative. You’ll go through a qualification process which involves Gong Cha checking the documents you will be submitting as well as discuss the operations of the business.
If everything goes well and you find that all your questions have been met with good answers, you’ll go through their franchise agreement signing, location approval, and then a layout review. Afterwards you’ll go through training, purchasing of equipment and inventory, a soft launch, and then your grand opening.
Strawberry yogurt slush.
Gong Cha’s available markets for franchising are:
- New York
- New Jersey
- Rhode Island
- New Hampshire
- North Carolina
- South Carolina
Gong Cha’s U.S. headquarters are located in Boston while their global headquarters is located in London. Their CEO is Paul Reynish who previously worked with Five Guys and Dunkin Brands.
How Much Does Gong Cha Make in Profit?
There is no official financial information as to how much Gong Cha makes in profit. But an estimated number is $370,000 for a single unit. This would represent an average profit margin of 18% and can take about 8.1 years for you to recover your investment.
Advantages of a Gong Cha Franchise
Franchising Gong Cha can bring about a lot of advantages. Here are a few:
Gong Cha isn’t just big in the United States. They’re becoming a global brand. They have stores in South Korea, Philippines, Vietnam, New Zealand, Australia, United Kingdom, Macau, Japan, Singapore, and many more.
In addition, Gong Cha has been a popular milk tea brand through the years. Here are a few of the awards they’ve received:
- Ranked #1 in the Tea category on Entrepreneur’s prestigious Franchise 500® list (2022)
- Selected as a finalist for Franchise Times’ list of Top Beverage Franchises To Buy (2022)
- Selected as a finalist for one of the Top 10 Global Food & Drink Franchises by the Global Franchise Awards (2022)
- Ranked #193 on Franchise Times’ Top 500 List, annual ranking of the 500 largest U.S.-based franchise systems by global system wide sales (2022)
Milk Tea Varieties
Gong Cha doesn’t just sell classic milk tea. They have other variations of teas such as brewed teas, fruit teas, slushies, and tea lattes. A menu with so much variety can be advantageous since it brings in customers who have different preferences. Gong Cha also offers a variety of pre-mixed milk tea drinks, such as the Gong Cha Special and the Earl Grey Milk Tea with 3Js.
Gong Cha bubble tea.
Milk Tea Demand and Growth
As mentioned above, the milk tea industry has a compound annual growth rate of 8.9% to 2030. The craze isn’t just temporary as well. Gong Cha has also announced that they’re planning to open 80 new stores with a target of 500 stores in the U.S. by 2025.
Challenges of Gong Cha Franchise
Before franchising a brand, you’ll need to know what the challenges are so you can expect them beforehand. Here are some challenges you can expect when you franchise Gong Cha:
Gong Cha isn’t the only milk tea brand that’s spreading all over the U.S. rapidly. You’ve got big brands like Share Tea, The Alley, Coco, and Happy Lemon. The milk tea industry is quite popular so you can expect to see a close fight among all of these milk tea brands to become the go-to brand in the United States.
American Taste: American consumers may have different taste preferences than consumers in other countries. Gong Cha may need to adapt its menu and recipes to appeal to American consumers if it hopes to become a household name.
Brand awareness: Gong Cha is a well-known brand in many countries around the world, but it is not as well-known in the United States. This means that potential franchisees and customers may not be familiar with the brand.
Financial Requirements: The financial requirement to open a Gong Cha store is pretty steep and can cost upwards of $2 million to open a single location. You’d need to have a good financial backing in order to pass the initial meeting with Gong Cha. And for a brand that mostly sells beverages competitor concepts start at investment level of $300K so you could in many cases get started for less with a different business opportunity.
Is the Gong Cha Franchise Right For You?
Gong Cha is a world renowned brand. But the concept is not yet proven in the United States. As mentioned earlier, I strongly suggest you evaluate the financial performance of US-based locations before investing. The company should be able to provide you with an updated Financial Disclosure Document that includes this information before signing on the dotted line.
What is an alternative Gong Cha franchise?
Another milk tea brand you may want to check out is Share Tea. The brand also originated in Taiwan in 1992. They also use high quality teas for their beverages. Share Tea has grown to over 400 stores around the world.
To franchise Share Tea, their minimum financial requirements is $100,000 in liquid capital and a minimum of $300,000 in investments. You can read my complete review of the Share Tea franchise opportunity here.
Gong Cha looks like a strong brand when it comes to competing with the other milk tea brands out there but do take more time in deciding if it’s the right franchise you want to bring to your area.