How Chatime’s growth strategy led it to bubble tea domination in Australia

Since launching in Australia in 2009, Chatime has dominated the Australian bubble tea industry, helping the drink become a mainstream product for western consumers. With 150 stores, a ready-made supermarket range, and a compound annual growth rate above the industry average, things will only get bigger for the Taiwanese franchise.

Chatime Australia’s CEO Carlos Antonius sat down with SmartCompany to share the company’s secret to success and its expansion plans.

When opening the first T-Brewery in Hurstville, Sydney, in 2009, Chatime Australia founders knew the franchise depended on consumers with an Asian background. This demographic was already familiar with the concept of bubble tea (or boba), and many already knew the Chatime brand from its Taiwanese origins. The growth strategy for the time was to simply capitalise on that market by selecting store locations that provided access to those consumers.

Fast forward to 2022, and Caucasian Australians are now Chatime’s biggest consumers. The brand has opened 31 new locations this year alone and is smashing the industry average compound annual growth rate of 7.2% by an extra 3.3%. So how did Chatime manage to crack into a new consumer demographic with such force?

Antonius believes the key to their success is mainly due to consumer research that facilitated a rebranding and new growth strategy in 2016.

“Chatime has evolved since it first opened in 2009 in Australia,” explained Antonius.

“We identified several barriers to entry for new customers through consumer research. That information allowed us to reposition the brand, redefine the menu and, more importantly, the tonality and comms of the brand, making it more accessible to a wider demographic.”

Antonius says redesigning stores and the brand assets were crucial to making Chatime more accessible.

“At the time, the Chatime assets were very patriotic — meaning, they had many Mandarin/Chinese characters on them. We removed a lot of that,” he said.

L-R: Ray Pratt, Carlos Antonius and Charlley Zhao celebrating the 150th T-Brewery opening in regional Victoria. Source: Supplied.

“We also made the product more visible. Instead of preparing it at the back of the store, we moved it to the front and provided a similar experience to ordering a drink at a bar.”

Chatime also directed its 2016 growth strategy to include more suburban T-Brewery stores instead of focusing on CBD locations. And they invested “significantly” in digital infrastructure, including a loyalty program that enabled click-and-collect ordering.

“Those kinds of initiatives enabled us to be ahead of the curve when COVID-19 hit,” said Antonius.

Navigating COVID-19

During the pandemic, Chatime’s T-Brewery stores continued selling most of their products, and the brand performed “very well during that period”.

“We still grew locations during the pandemic,” Antonius said.

“We opened new stores, and despite our city locations being very challenged from a sales perspective, our suburban locations performed very well.”

The central support team of Chatime was reduced significantly, and Antonius says they lost some intellectual property during that time. But, the brand has been able to manage that loss “reasonably well” and has now rebuilt the team to full capacity.

Chatime’s success during the pandemic was partly possible because its a vertically integrated business. Its parent company, La Kaffa International Co Ltd, owns Taiwanese manufacturing facilities that produce most of Chatime’s ingredients.

“I think we were one of the only bubble tea brands on the Australian market that were able to continue offering the majority of items to our customers during the pandemic, which is a remarkable result,” said Antonius.

For the future, Chatime is continuing its aggressive growth strategy that prioritises metropolitan store locations. By 2025, the brand aims to open its 250th T-Brewery location, dedicating 70% of its overall stores to metro areas. The remaining 30% is divided equally between regional and CBD locations.

There are also plans to expand Chatime’s ready-made supermarket range and invest in an e-commerce site. 

With the bubble tea category forecast to grow globally by 7.2% until 2027, the international Chatime franchise has its sights set on the American market.

“We are opening three corporate locations in California next year,” said Antonius.

“And the basis for the US expansion is on the success of what Chatime has achieved in domestic operations over the last number of years — that’s a great testament to the broader team.”

Chatime also has plans to expand into New Zealand.

“There’s a lot of growth happening, which is really exciting,” Antonius continued.

“The bubble tea category is forecast to continue growing, and at Chatime, we’re over-indexing and delivering double digits. We’re really excited about the opportunities domestically and globally.”