KUALA LUMPUR – Sales at four Chatime outlets which continued with the brand following the fallout between franchisor La Kaffa International Co Ltd and master franchisee Loob Holding Sdn Bhd have soared 200%, according to new master franchisee Will Group Sdn Bhd.
Average sales per Chatime outlet were RM170,000 in July, compared with an average of RM48,000 monthly under Loob previously. In July, Chatime had 13 outlets. As at August, the number has grown to 17.
Group managing director Aliza Ali said Will Group made an informed business decision to stick with bubble tea specialist Chatime following a dispute that escalated between Chatime franchisor La Kaffa International and Loob earlier this year.
She said Will Group was offered the role of master franchisee for Chatime Malaysia as two of its outlets (in Genting and KL Sentral) have posted the highest sales of all Chatime outlets worldwide for the past six years.
While 161 former Chatime outlets have been rebranded as Tealive after La Kaffa terminated its contract with Loob, directly outnumbering the Chatime outlets here, Aliza said Will Group is not playing a quantity game and does not see Tealive as competition.
“From a business point of view, we can give better service when that outlet is able to make a certain revenue; our staff will be taken care of and the quality of the outlet will be something we can concentrate on. We’re averaging RM170,000 per outlet, which is a vast difference under the previous management, which was about RM48,000 per outlet. It’s a threefold increase,” she told SunBiz in an interview recently, adding that the group had a good business relation with Loob.
Aliza said the 13 outlets raked in sales of RM2.2 million in July or 27% of the monthly RM8 million sales that Chatime did with 165 outlets.
“For us to claim RM2.2 million with 13 outlets is pretty encouraging. The sales of all the outlets that stayed with Chatime increased 200%,” said Aliza.
As part of its plan to open 30 outlets by end-November, she said the group is more than halfway through that. It has allocated RM35 million to open 70 Chatime outlets by mid-2018, with an expected sales of RM8 million a month.
Will Group is focusing on direct-owned outlets and is particular about the location and potential of its outlets, with minimum monthly sales of RM120,000 as a prerequisite.
“We see a lot of potential in Chatime. We believe in the business. When we talk about customers and sales, we know that the strength is there. The loyalty towards the brand is there. We’re focusing on claiming back the market and providing customers more outlets to go to,” said Aliza.
She said having Chatime at petrol stations is not a business plan for the new management of Chatime Malaysia. It instead has a partnership with Aeon and will be present in almost all Aeon outlets in Malaysia.
As part of La Kaffa’s plan to make Malaysia the regional hub for Chatime’s ingredients, it will invest RM25 million-RM30 million to set up a manufacturing facility near Port Klang or Kuantan Port by year-end. The hub will be supplying the ingredients to countries in Southeast Asia such as Indonesia, Brunei, the Philippines and Thailand.
“When we see there’s a possibility that we can save more by making Malaysia the regional hub for ingredients, that’s another industry that we can add on (to our coffers).
“We’ll be able to save cost, about 200%, as raw products were previously sourced from Thailand or Malaysia and then brought to Taiwan and then back to Malaysia. By changing how we want to move ahead to manufacture (the ingredients) here, we’ll be able to save costs and be more efficient.”
Will Group expects to see a 50% revenue contribution from its food and beverage business thanks to Chatime by end of 2018, from 40% now. The remaining contribution comes from its mining and dredging business, as well as construction.
Will Group’s major shareholder and director Julita Aisah Abdul Latiff is the wife of the Tengku Muda of Pahang. The company was incorporated in 2011.
“We don’t use the connection … how we’re expanding is literally from funds from Chatime. There’s no injection from a third party. Chatime is self-funding. We look at it as another business venture, where we have profits and we roll it from there,” said Aliza.