With bubble tea chain Gong Cha, master franchise partner Mad Vision is nurturing big ambitions not only in the Benelux but also in France, where the first branches will open before the end of this year: “This business model is crisis-proof.”
Becoming a European leader
With a turnover of around 10 million euros, four brands (O’Tacos, Chick & Cheez, Go! Fish and Gong Cha), some 15 restaurants under its own management and, in addition, six operated by franchisees, multi-brand franchise player Mad Vision is still a small player in the ‘quick service restaurant’ (QSR) industry for now. But the ambitions of entrepreneur Adlane Draou, a miner’s grandson with Algerian roots from Mons, are clear: “We want to eventually become one of the European leaders in QSR. We’re inspired by groups like Amrest, Autogrill, the Bertrand group in France or QSRP in Belgium. We are taking our first steps abroad this year, especially in France.”
The master franchise agreement for Benelux and France, which Mad Vision signed with bubble tea market leader Gong Cha, should accelerate growth exponentially. “We foresee a solid opening pace this year: we recently opened in Brussels, Mons and Antwerp, Liege opens in March, Charleroi, Genk, Tournai will also follow… After that, we will take the step to France, where the potential is huge. The first one opens there in May, in Paris. I hope to have 10 to 15 restaurants in Belgium by the end of this year, and as many in France. We may also open in the Netherlands this year, but that is not yet certain. If France requires too much time and energy, we will postpone that step for a while.” In any case, Mad Vision aims to double turnover by 2024. “We are moving pretty quickly towards 100 restaurants, in the next five years,” he says.
Limited investment
The big advantage of Gong Cha’s business model is that it is hardly affected by the energy crisis, argues the entrepreneur. “The restaurants consume very little electricity and have only between one and four employees, which also limits the impact of wage indexation. They are small, so we pay lower rents. The investment is limited to some 100,000 euros. Compare that to an O’Tacos restaurant, which has 10 to 15 employees and requires an investment of 350,000 to 500,000 euros…”
Does Mad Vision find enough entrepreneurs? “We are lucky to be part of a network of franchisees. As a result, we have no problem finding candidates. Moreover, the investment – and hence the risk – is low. These are small restaurants with limited turnover that generate an excellent margin. That allows you to open multiple branches and limit your risk. With ten branches of Gong Cha, you match one of McDonald’s. The advantage of this business model is that you don’t need a large space: you can perfectly open a 15 sq m kiosk in a clothing shop, for example, or in a hypermarket.”
The reference brand
What is Gong Cha’s strength, in a market with as many suppliers? “It is the world leader. In Europe, there are many small players left and right, but there is no reference brand yet. With Gong Cha, we have the advantage of being a first mover, we are securing top locations, in shopping malls and city centres. And there is the quality of the product: we have tasted them all and the difference is incredible. At Gong Cha, you don’t drink sugar water but real infused tea aged four hours at most. Even the tapioca cereals are freshly prepared on site. No one is on that level.”
The first Belgian branches are running very well, both in Wallonia, Brussels and Flanders. “That is quite rare, given the regional differences in consumption behaviour. The business model works everywhere.” According to Adlane Draou, the potential is therefore great: “Bubble tea is still quite unknown, especially among people over 40. There are still a lot of prejudices, for instance about the sugar content, while we also serve drinks with little or no sugar. The difference between Gong Cha and, say, a Starbucks, is that Gong Cha brings a product that you can also serve to children. You don’t do that with coffee. But we also appeal to slightly older consumers because this is a premium product.”
Profitability under pressure
Whether bubble tea could possibly be a quickly passing hype? Adlane Draou thinks not: “Bubble tea has been around since the 1980s in Asia, Gong Cha started in 2006 and today has about 2,000 outlets worldwide. In some countries, they have been operating for more than a decade. Tea is a growing category. We believe in it.”
What makes the QSR market so interesting? After all, there are a huge number of different brands and concepts in the market… “Especially since Covid, people are less inclined to eat out in traditional restaurants. Takeaway or delivery became more popular, fast food too. In the current crisis, people would rather spend 5-10 euros on a meal with the family, rather than eating out in a classic restaurant. Not everyone can afford that. Our brands offer excellent value for money.”
Yet the entrepreneur also warns: there can be no euphoria. The sector is suffering from rising energy prices and automatic wage indexation. Larger concepts like O’Tacos or McDonald’s are big energy guzzlers, and that eats away at profitability. Sales may stay up, but profits evaporate when energy prices quadruple. “You can’t raise prices proportionally to inflation. Gong Cha largely escapes that, fortunately.”
