Gong Cha franchisee Ramon Gaztambide described the weather in Puerto Rico as “hot and hotter.”
For that reason, he said the bubble tea brand has caught on quick in the market, and has led the franchisee group SID Tea to expand on its original franchise deal. Gaztambide, director of brand development for the group, said after opening the first two units in a four-location agreement, SID Tea signed a new deal for a total of 30 stores.
“Puerto Rico isn’t a tea-drinking society,” Gaztambide said. “It’s mostly coffee drinkers, and to drink tea in this way was new to us. But we liked the product and especially how refreshing it is. To have a tasty beverage that’s refreshing and looks nice is something we notice our consumers really value, especially when they’re posting online.”
SID Tea is helmed by Lyle Swanson, who’s been in the restaurant industry for nearly 40 years, including 35 with Subway. Originally starting as a minimum wage worker, Swanson worked his way up in the company and eventually the sandwich brand tapped him to develop units in Puerto Rico.
New Gong Cha franchisees say the refreshing boba tea products are becoming quickly popular in Puerto Rico.
“It was the worst market in the world at the time,” Swanson said. “Today, I can tell you we’re the highest-volume market for Subway. We have 162 Subway restaurants now and three years ago we embarked on expanding into other brands. Now we’re also with Wingstop, and have four in operation with six more in development.”
Along with Subway and Wingstop, Swanson also franchises with the brand Acai Express. Involvement in the restaurant industry runs in the family, too, as Swanson’s daughter also works in the field at Gong Cha.
“For a whole year, she was telling me that I had to take a look at this brand,” Swanson said. “Eventually we visited with them and we were very impressed. We had skeptical eyes, but it didn’t take but a whole day where we saw some really good possibilities with Gong Cha to be brought into our organization.”
Founded in Taiwan in 2006, Gong Cha is a bubble tea concept with 2,200 locations, including 230 in the U.S. It first entered the country using the master franchise model but recently introduced opportunities for direct franchising.
Related: Gong Cha Makes Switch to Direct Franchising to Fuel U.S. Development
“We’re excited about the momentum for Gong Cha,” said Geoff Henry, president of Gong Cha Americas. “We’ve been rapidly building up our store count in many countries. We’re at 26 countries, opening recently in Honduras and Saudi Arabia. Here in the Americas, we’re just shy of 450 across Canada, the U.S., Mexico and Panama.”
Gong Cha Americas President Geoff Henry
When exploring the brand for potential growth in Puerto Rico, Swanson said he was impressed by the brand’s flexibility and low cost. The initial investment ranges from $174,500 to $619,500.
To make his locations even more cost efficient, Swanson is developing Gong Cha units in his existing buildings to create multi-brand spaces. Swanson said his team launched co-branded restaurants about two years ago and because of Gong Cha’s versatility, it will fit right in place.
“It’s a great, safe way to start an emerging brand and eventually be brought outside of the multi-brand formation where it can be in stand-alone sites,” Swanson said.
“It means flexibility,” Gaztambide said. “We can have the same location with a Wingstop and a Subway with a Gong Cha. They don’t fight against each other. They complement each other.”
Henry said the brand was “thrilled” with the direction SID Tea is taking with its franchise plans.
“They’re world-class operators,” Henry said. “They’ve done a great job with their first locations and are already working on their next units. They’ve clearly proven that they know how to operate global brands and they do so with excellence. I’ve visited their restaurants and they’re top notch in terms of cleanliness of stores, sales performance and guest experience.”
SID Tea opened its first two Gong Cha locations in the spring and are set to open two additional units this summer with a fifth by the end of the year.
“We started with four so we could see what the brand was like in all aspects,” Swanson said. “Once we had the first two open, we knew we wanted to secure the contract for Puerto Rico and agreed to 30 stores.”
“We saw the simplicity and the lower complex aspect of the supply chain, with a lot of things being shelf stable,” Gaztambide said. “It means having a lot less refrigeration and freezer units, which is a positive for us. The process of getting someone on board was also a lot easier than some of the other brands because it’s less complex, which is really attractive in this heavy development schedule we have going on.”