Chagee has returned in Singapore (after leaving earlier this year). Their grand opening drew massive crowds, with queues stretching for over an hour.
We did a poll on our WeChat, and more than 50% of respondents believe that Chagee will dominate the market. But what makes Chagee stand out in a crowded field of competitors
Tune in to the latest episode of the Impulso podcast as we delve into Chagee’s business model, compare it to its competitors, explore the rise of Chinese F&B brands in the region, and discuss the fundamental challenges faced by F&B companies.
Also available on Spotify and Apple Podcasts.
Featured materials:
Momentum Works Immersions: F&B innovations
Coffee in Southeast Asia, Momentum Works
Luckin Coffee opens its 20,000th store, The Low Down
Bubble Tea: The business behind Southeast Asia’s favorite drink, Momentum Works
E76: Starbucks vs Luckin in China, who is winning?, The Impulso Podcast
E63: How does Luckin Coffee open 1000 new stores every month?!, The Impulso Podcast
[AI-generated transcript]
Sabrina: [00:00:00] Hi everyone, and welcome back to episode 87 of the Impulso podcast by Momentum Works. So on today’s episode, we’re actually going to be talking about Chagee’s re entry into Singapore. So this is something that we briefly mentioned in last week’s episode, and this week we’re going to dive a little deeper into Chagee re entering Singapore.
So this was last week, two weeks ago.
Jianggan: Was it two weeks ago? Was last week?
Sabrina: When this podcast is out, it will be two weeks ago, . Okay.
Jianggan: Okay.
Sabrina: Chagee actually
Jianggan: Singapore? Yeah.
Sabrina: Yes. So, this is their store at Orchard Gateway, and this is their store at Dhoby Ghaut. So, you can see that it was really, really crowded, right? So,
Jianggan: I’m going to just assume that people know what the hell Orchard Gateway and Dhoby Ghaut are.
Sabrina: It is two shopping malls in Singapore that are in the central area.
Jianggan: Yeah, in a single business area, right? Okay.
Sabrina: So it was very crowded. I actually almost went down on the opening day for the orchard gateway shop and My friend told me the queue was like two to three hours So I ended up going to the dubicon
Jianggan: for two to three hours
Sabrina: So there was some one dollar [00:01:00] vouchers on Shopee and grab.
That’s why yeah, so there was a really long queue The Chagee so Chagee also had an app and for their app. They also had a welcome promotion on the opening day Yeah, so the queue was very long I should ask you, right? So, Chagee is a bubble tea brand from China, which we bought, not sponsored by the way. Chagee, if you ever want to sponsor us, we are open.
Jianggan: Are we?
Sabrina: Yes, I am open. I don’t know about Jianggan.
Jianggan: Because Sabrina consumes 40 percent of the bubble tea in our building.
Sabrina: So, like I was saying, it will be so good. Chagee is a bubble tea brand.
Jianggan: She even dressed up to buy Chagee today. Thank you.
Sabrina: Yeah, not for the podcast, only for Chagee. So like I said, Chagee is a bubble tea brand from China and they were actually previously in Singapore.
So back then when they were in Singapore, I think the full name was.
Jianggan: Yes.
Sabrina: So, and then of [00:02:00] course they actually rebranded, ended up rebranding as empty because the franchisees ended their agreement with Chagee.
Jianggan: So what happened is that I think I had a chance , to interact with the founder very early on, and he was. I think the most first bubble tea founders, I mean, the new generation of bubble tea founders in China who had a vision to go global, even though he barely had any education, which is kind of rare for this generation of Chinese founders as well.
He, I think very early on, he went to Malaysia, he went to Singapore, he came to Singapore, he went to Thailand and in Singapore, they worked with with a local distributor or local franchising. And of course, they open, I think, a dozen stores in Singapore. But I think quickly over the years that that I think what they expect out of each other, there’s increasingly more and more misalignment.
They had a franchisee in Singapore who they worked with to, to bring the Chagee concept and they had a million and a dozen stores. But I think as time goes by the disagreement between the two parties about, I mean, what exactly should be the strategy, who should invest in [00:03:00] what you know you know, And what should be the expectation?
I think they drift they drifted away further and further until the moment they had from what I was told, a peaceful divorce. So, so the, the existing charging stores in Singapore were rebranded as
Sabrina: Amp’s Tea.
Jianggan: Amp’s Tea Plus. So, which I don’t think it’s a, it’s a very clever name because it’s so hard to pronounce.
But yeah, so, the whole concept changed and Chagee decided to come to Singapore again on their own.
Sabrina: So you actually went down to one of the store openings, right? On the first day?
Jianggan: Yes. The second day, actually. Oh, the second day. The second day. I was there before, before it opened. That was the soft opening. So a week before the grand opening. And obviously we took a picture of this pineapple. And I was showing that to friends, the friends saying, and why would they do that?
Well, they put a pineapple there. And I think Sabrina, you think it’s pretty normal, right?
Sabrina: Yes, to me, it’s like, okay, I understand why the pineapple is there. But I think when we were talking to some of our colleagues as well, they didn’t understand what the [00:04:00] pineapple was for. So what is the pineapple?
Jianggan: I don’t know, you know,
Sabrina: you know.
Jianggan: I don’t know.
Sabrina: So in Singapore and I think Malaysia as well, pineapples kind of symbolize good fortune and luck. So generally when you buy a new house or you open a new shop, you would roll a pineapple in to bring you good fortune and all. So I thought this was a Chinese thing. Turns out it’s a Singaporean and Malaysian Chinese thing.
Not a China Chinese thing.
Jianggan: Yes, no yes and no. So I spoke with actually quite a few friends in different parts of China, and I think those who are from the Teochew area, the eastern part of Guangdong province, they have the pineapple as well to symbolize good luck. I think historically it was, I think highly correlated to where the pineapple is actually produced, because if you move a little bit further north, you don’t have pineapple being produced.
And when I was a kid, I didn’t know what a pineapple was. So you have to assume that the whole world, I mean, the Chinese world knows about pineapple, but
Sabrina: there
Jianggan: are certain provinces which are covered by snow like half of the year.
Sabrina: [00:05:00] So what is the fruit that grows in snow?
Jianggan: Nothing. They eat kimchi.
Sabrina: You can roll a jar of kimchi, the cabbage.
Jianggan: No, it’s in a cellar.
Sabrina: Euro in the jar. So we actually did a poll on our community when Chagee launched in Singapore. So we were asking them how they think Chagee will perform upon their re entry and majority of them are actually quite confident. So about 52 percent of them were confident that Chagee would dominate the market.
And keep in mind, Singapore’s bubble tea market is already pretty saturated, right?
Jianggan: Yeah. So I always find that the, that argument is very strange. You keep hearing, and they’re saying, Oh, it’s saturated. So you can’t come in. I, or until now, I don’t understand why people keep making these arguments because when it’s saturated, it means that there’s this freaking lot of demand.
And all you need to do is to figure out, okay, what other existing players are doing and how can you do better than existing players? So I, to date, I still don’t understand why people think it’s saturated, so there’s no room [00:06:00] for new players. Why?
Sabrina: I think there’s room for new players, but then there’s a limit to how much market share you can gain.
Jianggan: If you are more efficient than all the players combined, then you can get 100 percent of the market share if you want. So
I always
find that argument strange, to be honest.
Sabrina: For Bubble Tea, it’s not really about efficiency, right? So we talk about the which is selection, speed, quality as well as saving. So for bubble tea, there’s such a wide spectrum that you can go for.
So I think it’s quite hard to dominate the market as well, but people seem confident that Chagee will dominate.
Jianggan: So we launched this poll in WeChat in Chinese. So I think most people who voted on this are the people who speak Chinese and most likely coming from mainland China, we had about like 50, 000 followers on WeChat account.
So, so yeah, so most people are actually quite optimistic about Chagee’s prospects in Southeast Asia and beyond. I spoke with some industry experts and and people say that, , Chagee now has a very, very good momentum in China. So even if they don’t do anything [00:07:00] drastic, they will probably be quite successful in this market.
Sabrina: So now I guess we can talk a little bit about, so what you mentioned is that investors say that Chagee is very bold, right? There are company that Expanded quite quickly in China and they pick a lot of prime locations as well.
Jianggan: Yeah, so on this image On the top, right? You will see that this is actually location in the busiest pedestrian street in chengdu in western china They spent as I was told almost 8 million yuan or that’s like 1.
2 million dollars to secure that location And usually people say, Hey, are you nuts. I mean, you look at Amps T plus funders, they’ll say, are you nuts. We, this, this are too expensive, but I think they became profitable almost instantly because so much food traffic is in that particular store. And that success allowed landlords of other time.
Places to invite China to say, Hey, come to our place because we know that you can draw the crowds. So, so it sort of [00:08:00] helps each other. And especially after the pandemic, we know that the consumption in China has not been growing rapidly in, the recent month. And so, Chagee goes against the trend of saying that, okay, everybody’s retreating.
The rent is, I wouldn’t say it’s going cheaper, but it’s much easier to negotiate with landlords and we just go big. So, last two years, I think they’ve been going like crazy. They even acquired, on the left of this image, a new headquarters, a whole building in Shanghai recently, close to the airport.
Why do they need a whole building? Not sure.
Sabrina: They can, sometimes there is enough just because they can,
Jianggan: yeah. I think the image below looks Chinese, but it’s probably in Malaysia.
Sabrina: Yeah. So this is the Chagee store in Malaysia, so it’s interesting, right. I think their, their strategy for at least store location seems kind of similar to the of Starbucks.
We know that Starbucks also picks prime locations Starbucks once they’re stores to be seen as a landmark.
Jianggan: Yes. And, once [00:09:00] they have this reputation, malls will come to you. Yes. So sometimes you don’t even need to pay the rent. Malls will want you to be there.
Sabrina: So do you think Chagee is doing something similar in that aspect?
Jianggan: I think they managed to establish their brand quite nicely over a very short period of time.
Sabrina: So we talk about Chagee’s brand a lot, right? I think they are a brand that’s very well known even in Singapore. Although, like we said, they were previously here for a short while and then they left. When they came back, it was really crowded because most people know of Chagee.
Jianggan: In fact, because of the previous experience or they have seen it somewhere on social media?
Sabrina: They’ve seen it somewhere on social media, so They’re quite active on their social media marketing, I would say. And of course they also have a very distinct brand image, right? Which highlights a lot of Oriental elements.
So for example, their cup designs have a lot of Oriental drawings, Oriental ish drawings, and even their logo. Right. But doesn’t it look kind of similar?
Jianggan: To Dior?
Sabrina: To Dior. [00:10:00] Yeah.
Jianggan: Do you have a Dior bag?
Sabrina: Not this one. Not this one. Yeah, not this one.
Jianggan: Most many you have.
Sabrina: Not this one. This one is not worth the money.
Jianggan: But the thing is that when you look in detail, it’s not exactly the same, but of course, I mean, I think that there’s sort of find a way to, trick people’s mind, right? I mean, once you see this, you immediately associate that with something you are familiar with, some premium brand. Not necessarily a Dior because they can claim that it’s very different, you know, whatever, right?
Sabrina: But there are definitely similarities
Jianggan: There are animals as well, right? On a deer.
Sabrina: Yeah, so it’s a tiger But on Chagee’s one, it’s a horse and even the stripe in the middle looks like yeah, exactly the same and of course Even Luckin is copying Chagee. So this is from china
Jianggan: So this is actually the the drink that i’m having with me it’s called jasmine green milk tea if you go to the this slide So, it’s jasmine green milk tea, and of course,
Sabrina: it’s also what I’m
drinking.
Jianggan: It’s what everyone bought, right?
Sabrina: Yeah, [00:11:00] so this is their number one best seller drink.
Jianggan: So Joshua, Phyllis, what are you drinking?
Sabrina: Same. Same, they’re all drinking the
same drink, yeah.
Jianggan: Cool,
cool, cool, do you like it?
Sabrina: People like it.
Jianggan: I see the two people behind nodding. Yeah. This is a trend which they pioneered I think is called, the English name is kind of banal, like jasmine green milk.
Tea is milk, but it’s very light.
Sabrina: Hmm.
Jianggan: And there’s a bit of t taste, but it’s also very light. So, , and the Chinese name is little bit more sophisticated. It’s called 伯牙绝弦 (Bo Ya Jue Xian) . And, and it actually evokes an ancient story of somebody who has a very good friend. But this person is a good player of Guqin, an ancient musical instrument.
And after his friend passed away, he said, I lost someone who would appreciate my music and my talent. Therefore, I will stop playing for life. So that’s the story. And Chagee made this drink. And this drink, I’ve seen some numbers. Don’t know. I mean,
Sabrina: what is the reason behind giving a drink such a tragic story?
Jianggan: I even think that probably 30 percent of the people who [00:12:00] buy these drinks will probably not be able to read this thing properly.
Sabrina: I know the story behind it.
Jianggan: Yes, but it sounds sophisticated. It sounds like cultural and this thing contributes to 34 percent of the sales.
Sabrina: This is their number one bestselling drink.
Jianggan: 34 percent of the sales. And that’s why I stopped Luckin. is copying. So they just launched, I think, this month, last month, actually, a drink, which is also called light jasmine milk tea, which is very similar taste compared to Chagee. And even look at the design, the sort of the blue is with a bit of traditional element.
But obviously Luckin be Luckin, you get a voucher and you get it much cheaper compared to what you have, would have paid on Chagee.
Sabrina: So it’s like 13 yen for the Luckin one and Chagee is about 20.
Jianggan: So basically for the Luckin ones, less than 2 after discount and for Chagee is about 3. USD, yeah.
Sabrina: Oh, that’s cheap.
In China. Damn. It’s not that cheap in Singapore. And of course, their uniform also looks kind of familiar, right? So, [00:13:00] Jianggan sent me these photos with no context. And I was very confused because I didn’t understand why he was sending me photos of our police force.
Jianggan: This was before the first door opened and I said, okay, wow, so many people here, it looks like something’s happening.
And then I was sending the photo to, to a friend who’s a retired veteran, he said, wow, the police.
Sabrina: It’s similar, but it’s not what I would immediately think of,
Jianggan: you know. But you do think that they have done a lot of sort of details for, the uniform of their. of the employees. It looks kind of classy. And when we’re there, I think that the employees have been trained properly.
They greet people and they, I think they follow the process, which is quite, sophisticated.
Sabrina: Good service and the quality. So, I mean, we’ve talked a little about how they select their store locations as well as their brand names. And you mentioned a little about their founder as well, right?
How he has a very interesting background and you’ve actually met. The founder before,
Jianggan: it was during the [00:14:00] pandemic. There was this forum about F&B expansion outside of China. So I was on a panel , with the founder together with three other people. One is the investor, the moderator, and one is representing one of the largest hot pot chains in the West.
And the other one represents the beans, the, crispy bun with meat inside, like a kebab that I think there are two stores in Singapore. So that guy’s actually in Singapore, but the Chagee founder was there, and at that time, he already shared that. Okay, he had overcome quite a number of challenges expanding to Singapore, Malaysia and Thailand.
That was made over the pandemic. You couldn’t travel. So he only sharing his reflections and stuff. But I do have a feeling that at that forum, most people, I heard like small murmurs saying that, Oh, this guy, Mr. John Chagee’s founder. He barely had like primary school education, which is. I mean, in China now is.
You know, everyone’s like, so evoluted about education. Everyone wants to go to like university post graduate. And, this guy started not much education. He started as a clerk for a, [00:15:00] one of the bubble tea stores called Chapanda. And then he gradually moved up to become the head of the store, etc, etc.
Then he founded his own brand. I also spoke with some investors who were looking at Chagee per se, and of course, some of them invested because they said, I see something different in this guy. And most parts, they said, okay, I mean, I don’t know how to talk to him because he barely, he would barely write.
But obviously I do think that the experience that he had, I mean, running things on the ground instead of like studying in the, in ivory tower gives him, I think a probably different understanding about consumers, about how to manage this kind of retail operations. I think people who do know him well tell me that that he’s actually very thoughtful about many things he does.
I don’t think that investors would put like hundreds of millions dollars into him if he’s not up to the standard.
Sabrina: So do you think, so his experience definitely helped him a lot, right? Even though he’s not very highly educated, which is quite different from most of the other F& B bosses that we see or know of?
Jianggan: Most [00:16:00] are. Bit more educated, but I didn’t know that. I think I think education makes you more informed and but it will also change your perspective.
Sabrina: So we’ve spoken a lot about Chagee, but of course Chagee is not the only bubble tea brand in Southeast Asia, right? We’ve spoken multiple times about the rise of Chinese F& B brands in Southeast Asia.
So there’s Mixue, who has been here for a while, actually, Luckin Coffee, which recently entered. Singapore. There’s Cotti Coffee, who’s also expanding very rapidly across Southeast Asia, and of course, Hey Tea as well.
Jianggan: I feel that I mean, you guys know Hey Tea? Do you like Hey Tea? Joshua doesn’t know.
Sabrina: I’ll bring you to try one day.
Jianggan: I feel Hey Tea had, I mean, a very good momentum that Chagee has today, but I saw how Squanderer did. When they first started, they’re a very premium brand. People love it. You know,
Sabrina: there were long queues as well for each, they were long queues,
Jianggan: but somehow they just kept to themselves very small. So I think it seems that they have good product, but in terms [00:17:00] of expansion, in terms of aggression, in terms of the ability to attract top talent to help them with that, expansion, they’re not doing a job that’s as well as Chagee is doing now.
Mm.
Sabrina: Because Heytea is quite premium, right? So do you think the reason why they didn’t expand as quickly as compared to for example Like Mixue and Cotti is because they were a lot more selective about the locations that they were at So for example, Heytea is the only bubble tea shop at Marina Bay Sands Which is one of a very high end mall in singapore.
They are the only bubble tea shop there I hate that mall because there’s only one bubble tea shop and the other outlet is at
Jianggan: So you rank the malls by the number of bubble tea shops?
Sabrina: Yeah, because when I go to MBS, the only bubble tea I can buy is hey tea, and the queue is always half an hour to an hour long.
Jianggan: But to date, how many stores do they have in Singapore? Five to six? A lot, right? Not a lot. And when we go to the premium place at Orchard Road, I orchard that, place has four.
Sabrina: Yeah.
Jianggan: So which means that [00:18:00] I’m something else. There’s a mismatch somewhere. I think they have one at VOCT, the one next to the scene.
Sabrina: Oh, yeah.
Jianggan: That’s like together with other bubble teas. Yeah. So, for me, you say that they are very selective. For me, I think that, for me, it seems the confusion about their own identity.
Sabrina: That’s true. Cause I think when they, they entered Singapore a while ago, right.
And they were really premium. So it was about eight or 9 to buy a cup of bubble tea. But there was a year where they actually dropped their prices to about five, six, six to 7 maybe. And I think cause they were also thinking of how to better position themselves in this market.
Jianggan: I think, even China, they’re facing challenges because because they position themselves a little bit too premium and afterwards, we try to, launch a sub brand with cheap pricing.
Consumers don’t really buy it, you know, it doesn’t really appeal.
Sabrina: Consumers
Jianggan: get confused.
Sabrina: And then of course, have you guys heard of this brand? So this is Bingxue. So Jianggan, recently you were in Jakarta, right?
Jianggan: So I was in Jakarta and I was with my friend sort of studying the retail scene there. [00:19:00] One down, downside of that is that we went to eight Bingxue stores during the same day.
And of course we bought eight. drinks, ice cream, and then we bumped into this. So this is actually their training facility and headquarters for Indonesia. So they have about 500 stores there, of course, Chinese brand. And what you can see is their training facility with people learning how to use the cashier, how to make the waffle and stuff.
And that’s me having the ice cream. It’s kind of nice. They put this piece of paper.
Sabrina: Yeah. So that the ice cream doesn’t melt onto your hands.
Jianggan: Yeah. Yeah. It’s quite nice. It’s very
Sabrina: simple. Product innovation, right? But it’s useful.
Jianggan: It’s very simple innovation, but obviously it adds the complexity because you have this new component, which you don’t have in other places.
They also have a very nice, how do you call this?
Sabrina: Egg waffles. Egg waffles. Yeah.
Jianggan: Very, very good. When you have the ice cream, it’s probably too much. And I think somebody in the team was asking me, Hey, they’re sending this Indonesia. Why is it in Chinese?
Sabrina: Because they produce them all in Chinese, right?
Jianggan: It’s, [00:20:00] I mean, everything is imported. I mean, every ingredient is imported from China. And if the consumers do not care whether the Chinese takes on it, why would you care?
Sabrina: Save costs.
Jianggan: I think one good thing about this, I was talking to some industry stakeholders in this actually the Indonesian government likes these guys because, they give proper training to all the employees.
They give people jobs and they, allow the, franchise to open their own business and which is actually quite good for, the economy. Yeah.
Sabrina: It’s pretty similar to what Mixue does in Indonesia as well, right? Yes. They have a lot of franchisees helping them operate.
Jianggan: Yes, yes. And hire lot of people.
So you, sell people’s shoes, which style, which make them happy. Yeah.
Sabrina: I don’t think that’s good for their health, but it makes them happy. So say some of things as far, I know it’s not good for your health. So like we’ve mentioned, there are a lot of Chinese brands entering F& B, right? And like we said, people, there are people who think the market is saturated, but this also means that there is a demand.
So in our bubble tea in Southeast Asia report, which we launched [00:21:00] about two years ago. So I’ll link this report down in the, yeah, in the show notes, if you guys are interested in checking it out. But basically we did a marketing. Sizing of the bubble tea industry in Southeast Asia. And in 2021, it was a 3. 6 billion us dollar industry just in Southeast Asia.
Jianggan: Just in bubble tea alone.
Sabrina: Just in bubble tea alone. So I think we have, we had a report in the report. We also say that bubble tea is actually the national drink of Southeast Asia.
Jianggan: Like you go to every country and people drink different kinds of bubble tea. I think earlier that I feel this had a discussion with people saying that, Hey, if a bubble tea doesn’t have a bubble, is it still bubble tea?
I think people probably don’t care anymore. It’s, it’s a drink which makes you happy. With, the combination of
Sabrina: fat, sugar and milk
Jianggan: and caffeine
Sabrina: and caffeine. Yeah, cause like there’s fresh fruit tea now as well, which is a pretty big trend, not just in China, but also in Southeast Asia.
Does that count as bubble tea? In China? Pretty big.
Jianggan: I think first incarnation of the [00:22:00] first iteration of a chai tea in Singapore, when they worked with the franchisee, they focused a lot on the, on the fresh fruit. They’ll put like very big pieces of watermelon, very big pieces of some kind of fruit into your drink.
Yeah. I agree. , but fresh fruit, especially cut fruit is a, is more complex supply chain to manage. We, we’ve expanded across nationally. You have to source for the fruit from different places. I mean, it’s very, because fresh fruit is perishable. It has wastage. It’s very hard to, source centrally.
Sabrina: And you can’t keep as much inventory either.
Jianggan: Actually, unless you do oranges. Oranges you can keep longer.
Sabrina: Really?
Jianggan: Yeah, you can keep longer. So that’s why you have a. That’s why you have the orange machines.
Sabrina: Yeah, the orange juice vending machines. You don’t have the apple machines, you don’t have
Jianggan: the other machines.
Oh,
Sabrina: that’s true, yeah. You can keep apples for very long.
Jianggan: Yeah, people drink orange juice, not because, I mean, oranges are tested nicer than apple, whatever. It’s just easier to produce, easier to ship, easier to keep.
Sabrina: I think that’s one of the challenges a lot of Chinese F& B companies face, right? When they’re moving out or expanding into Southeast Asia, [00:23:00] because obviously most of their supply chain and ingredients come from China and just the logistics of getting that from China to the different and each country in Southeast Asia is so different, just different infrastructure and all.
So it’s very difficult.
Jianggan: Different timelines for customs, different customs fees you have to pay.
Sabrina: But despite that, we still see a very big number of Chinese brands entering the region and not just Chinese brands. A lot of Southeast Asian brands are also appearing, right?
Jianggan: So, we did some simple accounting in a recent report we launched jointly with Lark called transforming frontline industries by frontline industries, women, F& B, retail, and hospitality.
So, for this report, we did a very simple calculation. We looked at 40 F&B brands, which just reestablished themselves in the region in the last three years. Collectively, they open about 7, 418 stores and half of the stores are opened by Chinese concepts and Chinese brands. So, so it shows, I mean, some F&B people are telling you that it’s [00:24:00] harder to do business.
I mean, this is why, right? Because it’s becoming more
Sabrina: competition. But of course, in addition to just, I mean, competition intensifying, what do you think are the other fundamental challenges faced by F&B players? So when we were doing the report with Lark, which will be linked in the show notes below, by the way, we talked a lot about challenges faced by these frontline industries, right?
One of it definitely is retention and training of staff. And of course, some of it is supply chain disruptions increased intensity of competition But what do you think is the fundamental, fundamental Challenges faced by most of these players.
Jianggan: No, I think these are all the challenges, right? And how do you, how do you manage people effectively?
How do you deal with turnover? How do you manage your supply chain? Because now things are coming from different places. How do you deal with inflation? Which, your cost as well as lowers the consumption power of your customers. And all these things combined which lead to the same thing, right?
How do you eventually become more competitive, especially for lots of the chains, they still need to grow. I [00:25:00] mean, at the end of the day, deficiency is, the key thing, right? The question is that, how do you become more efficient? I mean, in China, they have a super sort of competitive way to, to have very refined processes, but because of culture, because of regulations, it doesn’t necessarily apply in all the countries.
So I think for, concepts and brands, which are expanding regionally, How do you find the right people? How do you balance, the efficiency that you have you know, product side versus like, you know, the, local requirements. I think these are all the things that people need to, look at.
Jianggan: And at the end of this, how do you run a F&B as an organization, if it traditionally, because the concepts and stuff, you can always shift. Yeah.
Sabrina: And concepts are also always changing, so you have to keep up. So culture is a pretty big part, right?
Jianggan: That’s why Sabrina needs different bubble tea shops in the same mall.
Sabrina: But actually, no, I, I just need like, I just drink Koi. So actually I just want Koi. I don’t need that much. Cause as we’re talking about culture, when it comes to F&B, culture is also [00:26:00] something that affects the kind of food that we like to eat, right? So on this slide on the left, we have a bunch of, I think McDonald’s is a company that does this really well.
So in each country that they’re in, they actually have a curated menu, right? And there’s a McDonald’s university in. Somewhere in America, where they have every single menu item from all around the world. So I think there are a company that
Jianggan: University or museum?
Sabrina: Okay, so it’s called McDonald’s University
Jianggan: Wait, wait, wait, for what description it looks like a museum?
Sabrina: No, because it’s where they do their trainings as a whole. Okay, okay. Yeah, so that’s why it’s called like McDonald University. So they have every single menu and this is a photo that you took when you were in India.
Jianggan: Yes. So this
Sabrina: is McDonald’s.
Jianggan: So this is a McDonald’s that I visited in specifically in the city of Chandigarh, which is the Union Territory, which is the capital of two states, two states, was it two states?
Yeah. India. And obviously this is next to the golden temple, the, holiest place of Sikhism. And specifically interesting is that this McDonald’s is pure vegetarian. And sometimes you [00:27:00] see McDonald’s offering like, you know, vegetarian items, but pure vegetarian McDonald’s, that was the first time I saw.
But it shows that I think some of the large concepts, I mean, spend a lot of time to, localize so that they can actually appeal to the masses. What I think, last year I spoke with some senior executives from Luckin. What they told me is that, oh, look, McDonald’s has done lots of work before us, we learned from them.
it’s just the efficiency game that we do, we put a lot of things online, but we have learned a lot from McDonald’s and, about, you know, efficiency and stuff.
Sabrina: I mean, they’re one of the biggest,
Jianggan: there’s a reason why. We did a study for, our large investor clients about the burger sales in Southeast Asia.
I don’t have the numbers here, but we look at the McDonald’s sales in each country. We said, that’s really good business. That’s really good business.
Sabrina: And of course it’s not just, sorry, going back to Chagee, so we were talking about how Chagee has been very bold in their expansion [00:28:00] and all, right? And it’s not just in Southeast Asia, because we actually found out that they were, they were not a part of the Paris Olympics, but they were in Paris for the Olympics.
Jianggan: So guerilla marketing
Sabrina: why do you think it’s guerrilla marketing? Is it because, so they set up a couple of pop up stores in Paris. Good for them. Cause I think people there have never really had good bubble tea, so this is a good chance for them to try. But yeah, so, and they actually have an ad with a lot of athletes in it as well.
Why do you think it’s guerrilla marketing?
Jianggan: Because, I mean, of course they’re associated with the five rings of Olympics. Are they Olympic sponsor or they just happen to be there?
Sabrina: I think they just happen to be there.
Jianggan: So that’s guerrilla marketing.
Sabrina: They just, they saw the craft.
You studied marketing,
Jianggan: In
university.
Sabrina: Guerrilla marketing is like very experimental and different. This is just like a pop up store.
Jianggan: Yes, with Olympics. If it’s a pop up store in, I don’t know, Burkina Faso, then probably not.
Sabrina: So we can see that they’re quite bold, right? No, where [00:29:00] is that?
Jianggan: It’s a country in Africa, the capital is called Ouagadougou.
Okay. Let’s speak French there,
Sabrina: but anyway. Well, yeah, so we can see that Chagee might have intentions of expanding out of Southeast Asia as well, right?
Jianggan: I think they are starting in the U. S.
Sabrina: Yeah, so we’ve, I think they have a store in the U. S., but when we found online, we weren’t able to find anything online.
So if anyone knows if there’s a Chagee in the U. S., you can let us know in the comments down below. I don’t know why we need to know, but
Jianggan: That’d be interesting to see. I think the first bus of customers will be the Chinese students there.
Sabrina: Yeah, because when I travel overseas, actually I miss bubble tea a lot.
So it’s something that I actively search for.
Jianggan: Somebody should invent a mobile bubble tea generator for Sabrina and people like them.
Sabrina: It’s a good business. Look at the demand.
Jianggan: I’m not sure how big the demand is. 3.
Sabrina: 6 billion dollar industry in Southeast Asia.
Jianggan: No, but I’m not sure how many people are going to be paying for that aside from you.
Unless they’re [00:30:00] charged with a lot of money.
Sabrina: Yeah, there will be. So we’ve today we’ve Chagee re entering Singapore and of course, generally just the rise of Chinese F& B brands in Southeast Asia, right? And this definitely has brought about. An intense competition, but also changes to the industry in general, which is why Momentumworks is actually going to do a F& B innovations immersion to Guangzhou and Changsha in November of this year.
So what will we be seeing on this?
Jianggan: I think you guys all know Guangzhou, right? This is where the home of Cantonese squid cuisine, which is quite popular in Southeast Asia, but Changsha is it’s really interesting. It’s It’s the capital of Hunan province. The Hunan cuisine is quite popular in China as well.
You see lots of Hunan restaurants in Singapore.
Sabrina: Yeah.
Jianggan: And I think something related to the Chagee topic we’re talking about today, Changsha is the home to a concept called 茶颜悦色 (ChaYanYueSe). Which, which is literally everywhere in Changsha and Chagee, the initial concept of Chagee copied from 茶颜悦色 (ChaYanYueSe).
So what is the concept? [00:31:00] It’s kind of light lightish tea that evokes a bit of like a traditional culture, 茶颜悦色 (ChaYanYueSe).
Sabrina: So if you guys are interested, I will leave a link down below in the show notes. You guys can check out our website where we dive a little deeper into what the agenda as well as what are the key focus areas that will cover in the immersion.
So with that, thank you for tuning into another episode of the impulsive podcast. We hope that you guys enjoyed today’s episode. And as usual, if you did do like our podcast and hit that subscribe button on YouTube, Spotify, Apple podcast, or your preferred podcast platform to stay up to date on the latest happenings and trends in tech.
Jianggan: Thank you. I’m still looking at the, consume. Yea, it
Sabrina: says consume within 2 hours. If you
Jianggan: are unsatisfied with the drink, we will remake it for free.
Sabrina: That’s what you I’m looking at the consume within 2 hours, by the way.
Jianggan: Okay.
Sabrina: More than, it’s been 4 hours.
