Opening a bubble tea shop next to a middle school in 2008, 15 years later, Wang Xiaokun became a billionaire with a network of over 7,100 branches.
Wang Xiaokun, founder and chairman of the affordable bubble tea chain Cha Panda (also known as Chabaidao), has just joined the ranks of the world's billionaires thanks to his company's valuation reaching $2.1 billion after a recent funding round.
Holding 60% of the shares, Wang (40 years old) currently has a net worth of $1.1 billion, according to Forbes estimates. The beverage chain, based in Chengdu, China, has expanded rapidly over the past three years and now has more than 7,000 stores. Its signature drinks include taro bubble tea and jasmine milk green tea, most of which are priced at no more than $3.60.
Wang's wife, Liu Weihong, has a net worth of $700 million thanks to her 33% stake in the company. She heads a committee responsible for overseeing Cha Panda's day-to-day operations.
According to the prospectus submitted to the Hong Kong Stock Exchange, the funding round that concluded in June saw Cha Panda shares sold at 13.2 yuan (US$1.80) per share to investors including CICC, Orchid Asia, and Shanghai Loyal Valley Investments.
The company has yet to disclose details about the timing and size of the IPO. Analysts believe Cha Panda needs new capital to open more stores in order to keep up with the fiercely competitive tea-based beverage market in China.
A Cha Panda store in China. Photo: Visual China
Jason Yu, CEO of Shanghai-based market research firm Kantar Worldpanel Greater China, said that bubble tea consumers don't tend to be loyal and often choose to drink from multiple brands simultaneously. "Therefore, whoever has more stores will have a greater chance of attracting consumer attention and receiving a larger share of their spending," he explained.
Panda Cha was founded in 2008, when Wang started a fruit and milk tea shop next to Wenzhou II Middle School in Chengdu, a city famous for its spicy food and also home to pandas.
The first store, though less than 20 square meters, laid the foundation for the company's future development direction. This included: firstly, a mid-range price point targeting students; secondly, a small store model primarily focused on takeout; and thirdly, exploring the combination of natural ingredients and tea.
In its first decade, Cha Panda grew slowly. For the first eight years, the number of stores was just over 100. It wasn't until 2016 that Wang upgraded the first store, positioning the brand as "fresh fruit and Chinese tea," and opening franchises in Chengdu.
But Cha Panda didn't venture beyond Sichuan and Chongqing. The biggest change came in 2018, when Wang realized the fierce competition in the bubble tea market. So, he decided on a comprehensive upgrade. On one hand, the panda image was incorporated into the brand. On the other hand, the drink menu was reorganized and updated to be more streamlined, adding signature soy milk drinks with a "unicorn" design.
By 2020, Cha Panda's network had reached 531 stores. However, the business only truly took off when he adopted a franchise model. Currently, Cha Panda's strategy is to develop beverage recipes and then sell the ingredients, such as fruits and tea leaves, to franchise stores. This allows the company to keep operating costs lower than competitors like Nayuki Holdings, which spend more on employee salaries and rent for stores they directly operate.
The total number of Cha Panda-branded stores has increased to 7,117 as of August, with only 6 stores under the company's direct management. As of the end of March 2023, 44.9% of stores had an area of 30-49 m2 and 40.5% had an area of 50-100 m2. The takeaway sales rate increased from 47.6% in January 2020 to 58% this year.
Last year, Cha Panda achieved revenue of $580.3 million, an increase of over 16% compared to 2022. Profits increased 24% to $132.3 million. It is the third largest tea shop chain by retail sales in China, behind Michelle Ice City and Guming, according to research by Frost & Sullivan.
To reach a wider audience of younger customers, Cha Panda sponsors music festivals and cultural events, alongside online advertising campaigns. In June, Cha Panda showed its support for the Chengdu Giant Panda Breeding Research Base by adopting one of the pandas at the facility.
However, Cha Panda's main success still comes from controlling costs and offering affordable products, according to Yu of Kantar Worldpanel. "Consumers are more concerned about cost because milk tea brands aren't really different from each other. The products are all the same because they're all a mixture of tea with other ingredients, such as fruit," he said.
Phiên An ( according to Forbes, Min )
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