Poaching, rapid development, and going overseas, how far is Bawang Cha Ji from Starbucks?

In the fierce competition of the new tea market, Bawang Chaji is moving towards the goal of becoming the "Eastern Starbucks" with its rapid development momentum and ambition. This article will deeply explore the development history, management strategy, and challenges and opportunities of Bawang Chaji on the road to globalization.

How to judge the popularity of a consumer brand?

Consumers carry paper bags in the mall, investors discuss star projects in meetings, and franchisees line up with hot money. When these three points come together, the brand can be regarded as a hot fried chicken.

In this year's new tea market, Ba Wang Cha Ji, with its red background and flower-girl silhouette, has become a well-deserved dark horse.

Some data are enough to prove it. In 2023, Bawang Chaji opened 2,300 stores, more than three times the total of the past five years; Bawang Chaji's sales in 2023 were 10.8 billion yuan, and in the first quarter of 2024, Bawang Chaji's sales were 5.8 billion yuan. It is expected that the annual sales will exceed 20 billion yuan.

This dark horse has big ambitions. Not only has it repeatedly benchmarked Starbucks, but it also announced in May this year that its sales in China will exceed Starbucks China by 2024. With the development of the new tea market in China, it is not just Bawang Chaji that wants to become the Chinese Starbucks. Nayuki’s Tea did the same before.

The particularity is that the expansion of Bawang Chaji has been accompanied by the internal circulation of the new tea beverage market, and it will be more difficult to benchmark Starbucks. This requires not only benchmarking in standardization and scale, but also in management.

In order to make management keep up with the pace of expansion, according to media reports, Bawang Tea Princess has recently been "poaching" people on a large scale in the industry, involving management, marketing and other fields.

Behind this is Bawang Chaji's determination to enter the global market. In fact, Bawang Chaji, which was founded in Yunnan in 2017, began to expand overseas in 2019.

As the domestic tea market continues to expand, going overseas has become an industry consensus. Although Southeast Asia, where the taste is similar to that of China, has become the first stop for many tea brands, if they want to enter a larger market, they will have to test their localization capabilities, and the challenges remain.

Growing in the red ocean and expanding in the blue ocean, Bawangchaji is learning to become an international brand. Only in this way can this Chinese actress truly match the Siren, or even surpass her.

1. Bawangchaji is busy poaching people to ensure that management can keep up with the pace of expansion

Bawang Cha Ji is not the first in the whole leaf fresh milk tea market, but by selling whole leaf fresh milk tea to a larger market with its distinctive selling point, Bawang Cha Ji has captured the minds of users.

When the market was dominated by fruit tea and milk tea, Bawang Cha Ji seized the changing demand in the new tea beverage market and differentiated itself by offering original leaf fresh milk tea that was closer to the tea itself.

In the early days of its establishment, Bawang Tea Ji's stores were concentrated in its base camp Yunnan and other southwestern regions. Now, Bawang Tea Ji has blossomed in many places, especially this year. Just like people will suffer from insomnia after drinking Boya Jue Xuan, Bawang Tea Ji is very powerful.

According to official data, as of May this year, the number of Bawang Chaji's stores worldwide has exceeded 4,500. Prior to this, Bawang Chaji's GMV in the first quarter of 2024 exceeded 5.8 billion yuan.

Bawang Cha Ji is expanding at a speed visible to the naked eye, and an efficiently managed and combat-ready team behind it is very important.

Recently, as Bawang Cha Ji is in the critical period of its impact on the "Eastern Starbucks", Bawang Cha Ji has been "poaching" people from all over the back. According to 36Kr, Starbucks Vice President Li Tao has resigned and joined Bawang Cha Ji in the first half of this year. In addition, Bawang Cha Ji is also recruiting a large number of people from the industry, involving headquarters, branches, management, brand marketing, etc.

It is understood that Li Tao was previously in charge of national store development and asset management at Starbucks. Prior to Starbucks, Li Tao's career spanned multiple fields including catering and retail. He was the development director of Yum! Restaurants (China) Co., Ltd. and Coach China Trading Co., Ltd., the vice president of Daphne (International) Holdings Co., Ltd., and the vice president of One Tea One Zuo Catering Management Co., Ltd.

Ba Wang Cha Ji responded to Insight and said, "It is not true, there is no such person."

For Bawang Cha Ji, it is indeed necessary to recruit veterans from the retail industry, which will provide more experience for its management on the road to expansion.

Looking back at Bawang Cha Ji's expansion journey, in just seven years, it has grown from its base in Yunnan to its current 4,500 stores. Facing an increasingly inward-looking new tea beverage market, Bawang Cha Ji's successful rise is also due to its high-profile franchising model.

At the beginning of its establishment, Bawang Chaji chose a franchise model that is easier to expand. In December 2021, it moved its headquarters from Yunnan to Chengdu and began to accelerate store expansion. In 2023 alone, Bawang Chaji opened more than 2,300 new stores, an average of 6 new stores per day, which is three times the total number of its stores in the past five years.

Mixue Ice City and Luckin Coffee have proven in their respective fields that without scale, everything else is just empty talk. Especially in the face of fierce competition, franchising is the fastest and most effective way to seize the market. Seizing the first opportunity is crucial. In order to grow, even Heytea and Nayuki changed from direct sales to a direct sales + franchising model.

Of course, the biggest problem with the franchise model lies in management. How to enable franchisees to efficiently serve consumers under the management of the headquarters is a test for the brand.

Frankly speaking, the franchise model puts a greater test on the brand's refined operations and management.

Facing tens of thousands of franchisees scattered across the country, Bawang Cha Ji adopts the "1+1+9+N" model. The so-called "1+1+9+N" is to set up local organizational methods in advance and polish the local store model through the direct sales model to further provide guarantees for sustainable operations, and finally form a Bawang Cha Ji management system with strong control over direct sales and franchises.

Obviously, Bawang Chaji is more responsible to its store partners by polishing its product matrix and single-store profit model to maturity before opening up franchises. Under this model, Bawang Chaji empowers franchisees with the headquarters' operational and management capabilities, improving local service and local guarantee capabilities.

For Bawang Cha Ji, as a latecomer breaking out of a red ocean, the cost of trial and error is very high, from internal management to store operations. Every step may affect the speed and scale of its expansion.

2. To become the “Eastern Starbucks”, how can Bawang Tea Princess upgrade herself?

Since the rise of the new tea beverage track, Starbucks has been the target of Chinese brands. Previously there was Nayuki’s Tea, and now there is Bawang Chaji.

In fact, becoming the "Eastern Starbucks" was the goal set by Bawang Chaji in 2021. At that time, Bawang Chaji founder Zhang Junjie revealed in an interview with the media that the location of all overseas stores would be fully benchmarked against Starbucks. In May of this year, Zhang Junjie said that the goal for 2024 was to "exceed Starbucks China sales in China."

The reason for this confidence is that from the performance point of view, Bawang Cha Ji is approaching Starbucks China. Zhang Junjie said that Bawang Cha Ji's sales in 2023 will be 10.8 billion yuan, and Bawang Cha Ji's sales in the first quarter of 2024 will be 5.8 billion yuan. It is expected that the annual sales will exceed 20 billion yuan; in comparison, Starbucks China's revenue in fiscal year 2023 will reach 3 billion US dollars, equivalent to about 21.953 billion yuan.

Benchmarking Starbucks, becoming "Starbucks", and surpassing Starbucks is not comprehensive only from the perspective of revenue. Standardization and scale are the only way for Bawang Tea Princess.

In the initial store operation strategy, Bawang Cha Ji began to benchmark Starbucks. The brand logo is based on the brand color, the main characters are composed of lines, and the store design emphasizes the spatial attributes, providing consumers with a "third space" for socializing, working, and gatherings.

After decades of development, Starbucks' most competitive advantage is its strict and complete supply chain system.

50% of Starbucks' coffee beans come from Latin America, 35% from the Pacific Rim, and 15% from East Africa. These natural coffee beans are first collected in the origin warehouse and then supplied from the origin warehouse to Starbucks' global roasting factories. Currently, Starbucks has six central roasting factories around the world.

A strong supply chain ensures product standardization. Compared with freshly brewed tea, one of Starbucks' advantages is that coffee is simpler to make, and coffee raw materials are easy to store and easier to standardize overall. In addition, Starbucks has 32,000 stores in more than 80 markets around the world. Consumers can choose to shop in stores or order online and have their coffee delivered to their homes. The coffee made in the store is delivered to consumers through instant delivery.

Bawang Chaji also learned the logic of Starbucks in making coffee. At Bawang Chaji, original leaf milk tea is a super single product. A portion of concentrated tea liquid Teapresso, with milk added is Tea Latte, with water added is pure tea, and with cream added is Tea Puccino, which is very similar to the underlying logic of coffee.

Under the strategy of big single products, a cup of Bawang Chaji milk tea only requires three supply chains: tea leaves, milk and packaging materials, which is easier to standardize and scale. In addition, with the help of modern tea-making equipment, the production time of a cup of Bawang Chaji tea is currently about 8 seconds.

It should be noted that although the narrative of "Eastern Starbucks" sounds good, Bawang Tea Princess has to face a stock market with slowing growth and approaching saturation.

Nowadays, it is very common to see several milk tea shops on the same street, but the growth of the industry has actually begun to slow down. According to iMedia Research, the growth rate of my country's ready-made tea market is expected to drop from 13.5% in 2023 to 5.7% in 2025.

If Bawang Tea wants to surpass Starbucks, it must not only upgrade its entire management and operations, but also compete with other tea brands to build brand awareness.

Becoming the "Starbucks of the East" may be the first step for Chinese catering to move towards globalization, standardization and scale.

3. Globalization is the ultimate touchstone

More than 20 years after the three major Western catering giants, Starbucks, McDonald's and KFC, entered the Chinese market, Chinese catering has also set off a trend of going overseas, and "if you don't go overseas, you will be out" has become a consensus.

In 2018, Heytea opened its first overseas store in Orchard Road, Singapore, and Nayuki's Tea also opened its first store in Singapore in December of the same year. This year, Mixue Ice City opened its first overseas store in Vietnam.

In 2023, the popularity of tea beverages going overseas reached its peak. In August, Heytea opened its first local stores in the core business districts of many overseas countries such as the United Kingdom, Australia, and Canada; in October, Cha Baidao opened its first overseas store in Seoul, South Korea; by the end of 2023, Mixue Bingcheng had more than 4,000 overseas stores, and Bawang Chaji had more than 100 overseas stores.

Unlike most tea brands that choose to take root in China first and then go overseas, Bawang Chaji started its overseas layout very early. As early as August 2019, it officially opened its first store in Malaysia, taking the first step in its overseas development. In August and October of the same year, it entered Singapore and Thailand respectively.

At that time, most of Bawang Chaji's stores in China were concentrated in Yunnan, which was enough to show Bawang Chaji's emphasis on globalization. In 2021, in an interview with the media, Zhang Junjie said that before 2024, Bawang Chaji's business expansion focus will be in China, and after 2024, the focus will shift to overseas.

In order to expand overseas this year, Bawang Tea established a new global business center headquarters in Shanghai, which means that Bawang Tea has officially raised globalization to a strategic level. So far, Bawang Tea has a dual headquarters layout, Chengdu is the operational headquarters, and Shanghai is the global headquarters.

In May, at the "2024 International Tea Day·Modern Oriental Tea Innovation Forum", Bawang Tea Princess said that it plans to expand its brand to eight countries in Asia, namely Singapore, Malaysia, Thailand, Indonesia, Vietnam, the Philippines, Japan, and South Korea. Among them, the six Southeast Asian countries are the most important plan in the next five years.

In terms of overseas expansion, Bawang Cha Ji is still targeting Starbucks. For example, the most important thing is the store management model. Bawang Cha Ji, like Starbucks, has chosen a joint venture model, neither franchising, nor agency, nor direct operation.

The idea behind this is easy to understand. In unfamiliar overseas markets, it is difficult to enter with the direct sales model alone. Cooperation with capital that is more familiar with the local market not only reduces the difficulty of direct sales, but also reduces the risk of franchising.

As the saying goes, a master can only lead you to the door, but practice is up to you. Bawang Tea Princess learned the Starbucks model to enter the overseas market. How much cake she can grab in the overseas market in the future depends on her own strength.

When exporting tea beverages overseas, the supply chain is the first issue to be considered. This determines product standardization and also affects the cost of opening a store.

At present, due to cost considerations, most tea brands have not yet invested in building factories overseas, so they rely on transportation. The supply chain problem in Southeast Asia, which has geographical advantages, is relatively easy, but if it goes to the Middle East, Europe and the United States, transportation will be a big problem, and the requirements for brand supply chain construction will be higher.

In addition, the eating habits in Southeast Asia are similar to those in China, but the tastes of Europeans and Americans are quite different from those in China. How to promote the concept of oriental tea and develop products that are close to the tastes of local people is also a difficult problem facing every brand.

Zhang Junjie once publicly stated that going overseas is not the business of a single company, but the entire industry chain should work together and go global to truly achieve globalization.

At present, Bawang Cha Ji’s expectation for the brand is that when people see the red color of Bawang Cha Ji, they will think of the oriental tea civilization, just like seeing the green color of Starbucks will make them think of coffee.

Bawang Tea Princess revealed to Lianjie Insight that its corporate vision is to "provide 15 billion cups of modern oriental tea every year to consumers in more than 100 countries and regions in the future." This corporate mission and vision has never changed.

For Bawang Tea Lady, globalization is the ultimate touchstone for whether it can surpass Starbucks. Without conquering overseas markets, everything will be empty talk.

Text/Wang Huiying Editor/Ziye This article is written by the author of Operation School [Connect Insight], WeChat public account: [Connect Insight], original/authorized to be published on Operation School, and any reproduction without permission is prohibited.

The title image is from Unsplash, based on the CC0 protocol.