Taiwanese Pearl Milk Tea Enters the Louvre, Lakaffa Increases European Expansion Rate
Wang Yao-Hui, Chairman of Lakaffa has introduced pearl milk tea to the Louvre. Provided by Lakaffa
Chatime, a subsidiary of Lakaffa, has increased its expansion rate in Europe and Central-South America and has become the first Asian catering brand to enter the Louvre. Chairman Wang Yao-Hui has stated even though the cost of having a store at the Louvre is 2.5 times higher than the average street shop, the store has a greater effect in promoting the brand. Lakaffa is looking to expand towards an international layout, and continue making mergers and acquisitions to progress towards a 2019 goal of 5 billion NTD in revenue.
Founded in 2007, Chatime began expanding in 2010 and currently has approximately 800 stores in 38 countries. Wang Yao-Hui indicated that Lakaffa International’s revenue was 2.5 billion NTD last year and overseas revenue accounted for 60-70%. The revenue for this year is estimated to be 3.6-3.7 billion NTD, with the expansion rate in Europe and Central-South America being the fastest. Amongst all European nations, Chatime’s expansion rate is the fastest in France.
Wang Yao-Hui believes that the U.K. and France are still the economic centers of Europe, and solidifying these 2 countries will make future expansion much easier. Chatime already has 11 stores in France within 1 year and the half and with all of them located at Paris’ hot spots such as the University of Paris, Notre-Dame de Paris, Printemps and Palais Garnier. The store at the Louvre is one of the three standing catering brands, including McDonalds and Starbucks, located there and the first Asian catering brand on site.
Lakaffa’s international expansion, unlike other traditional beverage stores that initially expand towards China, chose to start in Southeast Asia. After successively opening stores in Mexico, Columbia and the Czech Republic, Wang Yao-Hui said that there are plans to open stores in the Republic of Mauritius, Belgium, Italy and Sweden. In addition to having more than 200 stores in Indonesia, Australia, Canada and the Philippines will each have a total of 100 stores within the next 2 years.
Despite having such a fast expansion rate, Wang Yao-Hui is not deterred as he stays true to his own business philosophies. Originally belonging to the electronics industry, he is well aware of internationalization and puts an emphasis on standardization. When he first chose to invest in the beverage business, he did his best to replace manpower with the machines for cooking tea and tried replacing traditional methods with technology and standardization. When tea cooking can be scientifically standardized, internationalization can be achieved at a rapid rate.
Wang Yao-Hui believes that the key to Lakaffa’s rapid internationalization rate is the brand’s added value, with a focus not only on ethnic Chinese customers and a market absorption higher than coffee. When questioned if the brand will expand the number of stores in Taiwan, Wang Yao-Hui said that Lakaffa has already invested heavily into establishing laboratories and food safety inspections. Therefore, it will be difficult to open a large amount of street-side stores on a low cost strategy and overseas expansion will still be the focal point for the future.
Despite the costs for subsidiary KINGZA’s IPO and brand investment in Australia, Lakaffa’s net profit per share in Q1 was only 0.42 NTD. However, Wang Yao-hui believes that the impact of the one-time expenditures will be greatly reduced in Q2 and as the peak season for the beverage industry begins, profits will steadily rise in Q2.