When opportuni-tea knocks; How to turn passion into profit

By Admin | 26 Nov 2018 View comments

It’s easy when you love a brand to want to invest in the business – and that’s just what Hung Nguyen did.

Just a year ago Nguyen opened up a brand new Chatime outlet in Welland, South Australia.

While it was a big step to take, he was familiar with the world he was heading into.

“I started out in retail. And I loved Chatime tea. We’ve grown up with the brand, we drink there quite often, we go to Chinatown to get something to eat and pop over to Chatime.”

Nguyen wanted to be confident about the business, however, before he signed up to a lease and to the franchise chain.

“There are other franchisees in Adelaide who are my friends so I sat down and talked to them. They gave me the lowdown on how it works. I went out to see what sort of crowd was going to the store, the traffic. We did our due diligence.”

With his business partner, and accountant, Nguyen studiously went over the figures before he purchased.

Now he’s lucky that Chatime does his books but he still calls on his partner (who works independently) to double check all the paperwork.

In setting out their goals, the partners tempered there ambition with some down-to-earth realism.

“We were prepared for a worst case scenario. It would probably have meant just two of us working long hours. But we’re pretty close to where we want to be. We’ve had good sales growth.”

Nguyen works with his partner’s wife instore, and has 11 staff members. He admits, however, that the first year hasn’t been all rosy despite the growth of the store’s revenue.

“Labour is very expensive, we understated the costs, the miscellaneous expenses don’t seem much but they do add up.”

The target was 10 per cent annual growth. It’s getting close to that, says Nguyen. Some franchisees in the Chatime chain are performing very well, he points out.

“My friend’s store last year to this year is double digit growth. My store is not very traditional. Chatime always like to couple with retail or high traffic areas like cinemas. We’re a suburban shopping centre, what was once a fruit and veg store.”

In fact initially the franchisor was sceptical of the location, which didn’t match the parameters of the Chatime site selection model. “It’s a destination store, it’s not a high traffic store which Chatime is usually. We assessed it, then the team looked at it, and decided to give it a go.”

There’s after-hours life in the cafe community, so evening trade , weekends and school holidays are good.

In a brand new or greenfield site, the biggest challenge can be getting customers. Nguyen says brand awareness, social media, and word of mouth have been the biggest drivers for his business.

“We’ve established ourselves in the community,” he says.

It’s been crucial to the business to deliver a high level of customer service – something Nguyen is totally aligned with from his retail background. If consumers get a positive experience, they tell their friends.

Of course, the franchisor is right behind the franchisee and Nguyen recognises the difference it has made to have expert support behind the scenes.

“The franchisor built the shop and ran marketing promotions. They do quality assurance reports every three months – my business development manager will look at the store, the equipment, test the teas. It’s quite a rigorous check. And we have random mystery shoppers every month.

“We get reports from PoS, back end so we can look at what we’ve sold, the hours worked. All these tools really help.”

Just a year in business and Nguyen is already looking ahead. “There’s still growth potential in this store but we’d like to get a second store,” he says.