Speaker 1: Welcome to Chopping It Up. I'm your host, Mike Hallen,
Speaker 1: the senior restaurant and food service analyst at Bloomberg Intelligence.
Speaker 1: Today we're joined by Jeff Henry, president of the America's
Speaker 1: at Goncho Global. Thanks for doing this.
Speaker 2: Jeff, absolutely, it's a pleasure to be here.
Speaker 1: And happy birthday. Man. It's a big one today.
Speaker 2: Yep, it is a milestone for me. I can't believe
Speaker 2: it's already been five oho, but it's been good.
Speaker 1: Five Oh, that's cool man. Any plans tonight.
Speaker 2: Plans for the weekend, so today is actually just a
Speaker 2: little more arrest. Lots of travel lately, So I just
Speaker 2: hoping they.
Speaker 1: Take it a little easy today, Okay, So well, I'll
Speaker 1: take it easy on you then I want to Yeah,
Speaker 1: it's too hard, you know, all right? So gun Cha
Speaker 1: I'm sure you know many of our listeners are unfamiliar
Speaker 1: with the brand. I'm lucky enough to have one right
Speaker 1: down the street in Montclair, New Jersey. But so, why
Speaker 1: don't you tell everybody what gog Cha is, what it sells,
Speaker 1: and what attracted you to the opportunity.
Speaker 2: Yeah, so, Gungsha, we are the leading bubble tea franchise
Speaker 2: concept we've got over twenty one hundred locations globally. I
Speaker 2: think we're now in over twenty four countries. We sell
Speaker 2: a wide variety of freshly brewed teas, but most of
Speaker 2: our guests come in for what we call like a
Speaker 2: milk tea or a bubble tea. So it's tea, it's milk.
Speaker 2: It's toppings like pearls also known as boba. It can
Speaker 2: be other toppings like jellies or coconut pearls, milk foams.
Speaker 2: Basically a wide variety of way for our guests to
Speaker 2: customize their bemverage. And you know, the category has been
Speaker 2: around for over twenty years, starting in Asia, but it's
Speaker 2: been really kind of taking off here in the US
Speaker 2: the past seven or eight years. And you know, Gunchha
Speaker 2: started in the Americas back in like twenty fourteen, and
Speaker 2: we've now kind of grown to know well over four
Speaker 2: hundred locations in the Americas. And I joined pretty recently.
Speaker 2: I joined basically exactly a year ago. Spent the last
Speaker 2: twenty years in beverages, but I've really enjoyed my time
Speaker 2: here at Guncha. Just a fascinating brand, great category, and
Speaker 2: I think just an exciting opportunity for both guests to
Speaker 2: get a fantastic beverage, but also it's a great franchise concept.
Speaker 1: Yeah, and beverages are hot, and cold beverages are hot,
Speaker 1: right acciden, but popular, I should say cold beverages are
Speaker 1: very popular. Yeah, all right, So about four hundred in
Speaker 1: the United States? Where are those located? What states invavements
Speaker 1: are you strong in?
Speaker 2: So it's four hundred in the America. So we actually
Speaker 2: currently have presence from Canada into the US, Mexico, and
Speaker 2: all the way down to Panama. So in the US specifically,
Speaker 2: we're we've got about two hundred and thirty locations. We're
Speaker 2: in twenty states, big presence kind of in the Northeast
Speaker 2: from Massachusetts down to Virginia, big presence in Texas, and
Speaker 2: big presence in California and parts of the Midwest. In
Speaker 2: the US specifically.
Speaker 1: Okay, cool. So what percentage of the global store base
Speaker 1: and the US or America's store base is franchised.
Speaker 2: Yeah, it varies a little bit by region. So in
Speaker 2: the US we're heavily franchised. We're basically ninety nine percent franchised.
Speaker 2: You know in some markets, you know, like Canada, Mexico,
Speaker 2: or one hundred percent franchised, but in some of our
Speaker 2: larger markets in Asia, it's more like eighty five. So
Speaker 2: it just kind of varies by region. But in the
Speaker 2: Americas specifically, you know, we started with a master franchising model,
Speaker 2: which kind of lends itself to heavily franchising and so
Speaker 2: and we'll continue to be heavily franchised in the Americas.
Speaker 1: How big is the box? And you know, what else
Speaker 1: do you have on the menu besides the bubble teas? Yeah,
Speaker 1: if you could and talk about like the service model,
Speaker 1: you know, kind of how everything kind of stuck.
Speaker 2: Yeah, yeah, So, I mean the great thing about gun
Speaker 2: Cha and the category is that the footprints are extremely versatile.
Speaker 2: So you might find a gun Shaw, you know, in
Speaker 2: the middle of a shopping mall corridor where we have
Speaker 2: a kiosk that's two hundred and fifty square feet, right,
Speaker 2: But you could also find one that's in a strip
Speaker 2: mall that perhaps is you know, a thousand square feet
Speaker 2: that's got seating for fifteen or twenty people. So we
Speaker 2: definitely have flexibility and that folt. We're actually starting to
Speaker 2: get into some drive through locations as well, which is
Speaker 2: exciting for us, But it's a pretty simple operating model, right,
Speaker 2: So we've got a variety of teas and pearls that
Speaker 2: we grew fresh multiple times per day. You know, in
Speaker 2: most of our locations, you can run the store with
Speaker 2: two team members. Obviously during peak time you might both
Speaker 2: have to have three or four, but it's a pretty
Speaker 2: simple model. We're investing into digital technology to make it
Speaker 2: easier for the team members to focus on making beverages
Speaker 2: as opposed to having to take orders. And so I
Speaker 2: think in this environment, you know, with higher interest rates,
Speaker 2: construction costs the way they are, you know, I think
Speaker 2: one of the things that makes us appealing is our
Speaker 2: versaal footprint. And we're actually starting to see some of
Speaker 2: our franchisees kind of paired Gunsha with other franchise concepts
Speaker 2: to do kind of almost like dual brand or try
Speaker 2: brand locations.
Speaker 1: Oh very cool, and I'm sure that's that's going to
Speaker 1: accelerate growth, having those those that flexible store footprints. That's cool.
Speaker 1: Who are your customers and how often did they visit?
Speaker 2: Yeah, so our our core guest is definitely uh younger
Speaker 2: probably than you and I. You know, our core guest
Speaker 2: is typically you know, a gen Z or a younger millennial.
Speaker 2: It's very popular with high school college aid students. But
Speaker 2: now that the category has been around for you know,
Speaker 2: ten plus years, you're having the category starting to age
Speaker 2: up because of those college students from seven or eight
Speaker 2: years ago are now in the working world, perhaps have
Speaker 2: a young families, and so they're actually bring their you know,
Speaker 2: their families in for a beverage on the weekends. But
Speaker 2: it's definitely a younger audience. But you know, everyone likes
Speaker 2: to feel youthful, right, so we actually have you know,
Speaker 2: we do bring in, you know, people who are certainly
Speaker 2: a couple of decades older than our core target. But
Speaker 2: you know, the target for us is pretty similar for
Speaker 2: who's drinking the category globally. I mean, bubble tea is
Speaker 2: a global phenomenon, and so there's a big generational divide.
Speaker 2: If you talk to somebody who's you know, thirty or under,
Speaker 2: they know exactly what bubble tea is, it's highly likely
Speaker 2: they've had it. It's also quite possible that they're a
Speaker 2: regular consumer of it. If you talk to somebody who's
Speaker 2: fifty or over fifty like me, now, it's highly likely
Speaker 2: that they haven't heard of it or haven't had it
Speaker 2: unless they've got perhaps teenagers in the household. So it's
Speaker 2: just fascinating to watch. What's one alm with this I
Speaker 2: think global phenomenon because it really is bubble Tea in
Speaker 2: gun Chaw very much at the center of it is
Speaker 2: kind of the drink of this younger generation. You know,
Speaker 2: they don't necessarily want to be drinking everything that their
Speaker 2: parents are drinking. And I think the personalization, customization aspect
Speaker 2: of it kind of lends itself really well to our
Speaker 2: core target and to your earlier question about what's on
Speaker 2: the menu. Yeah, we sell tea, you know, so you
Speaker 2: can get a hot tea, you can get a nice tea,
Speaker 2: you can get a milk tea. We also sell slushies,
Speaker 2: We sell creative series. We sell a few food items
Speaker 2: like freshly made waffles. In some instances we have freshly
Speaker 2: made doughnuts or cookies. But the vast majority of what
Speaker 2: we sell is kind of made to order beverages.
Speaker 1: And it looks nice, right.
Speaker 2: It looks great. I mean again, it's these products. You
Speaker 2: can have multiple layers, multiple colors, multiple textures, So people
Speaker 2: are coming in for the experience, right, They're coming in
Speaker 2: because one the product tastes great. But the great thing
Speaker 2: about like if you order the top selling it in
Speaker 2: most of our locations is you know, our milk tea
Speaker 2: with pearls, and so if you're a young twenty year old,
Speaker 2: you're getting a lot of actual functional benefits. In addition
Speaker 2: to it tasting great and looking great, You're getting, you know,
Speaker 2: a little bit of caffeine from the tea. You're getting
Speaker 2: kind of a carbohydrate boost because the boba or the
Speaker 2: pearls you know, are a high carboed hybrid as well,
Speaker 2: so you're getting kind of that energy left. And then actually,
Speaker 2: if you've or had it, the pearls are kind of
Speaker 2: chewing texture, so we actually can chew on the pearls
Speaker 2: and it's almost like a soothing mechanism, particularly for you know,
Speaker 2: university students maybe who are studying for an exam, so
Speaker 2: they can kind of sip on their melt tea while
Speaker 2: they're in the library studying for a few hours and
Speaker 2: it's kind of helps them keep them focused but also
Speaker 2: perhaps brings down their stress a little bit. So there's
Speaker 2: a lot of reasons I think why people are kind
Speaker 2: of gravitating to the product.
Speaker 1: Yeah, no, I've I've had a chance to try it.
Speaker 1: This stuff tastes great. Like I said, it looks great.
Speaker 1: So it's very instagrammable, which is which is important to
Speaker 1: the younger generations. So what's the sales mix of digital
Speaker 1: and delivery.
Speaker 2: Yeah, so we are, you know, we're leaning heavily into
Speaker 2: digital again with our core guests being kind of that
Speaker 2: Generation Z younger millennial. You know, they're obviously gravitating towards
Speaker 2: digital orders. In some case they prefer that because it's
Speaker 2: just more kind of they're kind of first nature for
Speaker 2: So if you break down digital for us, we do
Speaker 2: about most locations do anywhere between you know, eight to
Speaker 2: ten percent in kind of delivery, and then another five
Speaker 2: to ten percent what I would say is order ahead digital,
Speaker 2: and then we're investing significantly into in store self order kiosks,
Speaker 2: which for us have done phenomenally well. So I'm getting
Speaker 2: back to like the beverage and the product. If you
Speaker 2: walk into a gun Char location, we've got a lot
Speaker 2: of different things for you to choose from, right, both
Speaker 2: different categories of beverages melt teese, creative series, slushies, standard tees,
Speaker 2: but also a variety of topics. So the Kiosk does
Speaker 2: a great job of letting the guests kind of navigate
Speaker 2: the menu, and it's got great looking pictures of the
Speaker 2: product and so therefore it just helps of the guests
Speaker 2: find a beverage that they're looking for. And we tend
Speaker 2: to see a slightly higher tickets well, you know, ten
Speaker 2: to fifteen percent higher off of a digital Kiosk than
Speaker 2: we do at the counter, and many of our locations,
Speaker 2: you know, they quickly jumped to twenty five or even
Speaker 2: as high as fifty percent within the first month of
Speaker 2: launching a self order Kiosk in the store. So the
Speaker 2: guest is basically naturally going to the Kiosk versus the
Speaker 2: counter to kind of put in their customized beverage, which
Speaker 2: is good also for you know, labor management, because then
Speaker 2: the team members can focus more on making beverages versus
Speaker 2: taking orders. Yeah.
Speaker 1: That's great. Yeah, and it seems like you're on the
Speaker 1: right side of the demographics, right, So I guess do
Speaker 1: you have any industry data about how fast this category
Speaker 1: is expected to grow?
Speaker 2: Yeah? So, I mean, just going back in time, it's
Speaker 2: interesting because you know, just personally for me in my career,
Speaker 2: you know, ten years ago, I was with Coca Cola,
Speaker 2: and I was running Coca Cola's kind of coffee and
Speaker 2: tea business for North America, and most of our focus
Speaker 2: was on iced teas, primarily you both in restaurants and
Speaker 2: the bottle can side of it. But we were starting
Speaker 2: to see bubble tea emerge in the US, and quite Franks,
Speaker 2: they didn't know if there's going to be something that
Speaker 2: was a fad or really going to stick, because again,
Speaker 2: it had been around in ages since the early two thousand,
Speaker 2: starting back in Taiwan, which is also where gungcha originated from.
Speaker 2: But the category, you know, if you read a lot
Speaker 2: of different kind of analyst reports, you know it's expected
Speaker 2: to at least double, if not triple in size here
Speaker 2: to be. You know, I think north of five billion
Speaker 2: in the next five to six years. And so I
Speaker 2: think it's it's just a really attractive opportunity. Again, you've
Speaker 2: got both, you know, the younger age demographic and as
Speaker 2: it's it's a it's a category that get introduced to
Speaker 2: consumers at a young age too, right, So it's high schoolers,
Speaker 2: college students, and as they age up, they're continuing to
Speaker 2: drink this beverage and introduce it to their kids as well,
Speaker 2: because you can get a lot of you know, great
Speaker 2: products that don't have caffeine and a gun cha, which
Speaker 2: I think just makes for a great kind of family occasion.
Speaker 2: So I think the reason there's so much excitement is
Speaker 2: because I think there's just a lot of interest in
Speaker 2: the category with this younger generation.
Speaker 1: For sure. I think it's also interesting because you know,
Speaker 1: typically we see US brands being exported, not international ones
Speaker 1: being boarded. You know, were there any good examples of
Speaker 1: brands coming into the US from Asia or other places
Speaker 1: that you were able to study?
Speaker 2: You know, I think to your point in terms of
Speaker 2: our approach, you know, we've we've taken the master franchising approach,
Speaker 2: right so in Asia, where we have fifteen hundred plus locations,
Speaker 2: if you go to South Korea, we've got over nine
Speaker 2: hundred locations. You know, we're pretty much everywhere in South
Speaker 2: Korea and so and so we kind of perfected that
Speaker 2: model for roughly ten years before we brought it to
Speaker 2: this side of the world. But we started with a
Speaker 2: master franchising model to really focus on select entrepreneurs who
Speaker 2: were up for the challenge of managing operations, marketing in
Speaker 2: addition to supply chain as well as franchise sales, which
Speaker 2: is not the easiest thing to find in the US
Speaker 2: because most multi unit franchises and developers want to focus
Speaker 2: on operations and marketing, not managing end to end supply chain.
Speaker 2: And so I think the approach we've taken was more
Speaker 2: of the what model. Like you said, it's more of
Speaker 2: the model that you would see if you were as
Speaker 2: originally a US based company going overseas. We kind of
Speaker 2: did the inverse in this sense, and so I think
Speaker 2: we just kind of before we took it overseas and
Speaker 2: overseas being the Americas, we perfected it back in Asia,
Speaker 2: and I think continue to perfect it. And I've really
Speaker 2: now had to even since I joined in the past
Speaker 2: twelve months, stood up even more of a global operation
Speaker 2: where we're leveraging best practices from Australia, from Japan and
Speaker 2: from Korea and many of our markets around the world.
Speaker 1: So let's dig into that a little bit more. That
Speaker 1: shift to direct franchising. How are the agreements lined up?
Speaker 1: Are you are you giving exclusive territories to certain states?
Speaker 1: What is the typical size of the agreements that you're
Speaker 1: signing any of that color would be helpful.
Speaker 2: Yeah, So we literally just started direct franchising at the
Speaker 2: start of the year, so we're still getting momentum. We've
Speaker 2: got several new franchisees signed up. We've got a few
Speaker 2: stores that are opening here in the next few weeks
Speaker 2: in a couple of different states. So depending upon you know,
Speaker 2: the market, we could be looking at the deals that
Speaker 2: are you know, three to five stores to start with.
Speaker 2: We've got some opportunities where they're starting with a handful
Speaker 2: of stores with them potentially the opportunity to expand to
Speaker 2: forty or fifty and have kind of exclusive rights over
Speaker 2: that state or territory. But it really just depends upon
Speaker 2: the market. We're trying to actually to try and grow faster.
Speaker 2: So if we can have you know, one or two
Speaker 2: experienced operators in a DMA kind of building in parallel
Speaker 2: to kind of capture even more market share fat maybe
Speaker 2: block out some of our competition, that's the approach we're
Speaker 2: looking to go to, which is part of the reason
Speaker 2: we're doing direct franchising, because before within master franchising, we
Speaker 2: had to rely on the master to you know, find
Speaker 2: subfranchises to make it work, which got us to a
Speaker 2: great point in time here now. But I think we
Speaker 2: can move even faster with the direct model because again,
Speaker 2: that's what most US developers are used to dealing with.
Speaker 2: They don't want to have to manage end to end
Speaker 2: supply chain.
Speaker 1: Yeah, and I like when chains, when franchise or is
Speaker 1: opening up a territory to competition, it tends to motivate
Speaker 1: the franchises a lot more because you know, in a
Speaker 1: lot of instances, you know, development agreements tend turn into
Speaker 1: you know, agreements not to the develop right right exactly.
Speaker 1: They get to a they get comfortable, you know, with
Speaker 1: a certain level of sales and earnings, and they're not
Speaker 1: really motivated to build anymore.
Speaker 2: Yeah, and we've got we've got some great master franchises
Speaker 2: and we're going to continue to have them, you know,
Speaker 2: lead and manage the states that we've sold them. But
Speaker 2: we've got about fifty percent of the geographic US left
Speaker 2: to sell and that's what we're doing kind of via
Speaker 2: direct franchising.
Speaker 1: All right, great, and how are you prioritizing markets?
Speaker 2: We're prioritizing largely based upon kind of the I think
Speaker 2: the category potential in those markets. So we're looking obviously
Speaker 2: heavily at kind of population, population density, age demographics, and
Speaker 2: certainly weather too. Right, So you know, having been in
Speaker 2: beverages for twenty plus years, there's a lot of seasonality
Speaker 2: in beverages, both in ready to drink beverages as well
Speaker 2: as kind of made to order beverages, and so we're
Speaker 2: looking at all those factors again, you know, population size,
Speaker 2: age demographics, seasonality of weather. You know, historically the brand
Speaker 2: in the US started more heavily in Asian communities, so
Speaker 2: it maybe was a Chinatown or Korea town like in
Speaker 2: New York City. But now that the category is becoming
Speaker 2: a lot more kind of well known and i think
Speaker 2: distributed across the country, you're seeing it in basically all
Speaker 2: types of locations where perhaps it's even a very low
Speaker 2: Asian population demographic, but there's already the awareness of the category,
Speaker 2: and so versus five years ago, there's a lot more
Speaker 2: markets that we're looking to get into today than we
Speaker 2: did back then.
Speaker 1: It's cool, excuse female, i'd assume too, right.
Speaker 2: It does skew female. Yeah, it's about i'd say probably
Speaker 2: typical split is maybe sixty forty, so it definitely skews female.
Speaker 2: And again there is you know, the reasons for that,
Speaker 2: I think are one because of the customization and the
Speaker 2: different options that kind of the guests can get. There's
Speaker 2: also you know, I think nutritional benefits. Again, you know,
Speaker 2: the core product is tea. You know, t is the
Speaker 2: number two beverage consumed in the world after water, and
Speaker 2: there's obviously a lot of health benefits antioxidants associated with tea.
Speaker 2: So while the majority of our beverages are kind of
Speaker 2: on more the indulgence side, with the malteese or the
Speaker 2: brown sugar milt teese, people do come in for just
Speaker 2: a straight up great tasting tea as well.
Speaker 1: Great And how's a pipeline looking What are your what
Speaker 1: do you how many stores do you expect to develop
Speaker 1: in the United States in twenty four and twenty five.
Speaker 2: Yeah, I mean the pipeline's looking really good. We've got obviously,
Speaker 2: our existing master franchisees have been working on a pipeline
Speaker 2: here for a couple of years now. We are expanding
Speaker 2: our direct franchising development pipeline. You know, we're targeting north
Speaker 2: of one hundred openings in the America's this year, about
Speaker 2: half those coming from the US. And you know, as
Speaker 2: we continue to sell more territory. We expect that number
Speaker 2: to increase r year because we're also now getting into
Speaker 2: Central America. We'll have our first stores in Honduras up
Speaker 2: and Guatemala opening up later this year, probably by by
Speaker 2: early June, and then we're also looking to get into
Speaker 2: South America. We're not in South America yet, but that's
Speaker 2: obviously a massive opportunity. So we expect our pipeline to
Speaker 2: certainly increase year a year. But we've got some really
Speaker 2: good momentum and a lot of engaged both existing franchises
Speaker 2: and prospects looking to get into the brand.
Speaker 1: Yeah, that's a very strong growth rate on not an
Speaker 1: insignificant number of stores, So that's that's great. How involved
Speaker 1: does Goncha with site selection?
Speaker 2: Well, we're more involved now with direct franchising. So with
Speaker 2: direct franchising, we're actually doing a couple of things. When
Speaker 2: we've we've partnered with some you know, industry experts, one
Speaker 2: of the leading software providers in terms of real estate analysis,
Speaker 2: as well as some outside consultancies around just doing deep
Speaker 2: dives into specific markets. So we have a very good
Speaker 2: sense of what the market potential is is for gun
Speaker 2: Cha as we go into a new market. Let's say
Speaker 2: for Phoenix or for Vegas or for Nashville. We know
Speaker 2: the market potential and so as we work with new franchisees,
Speaker 2: you know, we can determine we need to have one
Speaker 2: franchise e lead that market to be mean multiple and
Speaker 2: then specifically in site selection, you know, we're very involved.
Speaker 2: You know, we'll work with the franchise on what we
Speaker 2: believe are the top trade areas for them to start
Speaker 2: to go into to help kind of see the market,
Speaker 2: and then we'll provide them approval once they work with
Speaker 2: their own kind of real estate broker to find the
Speaker 2: actual location, whether it's an end cap, whether it's in
Speaker 2: line strip mall, whether it's inside of an indoor shopping mall.
Speaker 2: But we're certainly involved in the process, and then we'll
Speaker 2: work through them on the store design and layout.
Speaker 1: Great man, are there any unit economics that you'd like
Speaker 1: to share?
Speaker 2: I mean, all I can share is kind of what
Speaker 2: we disclose publicly in our FDD. You know, we're proud
Speaker 2: of our top line sales and our average is roughly
Speaker 2: you know, five hundred and twenty five thousand in the US.
Speaker 2: Obviously varies by market. Some markets can be you know,
Speaker 2: ten to fifty percent higher than that. You know, our
Speaker 2: top quartile of stores is typically north of eight hundred thousand,
Speaker 2: so that can make it for a really good kind
Speaker 2: of cash on cash return. You know, our store investment
Speaker 2: or build costs you may vary from one hundred and
Speaker 2: fifty thousand to three hundred and fifty thousand, just kind
Speaker 2: of depends on where you are and how big of
Speaker 2: a footprint, because again, it could be a kiosk that's
Speaker 2: two hundred and fifty square feet, or it could be
Speaker 2: a much bigger space with a lot more fornenturance seating.
Speaker 2: But on average the store build is you know, two
Speaker 2: hundred to two fifty. So you know it's when you
Speaker 2: when you look at the AUV it's could be a
Speaker 2: pretty good cash on cash return.
Speaker 1: Yeah, for sure. It's a very strong sales to investment ratio. Okay, great,
Speaker 1: And so obviously, you know you've talked already about how
Speaker 1: the brand naturally attracts some of the younger generations. Is
Speaker 1: there anything that you're doing specifically to try to attract
Speaker 1: gen Z customers?
Speaker 2: Yeah, I mean I think the so, I mean, this
Speaker 2: category it's a really fun category, right, I mean, there's
Speaker 2: lots of different toppings, there's colors, so we're always looking
Speaker 2: to bring new news. So for instance, we did a
Speaker 2: global campaign so back in November December we did a
Speaker 2: little gingerbread series where we actually had a gingerbread flavored
Speaker 2: tea and we actually had it served in a gingerbread
Speaker 2: man bottle with a little milk foam topping, so you
Speaker 2: can imagine a gingerbread man it you know, had kind
Speaker 2: of a smiling face that the milk foam at the
Speaker 2: top made his face white, and the rest of our
Speaker 2: body was you know, gingerbread brown, so it was super cute.
Speaker 2: You had a scarf, very very photographic, so you can
Speaker 2: imagine just how many hundreds of thousands of pictures we
Speaker 2: had in the social social sphere with our guests coming
Speaker 2: in for that. So that was a huge, huge win
Speaker 2: every market. We sold out much faster than we expected,
Speaker 2: which is you know a good problem. We would obviously
Speaker 2: would have loved to have even more, but so that's
Speaker 2: certainly something we're looking to lean into even for twenty
Speaker 2: twenty four and make it even bigger. But ltos are
Speaker 2: part of the way that we know make news, you know,
Speaker 2: limited time offerings. We just launched in the US on Monday,
Speaker 2: a new partnership with Hershey, So we're actually doing kind
Speaker 2: of a tea based cookies and cream based beverage. Delicious
Speaker 2: looks great. It's off to a fast start for us,
Speaker 2: and so we're doing that this spring and then this summer,
Speaker 2: we've got some great innovations that we'll be doing around
Speaker 2: the world that kind of incorporate flavors from different countries.
Speaker 2: Because again, part of Guncha is our global footprints, so
Speaker 2: we're getting inspiration from, you know, the twenty four plus
Speaker 2: different countries that we already have a presence in. So
Speaker 2: we're always looking to bring new news both to the
Speaker 2: product and also on merchandising. You know, the gingerbread is
Speaker 2: one example. What we also bring in a fun little swag,
Speaker 2: whether it's tumblers or key chains or plushies. Like our
Speaker 2: core guests, they just love the brand and they love
Speaker 2: to collect things beyond just the product itself, so they
Speaker 2: can kind of, you know, both bring it home and
Speaker 2: also share it with their friends and social cool.
Speaker 1: Is that what percentage of your business is that kind
Speaker 1: of stuff?
Speaker 2: You know, it varies by location. Some operators are kind
Speaker 2: of lean into it. More than others. It's generally you know,
Speaker 2: four to five percent for like merchandising, and then you
Speaker 2: know the food mix can of again be another five
Speaker 2: to ten percent depend upon the location. We are continuing
Speaker 2: to look at more options for enhancing our food offering.
Speaker 2: We've got a pretty simple kind of back of house,
Speaker 2: and all of our products is currently delivered ambient. So
Speaker 2: from a supply chain standpoint, you know, we manage our
Speaker 2: supply chain to end from the tea farms, cultivating the tea,
Speaker 2: fermenting the tea in the quality and then it's all
Speaker 2: delivered from Asia to us here in the US and
Speaker 2: all delivered via ambient. So as we work on kind
Speaker 2: of more ways to expand the menu, we also have
Speaker 2: to kind of continue to fine tune our supply chain model.
Speaker 1: Cool and the Hershey's partnership sounds interesting. Are there more
Speaker 1: CpG companies and partnerships in the pipeline?
Speaker 2: Yeah, there's a few more. Can't kind of shure who
Speaker 2: they are, but certainly we're looking to do a few
Speaker 2: more things that are I think definitely unique, innovative, maybe
Speaker 2: polarizing for some people. You know, the intent is maybe
Speaker 2: some people will certainly love it, some people won't like
Speaker 2: it at all, but that's kind of part of the intent,
Speaker 2: is to kind of create some conversation, get the brand's
Speaker 2: an aim out there, but also for those who love
Speaker 2: it it is. You know, we're doing some fun stuff
Speaker 2: that we'll do later this summer with some big US
Speaker 2: and global brands, and then we're also leaning into some
Speaker 2: more licensing opportunities, right, I mean again, because people love
Speaker 2: to have you know, gung cha we call it a swag,
Speaker 2: you know, to bring home. We are looking to partner
Speaker 2: with some big global licensing brands to kind of marry
Speaker 2: up our brand with a brand that we think fits
Speaker 2: well to again just continue to delight and satisfy our
Speaker 2: core guest.
Speaker 1: Yeah, and it sounds like it's a good way to
Speaker 1: build the brand, like create more brand awareness, right.
Speaker 2: Yeah, absolutely, because again I mean just you know, versus
Speaker 2: twenty five years ago in terms of how you build
Speaker 2: brand awareness, so different now, right, Obviously, social media influencers
Speaker 2: is much much much more important to kind of get
Speaker 2: some traction and drive awareness, and so people are looking
Speaker 2: obviously for great experiences for brands that kind of stand
Speaker 2: for more than just a product. And hence, you know,
Speaker 2: we're looking to elevate the entire brands proposition, but also
Speaker 2: kind of more touch points, you know, more ways for
Speaker 2: people to bring the brand home and enjoy it beyond
Speaker 2: just once they finish the beverage.
Speaker 1: Well along those lines, Is RTD on your radar.
Speaker 2: Yeah, there's lots of things on our radar for sure.
Speaker 2: RTD definitely. It's one of those things that we want
Speaker 2: to make sure that we get it right. You know,
Speaker 2: there's a lot of there are a lot of actually
Speaker 2: emerging rt D bubble tea concepts out there. I've tried
Speaker 2: a bunch of them. I'm not sure that they quality
Speaker 2: would meet our standards, and so we don't want to
Speaker 2: introduce something that's inferior to you know, the great quality
Speaker 2: that you can get in a Gunshot store because we
Speaker 2: you know, we make our tea fresh multiple times per day.
Speaker 2: We make our pearls fresh multiple times per day. And
Speaker 2: if you're really into this category, you know, rubble t
Speaker 2: you are, it's much like wine. Like you come in
Speaker 2: and you will basically examine and and and kind of
Speaker 2: really look closely at the quality of the pearls, texture,
Speaker 2: the chewiness, the temperature. And to do that right, you
Speaker 2: got to make them fresh, right, and so that's hard
Speaker 2: to do in an ARTD way. But we are looking
Speaker 2: at the our RTD, but we're just.
Speaker 1: Not there yet, gotcha. All right? Cool, well, listen, Thanks Jeff,
Speaker 1: I appreciate your time, especially coming on here on your birthday.
Speaker 1: Where can the audience go to find a nearby guncha?
Speaker 1: And what social media platforms is the brand big on?
Speaker 2: Yeah, so certainly you can go online to find any
Speaker 2: of our locations in the US, you know, gun Cha
Speaker 2: USA dot Com, we're you know, we're Instagram, Facebook, that's
Speaker 2: kind of where those are our kind of two primary
Speaker 2: social media channels. And again, we are opening locations every week.
Speaker 2: We are in you know, twenty states currently in the US.
Speaker 2: We've got almost one hundred in Mexico, almost one hundred
Speaker 2: in Canada. And so if we're not in someone's neighborhood today,
Speaker 2: hopefully we'll be later this year. And I've done this
Speaker 2: year that hopefully next.
Speaker 1: Yeah, listeners should go go check it out if they
Speaker 1: have one nearby. That the stuff's fantastic. You know, I
Speaker 1: wasn't a believer. I'm you know, forty seven, I'm not
Speaker 1: your core market, but you know I had it and
Speaker 1: the stuff is fantastic, So yeah. So I'd also like
Speaker 1: to thank the audience for tuning in. If you liked
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Speaker 1: a conversation with David Maloney. He's the founder and president
Speaker 1: of datum FS, and we'll be discussing the commodity markets
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