How Gong cha overhauled its supply chain for US growth
Gong cha revamps supply chain to support ambitious U.S. growth plans.
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Gong cha Global is enhancing its supply chain as part of its strategy to expand across the U.S., moving from a master franchise strategy to direct franchising. This shift will facilitate operational consistency among its locations, as the company aims to open 1,000 new units and has acquired 170 existing stores. Alongside supply chain improvements, Gong cha is strategically placing warehouses to boost efficiency and support its growth plans.
Why It Matters
This shift to direct franchising and the supply chain overhaul may compress available territories as the brand standardizes operations, potentially impacting multi-unit operators in the space. Additionally, the focus on logistics could improve unit economics for franchisees as operational complexities decrease.
Gong cha Global is expanding its franchise presence in the U.S., aiming to build an additional 1,000 locations. The company has revamped its supply chain strategy by transitioning from a master franchising approach to a direct franchising system, acquiring 170 existing master franchise stores in the process. This shift is designed to ensure consistent operations and menu alignment across all franchises, which is critical for brand cohesion in various markets, such as Chicago and San Francisco.
To facilitate this growth, Gong cha has appointed Alan Davis as the director of supply chain for the Americas. Davis, who has experience with larger supply chains, emphasized the importance of building a robust supply chain from the ground up. He highlighted that adopting a direct franchising model allows for a unified supply chain strategy, enhancing training and minimizing complexity for franchisees.
Gong cha is focusing on creating an efficient network of warehouses tailored to store density, which will support its growth framework. Currently, the company operates five full-service warehouses across the U.S. that manage inventory and support distribution, allowing for faster and more reliable delivery to franchises. Davis indicated that the approach to warehouse placement avoids a "one-size-fits-all" mentality, with attention given to individual store needs. For instance, some franchise owners may prefer to collect products from warehouses to reduce costs, depending on the logistics involved.
