Gong cha slips into the red amid falling sales in key South Korean market

Gong cha’s Thai Mango beverage range | Photo credit: Gong cha

Taiwanese bubble tea chain Gong cha expects outlet growth in the Americas, Europe and the Middle East to lift revenues this year, after a ‘weaker performance’ in South Korea hampered group sales and profitability in 2023. 
 

Gong cha is one of the largest bubble tea chains in the world by outlets and opened 159 net new stores last year to reach 2,065 stores across 23 markets.  

However, following three years of positive year-on-year sales growth, Gong cha’s group revenues in the 12 months ending 31 December 2024 fell 3.4% to $177.8m, while group EBITDA declined 11% year-on-year to $39.2m. 

Gong cha also posted a pre-tax loss of $12.4m, compared to a pre-tax profit of $527,000 in 2022. 

In a Companies House filing, London-headquartered Gong cha attributed the sales decline to a ‘weaker performance’ in South Korea, its largest market with more than 800 stores. 

The bubble tea chain said a post-pandemic return to the office for many workers negatively impacted footfall across its neighbourhood stores in the East Asian country – sites which had significantly contributed to its success in the market over the previous two years.  

Lower-than-expected first quarter sales globally and growing segment competition in Asia also affected full-year revenues. 

Gong cha said most of its new store pipeline will focus on the Americas, Europe and the Middle East where the business is ‘still relatively immature’. The shift reflects the company’s ongoing transition from operating company-owned stores in East Asia to developing a global network of franchisees, the bubble tea chain added.