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· Posted on
February 21, 2024

The bubble may have burst for Chatime and there ain't no sugar-coating this sitch

Chatime is carrying a load of financial stress, and some of its stores are now in the red.

What's the key learning?

  • Chatime has been struggling with hikes to their utility costs, rent, and a 5.75% increase to minimum wage. Moreover, people are just spending less on sweet teas.
  • Chatime didn’t just open 169 outlets in 13 years, but it also planned to open another 81 stores within the next two years.
  • When your eyes are laser-focused on quick growth, it can be hard to bed down the right foundations.

👉 Background: Chatime is a household name amongst bubble tea enthusiasts. They entered the Aussie market back in 2010, when bubble-tea started kicking off here. And in just 13 years, they've since grown to a whopping 169 outlets.

👉 What happened: Recently, Chatime has been in struggle-street with hikes to their utility costs, rent, and a 5.75% increase to minimum wage. On top of that, people are just spending less on those sweet, sweet teas.

👉 What else: This has put a load of financial stress on Chatime, and some of their stores are now in the red... which of course means they're becoming unprofitable.

What's the key learning?

💡When your eyes are laser-focused on quick growth, it can be hard to bed down the right foundations.

💡Chatime didn't just open 169 outlets in 13 years, but it also planned to open another 81 stores within the next two years. But at the same time, they've been struggling to keep up with wages and pay compliance.

💡Chatime's head office had underpaid corporate staff up to $6 million big ones. And an internal audit found that roughly 86% of stores were underpaying workers... so it's probably worth getting that right first before rapid growth.

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