Operating Profit Plummets, 'Gongcha 2.0' Declared... CEO Ko Hee-kyung "Over 1,000 Stores This Year"

Press Conference for Gangnam Main Store Opening on the 17th
Strengthening Interior and Dessert Menu
"Double-Digit Sales Growth Targeted"

"Our goal this year is to surpass 1,000 stores through aggressive new store openings. Through this, we aim to achieve double-digit sales growth."

Ko Hee-kyung, CEO of Gongcha Korea, said this during a press conference held on the morning of the 17th at the Gongcha flagship store Gangnam main branch in Yeoksam-dong, Gangnam-gu, Seoul.

Since opening its first store in Hongdae in 2012, Gongcha has steadily grown and currently operates about 900 stores nationwide as of June. However, last year's performance was disappointing. Gongcha Korea's sales increased by 1.1% year-on-year to 182.97088 billion KRW, but operating profit dropped by 61.9% to 6.38718 billion KRW.

Go Hee-kyung, CEO of Gongcha Korea, held a press conference on the 17th at Gongcha Gangnam Main Store in Gangnam-gu, Seoul, and said, "We will expand our business with a double-digit growth target this year." Photo by Lim On-yu

Therefore, Gongcha is at a point where a new vision is needed. CEO Ko said, "It is true that last year's performance was somewhat sluggish," adding, "This year, we aim for double-digit growth compared to the previous year, and we also target a 14.6% increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) compared to last year."

To this end, CEO Ko, who took office last November, declared Gongcha 2.0 on this day. The Gangnam main branch unveiled today is a new-concept store showcasing Gongcha 2.0. As it has been over 10 years since entering the domestic market, the store's exterior and operation methods had become outdated, so they have been extensively improved from interior design to the menu. CEO Ko said, "Through Gongcha 2.0, we wanted to show the main purchasing demographic, teenagers to people in their 20s, that Gongcha is a 'changing brand.'"

First, at the Gangnam main branch applying Gongcha 2.0, you can see the floor inspired by Gongcha pearls and the order counter shaped like Gongcha drinks. Signature menu items that cannot be tasted at other stores are also introduced. The newly launched three types of ‘Premium Ice Fruity’ (‘Real Mix Berry Earl Grey Tea,’ ‘Real Lime Mint Oolong Tea,’ and ‘Real Peach Orange Black Tea’) are fruit teas where fragrant Gongcha tea brewed directly from tea leaves harmonizes with fresh fruits, boasting distinctive colors and attractive visuals.

Pairing foods that go well with the drinks have also been enhanced. You can enjoy premium desserts rarely seen at Gongcha before, such as ‘Milk Crepe Cake,’ ‘Strawberry Chocolat Cake,’ ‘Real Chocolate Cake,’ and ‘One Cup of Fruit a Day.’

Gangnam is an area densely populated with famous domestic and international F&B brands, attracting consumers ranging from their 20s to 50s. Gongcha continues its efforts to communicate more closely with consumers through specialized stores and provide the highest quality tea and tea culture.

CEO Ko said, "The reason Gongcha was able to successfully settle in Korea is because of our expertise in tea and thorough market analysis, which allowed us to consistently offer various tea menus tailored to Korean consumers' tastes," adding, "We will enhance our competitiveness by developing original menus that align with consumer trends while not losing sight of our essence as a tea-specialized brand."

Gongcha Flagship Store Gangnam Main Branch / Provided by Gongcha

Gongcha also plans to export Gongcha 2.0 to stores worldwide. Just as the Pearl Bokki (a menu where tapioca pearls used in milk tea are made like tteokbokki), Love Potion, and Mango & Strawberry Mini Pol, which started selling in Korea, have spread to Gongcha stores globally, the store format will also expand from Korea to the world.

CEO Ko explained, "Although Gongcha started in Taiwan, overseas consumers do not actually think of Gongcha as a Taiwanese brand," adding, "Many consumers even perceive it as a Korean brand, and Gongcha's strategy is to communicate emphasizing that Gongcha is a K-brand."

Currently, there are 160 Gongcha stores in Japan. About 2,000 stores operate in the U.S., Latin America, and Southeast Asia. Gongcha will open its first store in the Middle East in July.

Regarding plans for price increases, CEO Ko said, "We are not considering it." Gongcha Korea raised prices by 200 to 300 KRW on some products, including milk tea, on April 20 last year. CEO Ko said, "Although the rising costs of milk, powder, and chocolate, which make up a large part of the cost, are a burden, we are not considering price increases this year," adding, "We are looking for ways to reduce costs."

Regarding last year's rumors about the sale of Gongcha Korea, she firmly denied, saying, "There are absolutely no plans." CEO Ko explained, "If there had been plans to sell, investment expansion like Gongcha 2.0 would not have taken place."