Bubble tea seller Gong Cha fell into the red as its sales in Korea, the US and Australia all took a hit during its latest financial year.
The London-headquartered business has reported a pre-tax loss of $12.4m (£9.2m) for 2023, according to newly-filed documents with Companies House.
The loss comes after Gong Cha posted a pre-tax profit of $527,000 (£394,000) in 2022.
The accounts also show that its revenue fell from $184.1m (£137.6m) to $177.7m (£132.8m) over the same period.
Gong Cha said the fall in its revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) was “in part due to the timing of Lunar New Year, with several of our master franchisees pulling forward their product purchasing into the last quarter of the prior year, resulting in lower product sales for the group in the first quarter of 2023”.
The business added that its Korean division experienced a weaker performance due to “post-pandemic consumer trends”, following several years of rapid growth.
Gong Cha’s Korea sales fell rom $98.7m (£73.7m) to $92.8m (£69.3m) in the year but its turnover rose from $34m (£25.4m) to $40.3m (£30.1m) in Japan.
In the US, its sales dipped from $14m (£10.4m) to $11.2m (£8.3m) and from $12.2m (£9.1m) to $10.5m (£7.8m) in Australia.
During the year the company’s headcount grew from 722 to 770.
Gong Cha optimistic for the future
A statement signed off by the board said: “The group continued to invest, further strengthening its central functions to support product innovation supply chain development and growth in new markets, the benefit of which will be seen over subsequent years.”
On its outlook, Gong Cha added: “The group continues to invest to strengthen its position as a leading global tea brand.
“The global tea market has enjoyed robust growth over the past several years, and milk tea, including bubble tea, remains a staple beverage across Asia and increasingly around the world.
“Globally, the tea market is estimated to be larger than that of coffee’s itch continued growth expected.
“In recent years, the group has successfully transitioned from an Asia-focused, directly-operated store business to a more diversified global franchise operator.
“We plan to continue to further expand the group’s global brand presence through developing existing markets and entering into new markets, delivering sustainable profitable growth for the group ask for our master franchisee partners.
“We maintain a strong pipeline for new store opening sin existing markets and for new market entry.”
The Gong Cha group was founded in 2006 in Taiwan. At the end of 2023 it operated more than 2,000 stores in 23 countries.