CEO Series

9 Questions About The Chatime Fiasco Answered By Bryan Loo On BFM This Morning

Today Bryan Loo, franchiser of up to 5 international brands in Malaysia put on his interview headphones in BFM for an open-all interview with Melissa Idris on The Breakfast Grille. This interview came as the last leg in a long stream of crises that befell Loob Holding following their prolific falling-out with La Kaffa over the Chatime brand in Malaysia.

Even we have gone into Bryan Loo’s strategies in Malaysia after the public breakup of the brands, but today’s tête-à-tête with Melissa, just one day left in Loob Holding’s grace period with La Kaffa, is Bryan’s chance to deliver the definitive words about everything that has happened with La Kaffa over the past couple of months—and to reveal the new name.

So here’re some questions he answered.

1. So What’s The New Brand’s Name?

Image Credit: Tea Is Our Life FB Pagemage

Bryan Loo has confirmed that the new brand will be called Tealive (pronounced lai-ve, as in alive).

Up until this point, thanks to certain Facebook pages run by Loob Holding, many us thought that the new name would be ‘Tea Is Our Life’, but as it turns out, “It’s just the slogan that we would like to lead people to the ultimate brand. And we feel that tea is more than just a drink to us, tea is really our life. And tea is who we are. So what we want to present to Malaysians is that Tealive is going to be our next name.”

We’re a bit disappointed that it’s not pronounced “live” as in “We live here”, because it could have made a very appropriate pun with “leaf” (TeaLeaf, geddit?).

Bryan stated that part of the reasoning behind this name is that when you put the names together, it becomes “Tea Alive”, to further signify the vision of the new brand.

In fact, their first Tealive store is now open at Pavillion.

2. Was The Termination Long In The Works?

There have been conflicting accounts about how long has trouble been brewing, or whether the termination really was sudden for Loob Holding.

According to Bryan, everything began on the 5th of January (one day before the news blew up on the media on a national scale). A meeting took place between Loob Holding and La Kaffa, which was supposed to be about introducing new management, but La Kaffa instead came with a notice of severance.

By Bryan’s account, La Kaffa apparently said that the issue could still be discussed, but turned around and held their own press conference the very next day on the 6th of January, further stating that they are taking over the Malaysian operations.

“So that’s very misleading, because all the tenancy belongs to us. It creates a lot of uncertainty to the market, not only our people but to the consumers, the landlords, all stakeholders,” he said.

But Bryan further stated that while the termination did come to them suddenly, over the past 4 months arbitrations have been up and running in Singapore between the two parties, over the issue of the unapproved ingredients (which, incidentally, is why La Kaffa stated for dropping Loob Holding).

3. So Why Did Things Fall Apart?

Image Credit: @synicalrules on Instagram

One question on everyone’s mind was how did deal fall apart as it did, considering that La Kaffa and Loob Holding had a 6-year relationship by then.

Bryan explained, “There was a long history of bad faith that has been happening to the brand, to the business for over 2–3 years. I think that the trigger point was because last year, they came to Malaysia and launched a 3 in 1 Chatime milk tea powder in the supermarkets.”

According to Bryan, this move was done without their knowledge, and La Kaffa intentionally left them out of the loop by initially not releasing the product in Klang Valley (where Loob Holding is located).

This put Loob Holding in a difficult position as they had to explain themselves to franchisers about the 3-in-1 mix that is much cheaper than the standard RM6.90 Chatime products.

From here, Loob Holding felt that there was no trust and respect between the two organisations. But when questioned whether Loob would have ended the contract themselves, Bryan denied it strongly, citing his belief in the brand and their longstanding relationship.

4. Is Chatime Halal Or Not?

Over the course of the dispute, La Kaffa’s representative Hank Wang said that “The raw materials have been changed about 1 year ago. We pay much attention now because the majority of Malaysians are Muslim. All the raw materials supplied from La Kaffa to Malaysia are halal-approved by the Taiwan Halal Association.”

Brian has since refuted these claims on TV3 and NTV7.

On BFM, Bryan said,”It’s important because it’s very sensitive issue. How would we not be aware? We’re living in Malaysia in a multiracial country, things like that are sensitive. And they knew that we have halal [certification] since the beginning. If not, there would be no chance for us to expand our stores.”

He further goes on to state La Kaffa questions the Halal status of Chatime Malaysia despite knowing that Loob Holding’s Chatime was accredited by JAKIM.

But so far, there has been no denial from Bryan Loo about if the ingredients were taken from non La Kaffa-approved sources.

5. Why Have The Franchisees Remained Loyal To Loob Holding?

Franchisees threw their support behind Loob Holding instead of La Kaffa, and now we know why.

“Today we have direct control over 75% of our stores. The remaining 25%, most of them usually are our cousins, relatives, in-laws, our childhood friends, uni friends—close knit people. There are random people, but usually recommended by friends as well.”

So it’s all about connections.

According to Bryan again, “We guarantee that at least 95% of our franchisees is gonna be on our side,” based on their effort to grow the brand over the years.

6. What Was Malaysia’s Actual Percentage Of Chatime’s International Profits?

Melissa brought up the mixed messages that came from La Kaffa. On one hand, it has been said that Malaysia makes up over half of La Kaffa’s overseas business revenue, but La Kaffa has also stated that it’s only 5.2 percent.

To this, Bryan said that “Malaysia has always been the largest market to them. To what extent, we’re not sure but we’re definitely looking at at least 30%. But we do know that it’s 800 outlets worldwide, and Malaysia has at least 165. So, a significant portion.”

7. Are They Taking The New Brand Beyond Our Shores?

“We feel that we will be the next Malaysian brand that is going to put a footprint on the world. Because we always had the wild dream. Our dreams have always been restricted because our rights for Chatime has always [only] been in Malaysia,” said Bryan.

Now that the team is no longer limited, they are looking at a regional expansion and the closest one will be in the 3rd quarter of the year, where they are looking to set up in Vietnam.

8. What About Other Partners In Malaysia?

Image Credit: Motoring-Malaysia.blogspot.my

Since Loob Holding has, according to Bryan, “been doing its due dilligence with Shell over the past 1–2 years”, it gives them a good position to then move their new brand into Shell stations.

They are now pursuing a blue ocean strategy (blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand).

They are looking at 100 stations by 2018, but they are also looking into incorporating their other brands into this station like llaollao and Gindaco. On top of this, they are also looking into establishing a presence at MRT stations.

9. What About The Money Lost?

In their efforts to streamline their operations into a fully Malaysian operation, they incurred a lot of costs in the transition and rebranding.

According to Sinar Harian, that all amounted to RM10 million.

“We re-bridged the entire supply chain from Taiwan back to Malaysia. It’s a lot of groundwork that needs to be rebuilt, a lot of fundamental channels to rebuild, and of course there’s a lot of rebranding exercises in changing the signage… they’re all money,” said Bryan.

But overall, Bryan goes on to say that it’s a controlled loss because, “As long as the brand belongs to you tomorrow, you will go all out for it. and you never feel that that investment isn’t worth it.”

And perhaps that is the grand takeaway in all of this. A lot of these issues boil down to a he-said-she-said issue that we may never find a definitive answer to, but if the support behind the team really is as strong as the rest of Bryan’s interview implies, Tealive will continue to grow in Malaysia.

This spectacle has been very much public but in the end, it’s all about business.

Feature Image Credit: Malaysia Tatler