Tea cools and dessert shops soar

By InvestSMART · 10 Apr 2013

By InvestSMART ·
10 Apr 2013

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Stop sipping tea and pick up the dessert spoon. The retail frenzy of the past three years that has seen Chinese and Taiwanese "bubble tea" chains open hole-in-the-wall outlets has peaked and now some are being reborn as Asian dessert outlets.

Centred on areas with high numbers of Asian residents, visitors and students, Ten Ren Tea, Chatime, Easyway Tea and Bubble Cup opened colourful outlets offering cold "bubble teas", blending ice, milk, tea and fruit.

While outlets opened in Box Hill, Doncaster and Glen Waverley, the CBD has been the main focus with some chains, such as Chatime, having as many as four outlets.

But all fads peak and decline - as tea outlets soared, retailers struggled to sustain high sales and have been forced to change focus to survive. Max Cookes, CBRE's associate director of retail services, said Asian dessert concept stores have been replacing the once-popular tea shops.

He said dessert chains, such as Dessert Story and Meet Fresh, focused on Asian-style desserts, using mixes of sago, tofu, taro balls, jelly, mango and coconut. Taiwanese dessert chain Meet Fresh recently took over the Ten Ren Tea store at 147 Swanston Street and Mr Cookes said it was one of many.

The switch-over comes amid a trend for food retailers to increase their share of commercial tenancies in the CBD.

Food and beverage operators account for 29.2 per cent of tenancies, up from 26.5 per cent five years ago, according to Knight Frank. Clothing and footwear retailers, at 29.3 per cent, have been losing market share. With Chris Vedelago

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Frequently Asked Questions about this Article…

What retail trend is affecting bubble tea chains in Australia?

The article says the bubble tea boom has peaked in many areas, and several bubble tea outlets are being converted or reborn as Asian-style dessert shops as retailers struggle to sustain high sales.

Which bubble tea and Asian dessert chains are mentioned in the article?

The piece mentions bubble tea chains Ten Ren Tea, Chatime, Easyway Tea and Bubble Cup, and dessert chains such as Dessert Story and Taiwanese chain Meet Fresh.

Why are tea shops switching to Asian dessert outlets?

According to CBRE’s Max Cookes quoted in the article, tea shop sales have been hard to sustain after the fad peaked, so operators are changing focus to survive — replacing once‑popular tea shops with Asian dessert concept stores.

Where have bubble tea and dessert outlets been concentrating their stores?

The article notes these outlets have concentrated in suburbs with high numbers of Asian residents, visitors and students — including Box Hill, Doncaster and Glen Waverley — with the CBD also a major focus.

Has any dessert chain taken over an existing tea shop site?

Yes — the article says Taiwanese dessert chain Meet Fresh recently took over the Ten Ren Tea store at 147 Swanston Street, and this takeover is described as one of many similar conversions.

How is the rise of food and beverage tenants changing CBD retail tenancy mix?

Knight Frank data cited in the article shows food and beverage operators now account for 29.2% of CBD tenancies, up from 26.5% five years ago, while clothing and footwear retailers have been losing market share.

What sources and experts does the article cite about this retail shift?

The article quotes Max Cookes, CBRE’s associate director of retail services, and uses tenancy data from Knight Frank. The report also carries a byline mentioning Chris Vedelago.

What should everyday investors watch for in light of this bubble tea to dessert shift?

Based on the article, investors tracking retail property should watch tenant mix and demand in the CBD and suburbs with strong Asian customer bases — the article highlights growing food and beverage tenancy share and a move away from clothing/footwear retailers.