Chinese tea shop operator raises $29m
Lelecha, which operates around 35 milk tea stores across China, has raised RMB200 million ($29 million) in a Pre-Series A round of funding led by Vertex Ventures China.
Other participants include Jiaxing Drop Asset Management, Z&H Investment, Hina Group, Prometheus Capital and Ruchuan Capital. Fundraising for a Series A round is already underway, according to a statement.
The new capital will be used to expand the company’s coverage and improve its supply chain efficiency. There are plans to add 50 stores in eastern and northern Chinese cities.
Founded in 2016, Lelecha sells more than 20 types of milk tea as well as baked goods and desserts. It has adopted a franchise model, whereby franchisees to choose one of three store types, based on size. The company claims a single store can receive an average of 1,600-2,500 orders per day, with monthly sales amounting to RMB1.6-1.8 million.
Although coffee consumption is rising in China on the back of increasing disposable incomes and a shift towards more Westernized lifestyles, tea remains the dominant beverage category. Originally a hit in Taiwan and Japan, bubble milk tea has taken off in China in recent years, largely due to popularity among millennials.
One of the fastest-growing players in this space is Shenzhen-based HeyTea, which has over 163 stores in mainland China and Hong Kong. HeyTea has raised two rounds of funding since inception, receiving RMB100 million from IDG Capital in 2016 and a further RMB400 million from Longzhu Capital and BA Capital in 2018.
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