Coffee Bean & Tea Leaf CEO Talks China Expansion Plans

The Coffee Bean & Tea Leaf, owned by Singapore's Sassoon brothers, is ready to take a big leap in China. The global gourmet coffee chain, run by brother-in-law and CEO Mel Elias, tells CNBC's Christine Tan on Managing Asia that it wants to brew up a storm in other Tier 1 & 2 cities. The Coffee Bean currently has 30 stores in Shanghai.

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Q. The Coffee Bean & Tea Leaf has been in Shanghai for 7 years. What are your plans to expand beyond that?

We are very close to starting our expansion strategy in China, first in Tier 1 cities, then eventually in tier 2 cities.

Q. Are you looking for a franchisee?

We've been looking at a number of different approaches. We are bound by confidentiality. I think one of the ways to do it is to focus on having very few but large area developers. So that we can really make sure we have control over the expansion because of some of the risks. We don't have a sort of mom-and-pop franchise strategy approach. We take a developer of an area, who has the scope to develop a whole territory, and we make sure we set them up for success. I think that's the approach in China. You really have to limit the number of area developers you have. So that you can be successful and you can manage the expansion properly.

Q. But why were you reluctant to expand into other cities before this? What was holding you back?

There's a lot of runway. There's a lot of space for us in China. We feel that it's a market that we can expand in and it's very exciting. It’s the same with India. We have to do it right. We've been trying to figure out how to do it right. I've been looking and studying the right way to win in China, and in fact our strategy is called 'Win In China' in the office.

Q. So what is the right way to win in China? What's the secret?

You have to make sure you don't have a launch and leave approach to China. You have to make sure that you really dedicate and build resources. You build a regional office. You also have to make sure that you localize the concept to some degree. I think now is the time when China is looking for lifestyle experience, so you have to look for large footprint stores.

So these are some of the things that we are studying and you look at best practices. Some companies like Yum! Brands have been very successful in China... with KFC. You want to learn from their best practices and understand how they did things right.

Q. Your biggest competitor is Starbucks, a company that is a lot bigger. How innovative do you have to be in your product offering to compete with such a formidable rival?

One of our points of difference is the fact that we are innovative. Almost 50 years ago, we brought coffee and tea into the U.S., so the founder Herbert Hyman is the founding father of gourmet coffee and tea. In the 80's we invented the Ice-Blended drinks. In the 90's, we popularized tea lattes.

Recently, we've done something which is probably the most innovative thing we've ever done, is creating the single-serve beverage system called CBLT. So we've been able to bring you the experience of The Coffee Bean & Tea Leaf in the comfort of your own home, with a touch of a button. It’s something I'm most excited about at this point of time.

Excerpt taken from Mel Elias’ interview on Managing Asia, CNBC’s longest-running feature program. Catch the show with anchor Christine Tan at 27 May 1730 (SIN/HK), 28 May 1900 (SIN/HK) and 29 May 1930.