Cai Ca Case Study

by | Nov 25, 2025 | Uncategorized | 0 comments

Executive Summary

Cai Ca, launched in November 2024 by former Gong Cha Singapore CEO Kang Puay Seng, operates six outlets across Singapore featuring a health-focused product line built around Japanese soy milk tea fusion drinks. This case study evaluates the brand’s competitive positioning, financial viability, and long-term sustainability prospects in Singapore’s highly competitive S$200-300 million bubble tea market.

Key Findings:

  • Survival Probability: 60-70% over 3 years (moderate-to-high risk)
  • Break-even Timeline: 18-24 months under optimal conditions
  • Growth Trajectory: Conservative expansion (10-20 outlets by Year 5)
  • Critical Threat: Gong Cha’s planned 2026 relaunch with advanced store technology

1. Company Background & Strategic Context

1.1 Founder Profile & Credibility

Kang Puay Seng co-founded Mr Bean in 1995, building it from a hawker stall to over 60 outlets across Singapore and internationally. After selling his Mr Bean shares in 2015, Kang brought Gong Cha back to Singapore in 2017, demonstrating his ability to successfully scale beverage brands in Singapore’s demanding F&B landscape.

Founder Strengths:

  • 29+ years in soy-based beverage industry
  • Proven track record with two major brands (Mr Bean, Gong Cha)
  • Deep understanding of Singapore consumer preferences
  • Extensive landlord and supplier relationships

1.2 Market Entry Strategy

Facing a crossroads when Gong Cha’s franchise ended in September 2024, Kang chose to create a tea brand for Singapore rather than return to his comfort zone. The rapid launch demonstrates both urgency and strategic opportunism—securing existing Gong Cha locations before competitors could claim them.

2. Product Differentiation & Positioning

2.1 Core Value Proposition

Cai Ca’s signature offering uses Japanese yellow soybean milk blended with tea, positioned as a lighter alternative to dairy-based milk teas, catering to lactose-intolerant customers while providing distinct flavor profiles.

Unique Positioning Elements:

  • Health-aligned: All 32 drinks (excluding brown sugar items) are rated B or C under Singapore’s Nutri-Grade system
  • Complementary snacks: Tangyuan (glutinous rice balls) create food pairing opportunities
  • Local relevance: Brand explicitly created “for Singapore”

2.2 Regulatory Advantage

Singapore’s Nutri-Grade system grades beverages A-D based on sugar and saturated fat content, with Grade D beverages prohibited from advertising. Cai Ca’s B-C positioning avoids advertising restrictions while aligning with government health initiatives—a strategic advantage as competitors struggle with reformulation.

Government Policy Tailwinds:

  • Nutri-Grade mandatory labeling creates differentiation opportunity
  • Growing health consciousness supported by public health campaigns
  • Pre-packaged drinks graded C or D fell from 63% market share in 2017 to 40% in 2021, while A or B drinks rose from 37% to 60%

3. Market Analysis

3.1 Market Size & Growth

The global bubble tea market reached approximately USD 3 billion in 2024 and is projected to grow at 7.5-8.9% CAGR to USD 6-7 billion by 2034. Singapore, along with Thailand, Malaysia, Indonesia, and Vietnam, represents a major Southeast Asian market with consumers averaging 6 cups per month.

Singapore Market Characteristics:

  • Estimated local market: S$200-300 million annually
  • Lot One shopping mall alone houses four bubble tea brands, indicating market saturation
  • High store density creates intense location-based competition

3.2 Competitive Landscape

Tier 1 Established Brands:

  • KOI: OG brand with loyal following, competitive pricing from S$2.90
  • LiHO: Founded 2017, now operates 84 outlets in Singapore, known for cheese tea innovation
  • Chagee: Recent Chinese entrant drawing massive queues, health-focused positioning
  • CHICHA San Chen: Premium positioning with Taiwanese tea master credentials

Tier 2 Mid-Market Players:

  • Tiger Sugar, PlayMade, R&B Tea, Hollin (40+ outlets combined)
  • Each offers unique differentiators (brown sugar specialties, daily boba flavors)

Market Saturation Indicators:

  • 62+ bubble tea brands operating in Singapore
  • Multiple brands in every major mall
  • Price wars and promotional fatigue

3.3 The Gong Cha Threat

Gong Cha closed all Singapore outlets in October 2024 but announced a 2026 relaunch as “Gong Cha 2.0” with new franchisees, featuring award-winning technology-led store design successfully deployed in South Korea and Japan.

Threat Assessment: CRITICAL

Gong Cha 2.0 aims to cut customer wait times and enhance experience through technology, building on record 2024 growth with US$600 million in system sales. This represents Cai Ca’s single greatest competitive threat:

  1. Brand Recognition: Gong Cha has established brand equity from 2009-2024 presence
  2. Technology Edge: AI-powered ordering, reduced wait times
  3. Capital Resources: Global brand with substantial backing
  4. Prime Locations: Likely to secure high-traffic mall spaces
  5. Timeline: 2026 relaunch gives Cai Ca only 12-18 months to build loyalty

4. Financial Viability Analysis

4.1 Cost Structure (Per Outlet Monthly)

Fixed Costs:

  • Rent (shopping mall, high-traffic): S$15,000 – S$25,000
  • Staffing (4-5 FTE @ S$2,500/month): S$10,000 – S$12,500
  • Utilities, maintenance, cleaning: S$2,000 – S$3,000
  • Total Fixed Costs: S$27,000 – S$40,500/month

Variable Costs:

  • COGS (ingredients, cups, straws): 30-35% of revenue
  • Japanese soy milk (premium sourcing): +5-10% above standard dairy
  • Marketing & promotions: 5-8% of revenue
  • Delivery platform commissions (20-30%): Variable by channel

4.2 Revenue Projections

Average Transaction Value: S$6.50 – S$7.50 Break-even Transactions: 125-150 per outlet per day

Scenario Analysis:

ScenarioDaily TransactionsMonthly RevenueMonthly Profit/(Loss)Break-even MonthWeak Launch80S$16,000(S$22,000)NeverConservative125S$25,000(S$5,000)Month 18-24Moderate175S$35,000+S$2,500Month 12-15Strong225S$45,000+S$8,000Month 9-12

4.3 Profitability Assessment

Initial Phase (Months 1-6): Expected monthly losses of S$50,000-70,000 across 6 outlets

  • New brand building costs
  • Promotional pricing to drive trial
  • Staff training inefficiencies
  • Lower transaction volumes during awareness phase

Growth Phase (Months 7-18): Narrowing losses to S$20,000-30,000/month

  • Increasing brand recognition
  • Operational efficiency improvements
  • Repeat customer base development

Mature Phase (Months 19+): Path to profitability

  • Target: 140+ transactions per outlet daily
  • Operating margin: 8-12% at maturity
  • Requires sustained quality and consistent marketing

Capital Requirements:

  • Initial investment (6 outlets): S$1.2-1.5 million
  • Operating losses (first 18 months): S$600,000-900,000
  • Total Capital Needed: S$1.8-2.4 million minimum
  • Working capital buffer: Additional S$300,000-500,000

5. Strategic Success Factors

5.1 Strengths

  1. Founder Pedigree: Kang’s experience scaling Mr Bean from a single stall to 60+ outlets demonstrates operational excellence and growth capability
  2. Health Positioning: Nutri-Grade B-C alignment with government policy creates regulatory moat
  3. Differentiation: Soy milk base addresses lactose intolerance, offers unique flavor profile
  4. Location Access: Inherited prime Gong Cha sites before competitors
  5. Speed to Market: Rapid launch minimized competitor response time
  6. SME Agility: Independent operation allows faster pivots than franchise chains

5.2 Weaknesses

  1. Brand Recognition: Zero brand equity at launch in crowded market
  2. Taste Polarization: Soy milk flavor profile may limit mass appeal
  3. Premium Pricing Pressure: Japanese ingredients create cost disadvantage
  4. Limited Scale: 6 outlets insufficient for marketing efficiency
  5. Capital Constraints: Smaller than multinational competitors
  6. Founder Dependency: Business success tied to single individual

5.3 Critical Success Factors

Must-Achieve Milestones:

Months 1-6: Survival Phase

  • Average 100+ transactions/outlet/day
  • Achieve 30% repeat customer rate
  • Maintain 4.0+ Google/social media ratings
  • Generate organic social media buzz

Months 7-12: Traction Phase

  • Scale to 125+ transactions/outlet/day
  • Launch 2-3 new outlets in strategic locations
  • Build 10,000+ loyalty program members
  • Establish signature “hero products”

Months 13-24: Consolidation Phase

  • Achieve outlet-level profitability
  • Expand to 12-15 total outlets
  • Develop catering/corporate channels
  • Build defensible brand differentiation before Gong Cha returns

6. Risk Analysis

6.1 High-Probability Risks

Competitive Pressure (90% probability, HIGH impact)

  • Four bubble tea brands in single mall indicates oversaturation
  • Price wars compress margins
  • Promotional fatigue from constant discounts

Gong Cha Relaunch (95% probability, CRITICAL impact)

  • 2026 comeback with superior technology and established brand recognition
  • Could reclaim former customer base
  • Better capitalized for aggressive expansion

Failure to Achieve Break-even (40% probability, FATAL impact)

  • If daily transactions stay below 125, outlets bleed cash
  • Founder forced to close or sell before profitability

6.2 Medium-Probability Risks

Consumer Taste Rejection (35% probability, HIGH impact)

  • Soy milk flavor may not resonate with mainstream consumers
  • Limited appeal constrains growth ceiling

Regulatory Changes (25% probability, MODERATE impact)

  • Further tightening of Nutri-Grade standards
  • Sugar tax implementation (following Malaysia precedent)

Operational Execution (30% probability, MODERATE impact)

  • Quality inconsistency across outlets
  • Staff turnover in tight labor market

6.3 Low-Probability Risks

Health Scares (10% probability, CATASTROPHIC impact)

  • Historical precedent: 2011 plasticiser contamination, 2013 maleic acid in tapioca balls negatively impacted industry sales
  • Supply chain contamination incidents

Economic Downturn (20% probability, MODERATE impact)

  • Discretionary spending reduction
  • Beverage purchases considered non-essential

7. Long-Term Viability Assessment

7.1 Scenario Outcomes (5-Year Projection)

BASE CASE (60% probability): Moderate Success

  • Outlets: 12-15 locations by Year 5
  • Annual Revenue: S$8-10 million
  • Profitability: Achieve break-even Month 20-24, modest profitability thereafter
  • Market Position: Established niche player (3-5% market share)
  • Exit Strategy: Sustainable independent operation or potential acquisition target

UPSIDE CASE (25% probability): Strong Growth

  • Outlets: 20-25 locations, regional expansion (Malaysia)
  • Annual Revenue: S$15-18 million
  • Profitability: Break-even Month 15-18, strong margins (10-12%)
  • Market Position: Top-5 brand in Singapore
  • Exit Strategy: Attractive acquisition by larger F&B group, franchise expansion

DOWNSIDE CASE (15% probability): Failure

  • Outlets: Consolidation to 3-4 locations or complete closure
  • Timeline: Closure by Month 24-30 if break-even not achieved
  • Causes: Insufficient differentiation, Gong Cha competition, capital depletion
  • Outcome: Founder exits F&B or pivots to different concept

7.2 Three-Year Survival Probability: 65-70%

Favorable Factors (+35%):

  • Founder’s proven execution capability (+15%)
  • Health-trend alignment (+10%)
  • First-mover advantage in soy milk bubble tea (+10%)

Unfavorable Factors (-30%):

  • Intense market competition (-15%)
  • Gong Cha 2026 threat (-10%)
  • High break-even threshold (-5%)

Net Assessment: Above-average survival odds for F&B startup, but significant execution risk

8. Strategic Recommendations

8.1 Immediate Actions (Months 1-6)

  1. Accelerate Brand Building
    • Invest S$80,000-100,000 in targeted digital marketing
    • Partner with health/fitness influencers
    • Create viral signature drinks (e.g., “Golden Soy Matcha Fusion”)
  2. Drive Trial Through Promotion
    • 1-for-1 promotions during off-peak hours
    • Corporate bulk order discounts
    • Student loyalty program (key demographic)
  3. Optimize Operations
    • Implement data analytics on peak hours, popular SKUs
    • Train staff extensively on consistent quality
    • Reduce transaction time to under 3 minutes

8.2 Medium-Term Strategy (Months 7-18)

  1. Strategic Expansion
    • Open 3-5 new outlets in underserved neighborhoods
    • Target locations: Punggol, Sengkang, Woodlands (residential density)
    • Avoid direct competition in Gong Cha’s future target areas
  2. Product Innovation
    • Launch seasonal limited editions every 6-8 weeks
    • Develop proprietary soy milk formulations
    • Introduce food menu (soy-based snacks, light meals)
  3. Build Moats
    • Secure long-term leases (3-5 years) at favorable rates
    • Develop brand partnerships (fitness centers, corporate offices)
    • Create subscription/membership program with predictable revenue

8.3 Long-Term Positioning (Months 19-36)

  1. Pre-empt Gong Cha Threat
    • Build unshakeable brand loyalty before 2026
    • Lock in “health-conscious bubble tea” positioning
    • Expand to 15+ outlets to achieve scale economies
  2. Diversification
    • Bottled ready-to-drink line for supermarket distribution
    • Catering and corporate pantry services
    • Export proprietary soy milk base to other F&B operators
  3. Exit Strategy Preparation
    • Document operational playbooks for scalability
    • Achieve consistent 10%+ EBITDA margins
    • Position as acquisition target for regional F&B groups

9. Conclusion

Cai Ca faces a challenging but navigable path to long-term viability. Founder Kang Puay Seng’s track record transforming Mr Bean from a hawker stall to an international chain provides strong execution credibility, while the health-conscious positioning aligns with Singapore’s regulatory environment and consumer trends.

However, success hinges on three critical factors:

  1. Speed: Achieving break-even within 18-24 months before capital depletes
  2. Differentiation: Building defensible brand equity beyond the soy milk novelty
  3. Scale: Expanding to 15+ outlets to survive the Gong Cha 2.0 competitive onslaught

Final Assessment: Cai Ca has a 65-70% probability of surviving beyond three years if execution remains disciplined and market conditions stay favorable. The brand occupies a viable niche in Singapore’s health-conscious beverage segment, but faces existential pressure from Gong Cha’s 2026 relaunch with advanced technology and substantial backing.

Verdict: CAUTIOUSLY OPTIMISTIC with material execution risk

The next 18 months will determine whether Cai Ca becomes Singapore’s next homegrown bubble tea success story or another cautionary tale in the country’s brutal F&B landscape. Kang’s entrepreneurial resilience, combined with strategic focus on health positioning and operational excellence, provides a fighting chance—but the margin for error is razor-thin.

Analysis Date: November 2024
Sources: Industry reports, financial modeling, competitive analysis, regulatory review