If you travel to Changsha, the capital of Chairman Mao’s home province of Hunan, you might witness China's latest tea revolution with long queues of young locals outside Modern China Tea Shop (MCTS).
The tea house is a "hot" talking point on China's leading social media platform Weibo. Fans living in other towns are even willing to pay Changsha locals RMB 13–16, almost the price of the drink itself, to buy and take pictures of their favorite tea lattes to post on social media. The insta-proxies have kickstarted a new online business for Changsha tea drinkers and influencers.
But MCTS founder Lyu Liang has no plans to expand the store beyond his hometown. He prefers to pitch the artisan beverages to the city's 8m residents by doubling his retail outlets to over 200 by the end of 2019.
“If your basic skills are not solid enough, opening stores in other cities would inevitably create more negative customer comments,” Lyu has said, adding that good reputation is built gradually through word-of-mouth.
QA challenges
In a brave and unusual move, MCTS has printed a message on all drink receipts: “Every drink here is made on-demand. It’s hard to avoid slipping up when offering fast service. If your drink doesn’t meet your expectation, please feel free to go to any MCTS store and ask for a new drink.”
That might seem to be a high-risk strategy, given that the tastes and expectations of customers can vary widely. But MCTS's replacement drink practice has turned out to be an effective way to earn customer goodwill.
“The last time when I ordered a Frothy Osmanthus Oolong, I said to my friend that the paper cup was leaking a bit as we were leaving the store. A female staff heard it and immediately made a new one for me. What can I say?” a customer commented on Weibo, telling other customers about the offer. Since the practice began in 2015, only one customer had been caught cheating to get free drinks over and over again.
In March 2017, a downtown store was suspended after the local food and drug administration found that the MCTS outlet didn’t have a food business license and had not complied with food additives regulations. The company admitted the oversight and responded by checking the status of five other stores. The suspended outlet completed the required formalities and got the license.
MCTS now operates a self-inspection mechanism and publishes monthly reports on the food safety of all its stores on WeChat. Incidents, such as a thread of hair found in drinks by customers, were revealed in the reports. A social media pundit pointed out: “It's worthy of admiration. This practice requires internal management strength.”
Savvy tea drinking brand
Lyu has created a distinctive mixing technique, typically featuring three or four layers per drink. For example, the signature drink Youlan Latte (no coffee added in spite of the latte name), has a black tea bottom layer with whipped cream in the middle and chopped pecan nuts topping.
Staff will inform first-time customers about the MCTS three-step drinking method. A blogger wrote about her experience of drinking Youlan Latte for the first time: “Eat the pecan nuts for a nutty start, sip some of the whipped cream before mixing it into the black tea. Once melted, you can enjoy it as a black tea latte!”
Unlike emerging players like Heytea and Nayuki that release a new drink every one or two months to attract customers, MCTS has only launched two new recipes in 2018. Within its menu of over 20 drinks featuring pure tea, fresh juice and various concoctions with milk and whipped cream; MCTS has produced several winners that often attract long queues of customers to its stores.
All MCTS paper cups have eye-catching designs of well-known Chinese paintings, such as a portrait of the Qing dynasty emperor Qianglong. Lyu has spent over RMB 1m to buy the copyright of various artwork from museums including the Forbidden City's Palace Museum. He has also invited illustrators to produce contemporary versions based on the classics.
Other MCTS collectibles include porcelain cups, bookmarks and palace-style round fans. Some are for sale while others like the round fans are given as promotional gifts to customers. Some newly-weds buy the beautifully designed tins of MCTS tea leaves to give to wedding guests.
Inspired by Coca-Cola
Former advertising guru Lyu had trialed various business ideas including a cinema popcorn kiosk, sauced meat shop and milk tea franchise. Inspired by pop music with Chinese cultural elements in 2013, he designed a logo featuring a traditional portrait of a Chinese lady using his wife as a model. In December, Lyu decided to open the first MCTS store at Changsha's downtown landmark Huangxing Square.
Lyu wanted MCTS to be more than just selling tea drinks. “Feelings of warmth are delivered through services. Both online and offline interactions with customers shape their perceptions of your brand,” he said.
For example, every store has a small medicine chest containing first-aid items like band-aid, floral water, burn ointment and cotton swabs for customers and walk-ins who need help without buying a drink. On rainy days, umbrellas are also available in the stores.
“I want MCTS to become a longstanding brand […] like Coca-Cola, a drink that grandfathers, dads and sons can all enjoy,” Lyu said. The transformation of the Chinese tea house into a global household name may even include a song by a Changsha student. Composed to celebrate her high school graduation, the song “Let Me Buy You a Youlan Latte” has now gone viral in China.
