Huawei Explores In-Store Coffee, Tims China Moves Toward SPAC Listing

This is an English adaptation of a FoodBud historical article originally published on August 22, 2022.

FoodBud introduced FB Inspire as a format for collecting fragmented but useful signals from the foodservice chain market, following its earlier FB Insight focus on international chains and Chinese brands going overseas.

1. Huawei’s coffee-service opportunity

Huawei’s move into coffee had already been widely reported, mainly around its registration of coffee-related logos. FoodBud’s understanding was that Huawei was looking to provide coffee service inside its own offline stores and had already been speaking with domestic coffee brands about possible cooperation.

Given Huawei’s position in the Chinese consumer market, and the pressure it had faced in the U.S. market, FoodBud noted that Huawei might be more inclined to choose a local coffee partner.

According to Jihai brand-monitoring data cited in the article, Huawei had 8,210 offline stores. If coffee service were rolled out broadly, the scale would be significant.

Industry comments cited by FoodBud framed the partnership question around traffic and brand fit:

• @YOLO_ compared it with other cross-brand models such as Huazhu + Costa, and argued that coffee could help bring traffic into Huawei stores while customers browse phones and IoT products. Coffee coupons could also be bundled with device purchases. The comment suggested that actual sales would still depend on product strength, and proposed Manner as a potential partner.
• one social-media user suggested that better-known brands would likely want visible branding, so Huawei might instead choose a smaller brand.

2. HEYTEA staff and delivery riders accused of exploiting reimbursement loophole

Citing a report from The Paper, FoodBud said delivery riders and a HEYTEA store manager allegedly colluded to exploit a company replacement-order settlement loophole. They were accused of fabricating more than 800 orders and obtaining over RMB 130,000 in delivery-fee reimbursements.

In July 2022, Mr. Wang, a representative of the company behind the well-known tea-drink brand HEYTEA, reported the case to Longhua Police Station and the Xuhui economic-crime investigation team. He said the company had found that between January and March, someone had used the company’s replacement-order process to claim large volumes of delivery fees, totaling more than RMB 130,000.

Mr. Wang said replacement orders were usually low-value because milk-tea costs were not high, and monthly replacement costs were normally no more than RMB 3,000, so the company generally did not keep detailed records. However, because each store settled delivery fees monthly with specific courier companies, the company found anomalies when checking courier data.

The article explained that replacement orders were used when a drink was spilled or made incorrectly during delivery: the store manager would use a dedicated work phone and designated courier software to send another order to the delivery customer. The same process could also be used when Store A needed fruit, cups, straws, or other materials from Store B: Store A’s manager could ask a familiar rider to run the errand first, then create a delivery order based on the actual weight of the items for settlement with the rider.

3. Tims China’s SPAC listing nears completion

On August 19, the SPAC company planning to merge with Tims China held a vote on the merger proposal. The vote count cited by FoodBud was 28.35 million in favor, 1.91 million against, and 138,000 abstentions.

FoodBud noted that the remaining question was the exact listing timing. The planned ticker was THCH. The article also observed that taking the China business public in the North American market through a SPAC process had been arduous, with disclosures covering items such as communications among shareholders and privacy-related information barriers.

Note: SPAC, listing, and vote figures above are historical as of the original article date, August 22, 2022.