New Milk Tea Ranking: Who is the Dark Horse?

With the submission of the prospectus by Bawang Chaji, listed companies such as MIXUE Ice City, Cha Baidao, and NAYUKI have released their latest financial reports, and the landscape of the new tea beverage industry is gradually becoming clear:

MIXUE Ice City leads by a significant margin, ranking first in the industry in terms of store count, revenue, net profit, and membership numbers. Bawang Chaji has emerged as a dark horse, surpassing the previous second-place Gu Ming and third-place Cha Baidao, becoming the second in the industry.

The competitive landscape between MIXUE Ice City and Bawang Chaji is becoming increasingly apparent. NAYUKI has fallen from grace; although its revenue is comparable to Cha Baidao, there is a huge gap in net profit, with a total loss of 919 million yuan for the entire year of 2024.

Although HEYTEA has not publicly disclosed financial data such as revenue and net profit, it is known from previous reports that the number of stores puts HEYTEA in a similarly awkward position of "falling from grace" as NAYUKI.

The landscape of the new tea beverage industry has been completely rewritten. Once representing the high-end influencer milk tea image and firmly occupying consumer minds, HEYTEA and NAYUKI have now been successively overtaken by mid-range and affordable tea brands.

Of course, the new tea beverage market landscape is rapidly changing, and the yet-to-be-listed HEYTEA remains one of the biggest variables in the industry's changes. However, it can be confirmed that competition in the new tea beverage market will only intensify in 2025. The number of industry brands and stores is nearing saturation, and the closure rate of continuously loss-making stores is rising, accelerating the reshuffle. Industry insiders analyze that a large-scale wave of store closures may occur in the second half of the year.

High-end versus down-market, who will laugh last?

Aggressive Expansion, MIXUE Earns the Most, Bawang Chaji Has Higher Profit Margins

From a profitability perspective, MIXUE Ice City, with the most stores, is undoubtedly the most profitable.

The net profit of MIXUE Ice City is equivalent to the total of Bawang Chaji, Gu Ming, and Cha Baidao combined. The first financial report released by MIXUE Group after going public on March 26 shows that MIXUE Group achieved operating revenue of 24.83 billion yuan in 2024, a year-on-year increase of 22.3%, with a net profit of 4.45 billion yuan, a year-on-year increase of 39.8%; gross profit reached 8.06 billion yuan, a year-on-year increase of 34.4%; and the gross profit margin was 32.5%.

MIXUE Ice City is the only new tea beverage company that has achieved gross profit margin growth for four consecutive years. Its prospectus and financial report data show that from 2021 to 2024, MIXUE Ice City's gross profit margins were 31.3%, 28.3%, 29.5%, and 32.5%, respectively.

The newly emerged dark horse Bawang Chaji excels in gross profit margin and net profit margin. Its prospectus shows that in 2024, Bawang Chaji achieved annual revenue of 12.405 billion yuan, with a net profit of 2.515 billion yuan; the gross profit margin reached 51.5%, and the net profit margin was 20.3%. In comparison, MIXUE Ice City's net profit margin is only 18%. However, it has only 6,440 stores, about one-seventh of MIXUE Ice City. Against the backdrop of declining cup volumes per store for new tea beverage brands, having more stores may actually dilute net profit. Its sustained profitability remains to be proven.

Gu Ming's net profit margin is 17%, lower than the first and second in the industry. The financial report released by Gu Ming Holdings Limited shows that in 2024, the company achieved revenue of 8.791 billion yuan, a year-on-year increase of 14.5%, with a net profit of 1.493 billion yuan, a year-on-year increase of 36.2% The three new tea beverage companies mentioned above have all achieved double growth in revenue and net profit.

In terms of expansion speed, MIXUE Ice City and Bawang Chaji are the most rapid. MIXUE Group's financial report shows that as of December 31, 2024, the total number of MIXUE stores worldwide reached 46,479, an increase of 8,914 stores compared to the same period in 2023, averaging 24 new stores opened daily.

In 2024, Bawang Chaji opened an average of 8 new stores daily. The past two years have been a period of rapid growth for Bawang Chaji. Its prospectus shows that the number of global stores in 2022, 2023, and 2024 was 1,087, 3,511, and 6,440, respectively, with an increase of 2,929 stores in 2024 alone. In comparison, NAYUKI only added 143 stores in 2024, while Guming added 913 stores.

However, it is worth mentioning that the growth in the number of Bawang Chaji stores comes at the cost of diluting the performance of franchisees' individual stores. The prospectus of Bawang Chaji mentions that in the fourth quarter of 2024, China's same-store GMV decreased by 18.4% year-on-year, primarily due to increased store density and intensified market competition.

In contrast, the financial data of Chabaidao and NAYUKI appears somewhat disappointing. Both companies experienced declines in revenue and net profit, with NAYUKI becoming the loss leader in the tea beverage industry.

Chabaidao's financial report shows that in 2024, it achieved revenue of 4.92 billion yuan, a year-on-year decrease of 13.78%, and a net profit of 472 million yuan, a year-on-year decrease of 58.3%. NAYUKI's financial report shows that in 2024, it achieved revenue of 4.921 billion yuan, a year-on-year decrease of 4.7%, with net profit turning from a profit of 20.9 million yuan in 2023 to a loss of 919 million yuan in 2024.

Shanghaia Auntie, which submitted its prospectus for the second time at the end of last year, also saw a decline in net profit and a slowdown in growth. Its prospectus shows that from 2021 to 2023, the company's revenue was 1.64 billion yuan, 2.199 billion yuan, and 3.348 billion yuan, achieving growth for three consecutive years. In the first half of 2024, Shanghaia Auntie's revenue grew by 6% year-on-year to 1.658 billion yuan, but net profit fell by 12.3% year-on-year to 168 million yuan.

NAYUKI and HEYTEA Fall from Grace

Compared to franchise-based tea brands, high-end tea brands NAYUKI and HEYTEA, which primarily operate direct stores, have seen a noticeable decline in both volume and performance.

The data for NAYUKI is the most straightforward, with a loss of 919 million yuan for the entire year of 2024. In terms of store operations, the average daily order volume per direct store of NAYUKI dropped from 344.3 orders in 2023 to 270.5 orders in 2024, and the average sales value per order decreased from 29.6 yuan in 2023 to 26.7 yuan in 2024.

A store manager of NAYUKI in Beijing told Tech Planet that all NAYUKI stores in the Beijing area are direct stores, and the store he manages ranks among the lowest in performance in the region. Since opening less than two years ago, the store initially had good sales during promotional events, and on busy weekends, daily revenue could even reach 10,000 yuan Now that sales are stable, the average daily revenue is around 5,000-6,000 yuan.

From the employees' perspective, the frequency of new product launches has increased. The store manager stated that there are almost new products every month, with new items introduced each month. Official data from NAYUKI shows that in 2024, NAYUKI will launch over 120 new products, including 70 beverages and 55 baked goods.

The brand continues to expand its offerings, and NAYUKI has covered almost all categories, including tea beverages, coffee, baked goods, and light meals. However, according to the aforementioned store manager, many franchisees in lower-tier markets choose to forgo the coffee category when joining NAYUKI, as not joining the coffee category can save a portion of costs. From the franchisees' perspective, NAYUKI does not have a significant competitive advantage over Luckin Coffee, making it unnecessary to directly compete with Luckin's core products.

The large store model has somewhat dragged down NAYUKI's performance. Many NAYUKI stores are relatively large, and the concept of a "third space" allowed NAYUKI to be compared to Starbucks for a long time, with a clear social attribute. However, in reality, nearly half of NAYUKI's orders now come from takeout. From the order sources, 45.5% and 41.4% of orders come from in-store pickup and takeout, respectively. As takeout orders increase, the large area of the "third space" has instead become a waste, and high costs have severely diluted brand profits.

The baking SKU has also invisibly raised the company's operating costs. Although baked goods have high gross margins, they are considered low-frequency consumption in the tea beverage industry. Against the backdrop of consumption downgrade, high-end baking businesses will inevitably be affected. Several NAYUKI store managers in Beijing mentioned that baking revenue does not account for a high proportion of store income.

Since its listing on the Hong Kong Stock Exchange in 2021, NAYUKI has accumulated losses of over 5.6 billion yuan. The "tea beverage + European bread" model once allowed its market value to exceed 32 billion Hong Kong dollars. However, NAYUKI's market value has now evaporated by 95%.

The situation for HEYTEA is also not optimistic. An employee at a core business district store of HEYTEA revealed that compared to its previous peak, the store's revenue has declined, mainly due to a decrease in customer spending and product price reductions, dropping from over thirty yuan to around ten yuan. However, customer traffic remains relatively stable.

Third-party data shows that from 2021 to 2024, among more than 50 tea beverage brands, 56% of brands have experienced varying degrees of price reductions. Among them, LELECHA, NAYUKI, and HEYTEA have seen the largest declines, with overall reductions exceeding 10 yuan.

Earlier this year, HEYTEA stopped external franchising. A store manager of a HEYTEA franchise in a lower-tier market stated that he was the first franchisee in the region after HEYTEA opened for franchising. At the beginning of its operation, the store's monthly revenue reached 500,000-600,000 yuan, but three months later, the revenue declined to a stable phase, with monthly revenue around 200,000-300,000 yuan. By the end of last year, as more HEYTEA stores opened nearby, the monthly sales of the same store had dropped to around 180,000 yuan. The material loss rate for the store is relatively high, around 50%.

High-end tea beverages are even more out of place in lower-tier markets.

Store Closures, Franchise Backtracking, Does New Tea Beverage Have a New Story?

The new tea beverage business is becoming increasingly difficult to operate.

The most compelling data is the number of store closures. Although MIXUE Ice City has a rapid store opening speed, the number of closures is also high. Its publicly available data shows that from 2021 to 2024, the number of franchise stores closed by MIXUE Ice City was 577, 696, 1307, and 1609 respectively.

According to Gu Ming's financial report, the number of new stores opened by the company in 2024 was 1587, while 674 stores were closed. In the previous year, 2597 new stores were opened, and 265 were closed. The pace of opening stores has slowed down, and the number of closures has increased.

According to Cha Bai Dao's financial report, the total number of franchise store closures in 2024 was 890, while in 2023, the number of closures was only 220. The number of closures in 2024 is more than four times that of 2023.

The prospectus of Hu Shang A Yi shows that from 2021 to 2023, Hu Shang A Yi closed 210, 393, and 370 stores each year. In the first half of 2024, the number of franchise stores closed by Hu Shang A Yi was 531, accounting for 6% of the total number of stores. A research report released by Hua An Securities shows that Hu Shang A Yi's closure rate in 2023 was 7.7%, higher than that of other tea beverage brands.

The new tea beverage industry's dividends have peaked, and it has become very difficult to benefit from new store openings. Even the "dark horse" of the industry, Ba Wang Cha Ji, is finding its growth story increasingly challenging. An employee at a Ba Wang Cha Ji store near Beijing's Guomao, which opened less than six months ago, stated that apart from the initial grand opening promotions that attracted a lot of customers, during other times, such as weekdays, there are only about 200 orders per day. Based on an average order value of 18 yuan, the daily revenue of a store is only around 4000 yuan.

Franchisees are also feeling increased pressure. A recruitment manager from Ba Wang Cha Ji told Tech Planet that since the end of last year, the monthly revenue of newly opened stores is around 450,000 yuan, which is not as good as before. The earliest franchisees invested 700,000 to 800,000 yuan, and could break even in as little as four months, but now it takes at least one to two years to recoup the investment. "Investing in Ba Wang Cha Ji now is like chasing a tail investment, and the brand is on a downward trend." The health tea market is severely homogenized, with brands like Jasmine Milk Tea, Grandpa Doesn't Brew Tea, and Grandma's Handmade Tea all competing.

Ba Wang Cha Ji, which is seeking to go public in the U.S. stock market, is trying to tell a new story to investors beyond milk tea. In addition to its main brand, it has incubated a new sub-brand called "Second Cup Tea." An employee at a "Second Cup Tea" store in Shanghai revealed that there are currently three Second Cup Tea stores in Shanghai. Compared to Ba Wang Cha Ji, the new brand's sales are not very good, with significantly less customer traffic. Previously, at Ba Wang Cha Ji stores, employee income was linked to store revenue; the higher the revenue, the higher the employee income. Now, the income at the new brand's stores has shrunk significantly. Unlike Ba Wang Cha Ji, which focuses on fresh milk tea, Second Cup Tea emphasizes "traditional extraction of Chinese pure tea," "Chinese-style tea," and "tea latte," and has also added baked goods to its offerings.

However, with the increasing density of stores and decreasing revenue per store, growth is becoming increasingly difficult. Brands including HEYTEA and Ba Wang Cha Ji are responding to the intensifying industry competition by closing stores, lowering prices, reducing store sizes, expanding overseas, or accelerating the launch of new products 霸王茶姬 has launched a low-caffeine product in response to public criticism regarding the high caffeine content of its flagship product, Bo Ya Jue Xuan coffee, which can lead to insomnia issues.

For tea beverage companies, 2025 will be a crucial year to build core advantages and withstand the wave of closures.

This article is reproduced from Tech Planet (ID: tech618) with authorization, and all copyrights belong to Tech Planet. Unauthorized translation or reproduction is prohibited.

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