New-style tea is a basket, putting everything in it?

Zebra Consumer | Chen Xiaojing

Morning C, Afternoon T, Evening A. A small new-style tea shop seems to want to capture the lifestyle of young people in one net.

At the end of last year, having just configured coffee machines for its stores, Gumeng, known for its steady expansion, has started eyeing the alcohol business. Rumors suggest the brand is currently beta-testing a canned beer product called "Fresh Grapefruit Draft Beer".

In fact, today's new-style tea shops are no longer satisfied with just selling milk tea. Coffee, baking, ice cream, and almost everything else have become standard offerings for top brands, with alcoholic beverages following suit.

Behind this collective category expansion by new-style tea brands lies the growth anxiety faced in an era of stock competition.

From milk tea to coffee and then to beer, this gradual boundary-breaking category expansion: is it the standard answer for new-style tea to break through growth bottlenecks, or a short-sighted behavior that overdraws terminal capacity and weakens the core business? The answer can only be left to time.

But it is certain that when the industry adopts the same actions to try to break homogeneous competition, it means another round of involution (intense internal competition) has already begun.

Inevitable Expansion

Whether brands like it or not, the era of collective growth for new-style tea relying on store expansion has ended.

Data from Zhaomen Canyan shows that from December 2024 to December 2025, 102,000 new new-style tea stores opened in China, while 131,000 closed, resulting in a net decrease of 29,300 stores for the year. In the first half of 2026, industry reshuffling accelerated again, with national tea store inventory shrinking to 383,100. Over 110,000 stores closed in the past year, and the net reduction in stores reached 43,200.

As the industry enters an era of stock competition, almost all brands face terminal operational pressure.

Nayuki, the representative of high-end tea drinks and the "first share of new-style tea," bears particularly heavy pressure. Consequently, the shareholder annual meeting held in June this year turned into a "roast session." Shareholders were extremely dissatisfied with the company's operational status, proposing that the founder receive only a 1 yuan annual salary, with compensation tied to performance.

Nayuki's operating conditions are indeed worrying. Since its IPO in 2021, it has only been profitable in 2023, with a profit of 13.22 million yuan; in other years, the total net loss attributable to shareholders reached 6.15 billion yuan.

In 2025, Nayuki's revenue was 4.331 billion yuan, a 12% year-on-year decline. It closed 152 stores during the year, ending with a total of 1,646 stores, marking the first negative growth in total store count since its listing.

How deep is the chill in the industry? Chagee's experience might be even more palpable.

Over the past few years，凭借 differentiated original leaf tea products, Chagee sprinted forward like a dark horse, making all other brands envious. However, against the general trend, even a dark horse had to slam on the brakes.

Although the company's revenue scale continues to grow, its net profit attributable to parents plummeted by 53.45% in 2025, revealing the cruelty of market competition. More importantly, its single-store GMV has declined continuously for multiple quarters, dropping from 574,000 yuan in Q4 2023 to 356,100 yuan in Q1 2026.

Similarly, ChaPanda's single-store operations have also seen a significant overall decline. Daily average retail sales per store dropped from 7,414 yuan in 2021 to 6,887 yuan in 2023. Although there was a slight year-on-year recovery in 2025, it was far from returning to its best days.

During the rapid growth period of the new-style tea industry, all brands could enjoy incremental dividends. Once entering the stock era, structural problems in products are fully exposed.

A research report by CICC shows that over 70% of new-style tea orders are concentrated in the short hours after noon. During other times, store equipment sits idle, labor is wasted, and fixed rent expenses result in massive sunk costs.

Categories such as coffee, light meals, and alcoholic beverages stagger with tea consumption, effectively filling the time gaps in store operations, extending effective revenue-generating hours, and diluting fixed costs.

It is precisely for these reasons that new-style tea brands have collectively launched a category expansion race.

What to Include? Each Has Its Trade-offs

Actually, conducting "Tea +" operations centered around milk tea is not new in the new-style tea industry.

Nayuki is a pioneer in composite business formats within the industry. At the beginning of the brand's establishment, it relied on the "Tea + Freshly Baked European Bread" dine-in model to break out of early homogeneous low-price competition and establish itself in the high-end market through experiential differentiation.

However, to adapt to scaled development and compress store operational costs, Nayuki initiated internal reforms in 2023, changing the in-store baking model to a lightweight model of central factory pre-preparation and simple re-baking in stores. This approach, which diluted its own product differentiation advantages for cost reduction, once sparked controversy at shareholder meetings.

From tea to alcohol, Nayuki was also an early attempter in the new-style tea industry. As early as 2019, it launched an independent business format bar called BlaBlaBar, focusing on nighttime immersive micro-intoxication socializing. Ultimately, however, this format failed to achieve scaled implementation. Only some characteristic Nayuki stores would periodically list limited tea-alcohol products.

Although current top new-style tea brands all try to pack more different categories of products into their stores, each brand makes different choices based on its own advantages.

For the ten-thousand-store sinking tier represented by Gumeng, ChaPanda, and Mixue Bingcheng, category expansion has always been extremely restrained. The bottom line to guard is not increasing the burden on franchisees. They focus on categories with high standardization, low spoilage, and ease of operation, such as coffee and ice cream, reusing existing supply chains and labor systems.

This time, Gumeng's beta testing of beer continues the lightweight thinking, selecting 30-day short-shelf-life canned products that do not add extra store production processes, requiring only sales.

Caution! Overflow When the Basket Is Full

In the short term, new-style tea category expansion can indeed effectively drive terminal store sales. However, once boundaries are crossed and 无序 stacking of categories occurs, the solution originally intended to break growth bottlenecks will evolve into new involution.

Ultimately, franchisees will become the biggest victims. Earlier this year, several authoritative media outlets conducted field visits to new-style tea stores, finding that SKUs in composite format stores nearly doubled, and the difficulty of ingredient reserves, warehouse management, and near-expiration control rose linearly.

Most small and medium franchisees lack refined operational capabilities, leading to rough inventory turnover control, which directly results in persistently high spoilage rates for baking and short-shelf-life categories. Data shows that the ingredient spoilage rate of composite format stores is 10% to 15% higher than that of pure tea stores.

In media reports, tea franchisees in many places reported that after adding new categories like coffee and baking, inventory preparation doubled, and peak season labor costs increased significantly. To compress personnel expenses, stores assign one person to handle multiple types of output, leading to continued increases in errors and customer complaints during peak hours.

Increasing categories also lengthens training cycles and raises error rates in output, causing overall operational efficiency to decline. Many stores appear to have high 账面 cash flow, but after deducting various costs, actual net profits do not rise but fall.

In addition, category expansion brings substantial fixed investments. Single pure tea stores are only equipped with basic tea-making equipment. Adding coffee, baking, and alcohol requires new coffee machines, baking ovens, and wine storage equipment, increasing overall investment. Multi-category raw material procurement also occupies working capital. According to chain industry monitoring data, inventory turnover days for composite format stores are 3-5 days longer than those for pure tea stores.

For brands, what is more fatal is that multi-category overlap causes user mindshare confusion. Cross-category operations by tea brands seem to broaden consumption scenarios but actually risk losing their core positioning.

They cannot beat chain coffee brands in coffee standardization and cost-effectiveness, nor can they match professional stores in baking and micro-intoxication scenarios, leading to being "jack of all trades, master of none."

Zhu Danpeng, a Chinese food industry analyst, mentioned in a media interview that indiscriminate cross-boundary moves by tea brands will disperse R&D and quality control resources, making it difficult to build long-term competitive barriers in vertical categories. The China Chain Store & Franchise Association also pointed out that category extension must match its own mature supply chain and core user mindshare; blindly expanding categories will only dilute the brand's original recognizability.

The deeper contradiction in the industry lies in the interests between brand headquarters and franchisees.

For brands, format expansion is almost a sure win, with raw materials, equipment supply, and management fees constituting stable income. Meanwhile, store traffic diversion, inventory spoilage, and labor expenses are all borne solely by franchisees. A slight misstep could lead to store losses.

Once such a vicious cycle forms, the franchise model widely adopted by the new-style tea industry will be unsustainable. The illusion of high cash flow created by piling up categories ultimately cannot support brands in navigating the stock competition cycle.