The Giant Beneath the Crack: The Growth History of Cha Ji Ba Wang
Text | Shi Jiaxiang
Editor | Liu Jing
Finally, the capital market has awaited the long - overdue listing of Ba Wang Cha Ji. On March 6, 2025, the China Securities Regulatory Commission issued a document approving Ba Wang Cha Ji's listing filing in the United States.
In the past eight years, this milk tea shop that started from a corner in the southwest has become a ready - to - list freshly - made tea beverage enterprise with 6,500 stores. Especially in the past two years, the number of Ba Wang Cha Ji's stores has multiplied several times, and its GMV has increased dozens to hundreds of times.
A well - regarded consumer goods company often emerges together with products that change the industry. For example, Starbucks founder Schultz introduced Italian lattes in the sixth store; Wang Ning of Pop Mart signed an exclusive license for Molly in 2016; for Heytea, it's the Grape Yogurt that has been copied by countless competitors.
Ba Wang Cha Ji is not the case. Although it also has a super hit product: Bo Ya Jue Xian, which sold 230 million cups a year. But from the product profile, it's hard to say that this is Ba Wang's exclusive original.
Ba Wang Cha Ji's real rise comes from the comprehensive victory of a modern consumer company. A consumer investor commented that since ancient times, it has been difficult to have both traffic and good products. "Naixue and Heytea tried but failed to catch both, and Cha Yan Yue Se chose not to try. Ba Wang is the only one that caught both."
This may be related to that fateful financing; perhaps related to the continuous strengthening of "total standardization"; or perhaps related to the dividend period of freshly - made tea with original tea leaves. But ultimately, it's related to the founder, Zhang Junjie.
"The public likes to see heroic enterprises. Zhang Junjie seems to be at least a bold and resourceful figure now," said the aforementioned consumer investor.
A friend of Zhang Junjie said that four years ago, when Ba Wang's average store revenue was only about 100,000 and there were only about a hundred stores, people scoffed at Zhang Junjie's claim of becoming the "Starbucks of the East." "Ninety - nine out of a hundred people didn't believe it." But today, this company has firmly regarded Starbucks as a potential competitor.
A well - known investor once said when comparing the business environments in China and Japan that Japan believes in "everyone in their place," and innovation comes from large enterprises, so there is almost no VC market; but China believes more in "Are the noble ones born noble?"
Ba Wang Cha Ji is a story of "Are the noble ones born noble?"
A Decisive Financing
Fate was rewritten at the end of 2020.
At this time, Ba Wang Cha Ji had actually started to make a profit. According to relevant sources, Ba Wang Cha Ji's GMV exceeded 200 million that year, and the net profit exceeded 10 million. "They called me back to Kunming to pick up the money every month," recalled a former core member of Ba Wang Cha Ji.
However, a divergence occurred at this time. Zhang Junjie revealed in a private occasion many years later that some shareholders at that time thought that Ba Wang only needed to expand for one more year and then could sell the shares or recruit professional managers to manage the company, but he insisted on reinvesting the profits for further expansion.
At that time, Ba Wang Cha Ji actually had four partners with equal shares, and there was no absolute controller. In the above - mentioned occasion, Zhang Junjie said that other shareholders offered a valuation of 50 million to buy out his shares, while he offered a price more than twice that amount to buy back the shares of others. This meant a capital gap of tens of millions.
At that time, Ba Wang Cha Ji was neither big nor small: there were more than 200 stores nationwide, but they were mainly concentrated in Yunnan, Guizhou, and Sichuan. The monthly sales of a single store were less than 200,000 (the monthly revenue of a Mixue Bingcheng store is about 100,000), far behind Heytea.
XVC appeared at this time. It is an early - stage VC founded in 2016.
By this time, the financing war in China's new - style tea beverage industry had reached the middle and late stages: Heytea was valued at over 16 billion, Cha Yan Yue Se was also being pursued by US - dollar funds, and Naixue, which was one step ahead, was about to list in Hong Kong.
But for XVC, companies like Heytea, Cha Yan Yue Se, Guming, and Cha Baidao were all out of the VC's range. Ba Wang was one of the few companies still in the early stage of financing.
XVC recalled in a later public document that Ba Wang Cha Ji already had the highest recognition in the Kunming area at that time. And when the store density increased, Ba Wang's same - store sales not only did not decline but continued to grow at a double - digit rate, which meant that its business model could be replicated.
After the investigation, XVC quickly held an "investment decision - making meeting" and decided to help Zhang Junjie buy back the shares held by others and completely replace the existing management team.
According to "An Yong Waves," Zhang Junjie expected a post - investment valuation of 700 million, and XVC didn't bargain. "Once you decide to invest, you don't haggle too much. If it can eventually reach 70 billion, there's no difference between 500 million and 700 million," said an investor in Ba Wang Cha Ji.
Ultimately, XVC invested over 100 million. This was the largest investment in their first - round investment since its establishment. XVC then made an additional investment round, and now it holds nearly 20% of the shares in Ba Wang. Hu Boyu, the founder of XVC, once said that the IPO of this company "can pay back about twice the total amount of money we've invested in history."
There was an episode. When meeting the investors, Zhang Junjie even proposed to leave Ba Wang Cha Ji and start a low - price milk tea brand called "Milk Tea Mobilization" with a slightly higher price than Mixue Bingcheng.
A former senior executive of Ba Wang recalled to "An Yong Waves" that Zhang Junjie's decision to stay "was the result of a collective decision." Looking back now, the others' timely withdrawal might have been the best choice. Otherwise, there might not be the current Ba Wang.
Fosun also participated in this round of investment. Another VC, Cong Bi Qiu Shi, entered the scene a few months later. At that time, Ba Wang only had a few dozen more stores, but the valuation was twice as high as the previous round.
Capital is indeed one of the keys to Ba Wang Cha Ji's fateful turnaround. Looking back, the timing of Ba Wang's fundraising was full of "timing and geographical advantages." The end of 2020 was just before the peak of consumer investment was about to decline. "It got the last wave of money when the market money was still cheap," said a consumer investor.
Of course, more importantly, it was "people's unity." Only Zhang Junjie, who had the ambition to "open stores in 100 countries" at that time, dared to promise the VC a large - scale expansion.
Expand, Expand at All Costs
With sufficient funds, Ba Wang Cha Ji, which had received over 300 million in financing, quickly started to expand.
The first stop was Chengdu. In June 2021, Ba Wang Cha Ji moved from Kunming to Chengdu and rented the best location in Chunxi Road in Chengdu with an annual rent in the millions. The management team grew from a few people to 200.
People close to Zhang Junjie said that during the pandemic, there were many enterprises and brands with money, but none of them were expanding aggressively. They all adopted a defensive strategy, except Zhang Junjie, who "was the most willing to spend money." In the conservative offline catering industry, this is not a common way of thinking.
At that time, Ba Wang's internal discussions repeatedly emphasized that without scale, they couldn't enter the game. "We must reach 1,000 stores at all costs," which was set as the goal to be achieved by the end of 2022.
However, the process was not smooth. For example, shortly after the opening of the Chunxi Road store, the sales of the old stores in Yunnan and Guangxi declined. The first store in Xi'an was opened in Datang Ever - Bright City, but the footfall and display space were not as expected. Song Wei (a pseudonym), the former general manager of Ba Wang Cha Ji's Shaanxi branch, told "An Yong Waves" that Ba Wang opened five stores in Xi'an in a short period, but the market had little awareness of it, and the stores were constantly losing money.
However, this didn't stop Ba Wang from expanding. Around 2021, to attract franchisees, Ba Wang Cha Ji offered 100 spots in each province with waived franchise fees, brand usage fees, and a set of equipment for free. The decoration fee was only half of what it is now.
The investment promotion brochure prepared by the headquarters included all the details from the initial communication with customers to the final signing. When signing the contract, it was required to "take photos + write a caption + post on Moments" as much as possible, so that potential customers would feel a sense of urgency. "If it's an old franchisee opening a new store, the caption should be prominent to convince new customers."
However, a person who has been in the tea beverage industry for a long time emphasized to us that even during the period of accelerated store - opening, Ba Wang didn't lower its requirements for store location.
A person from Ba Wang gave an example: for two stores only 10 meters apart, Ba Wang would "go to any lengths" to get the one with better exposure. An early investment promotion brochure showed that Ba Wang required not to open street - side stores that might affect the brand, nor to open stores in the corners, basements, or above the third floor of shopping malls.
The effect of the expansion was immediate. According to "An Yong Waves," in 2021, Ba Wang Cha Ji's GMV doubled compared to the previous year, but it turned from profit to loss, with a loss of over 10 million. Ba Wang tried to raise funds again at that time but failed.
By the end of 2022, Ba Wang entered nine central and eastern provinces such as Zhejiang, Jiangsu, and Guangdong, and also entered the major tea beverage markets in Guangzhou and Shenzhen, first - tier cities, from the previous second - to fifth - tier cities.
Here's some background. At this time, Cha Yan Yue Se was actually more popular, but the company didn't expand rapidly. "The market dividend created by Cha Yan was taken by Ba Wang," said a person close to Cha Yan Yue Se.
An early investor who had looked into Ba Wang said he was puzzled why the market would accept Ba Wang's products when its average price was 3 or 4 yuan higher than Cha Yan's. Perhaps the only explanation is that consumers' demand for a cup of freshly - made tea with original tea leaves is stronger than their sensitivity to price.
Ba Wang's aggressive strategy quickly occupied the market that Cha Yan had cultivated for eight years.
Replicable
A typical day for a back - kitchen staff member at Ba Wang Cha Ji is like this: At 8:30 in the morning, turn on the tea - brewing machine, pour 60 grams of Jasmine Snow Buds into it, press the button to get 2,100 milliliters of hot water, steep it at 80 degrees Celsius for 7 and a half minutes, then pour in 750 grams of ice cubes, stir until they melt and skim the foam, and you'll get about 3 liters of Jasmine Snow Buds tea soup. This tea soup is Ba Wang Cha Ji's biggest secret - the raw material for making Bo Ya Jue Xian.
According to a rough calculation based on the ingredient list, a large - sized, standard - ice, slightly - sweet Bo Ya Jue Xian uses 280 ml of Jasmine Snow Buds tea soup, and one batch of tea soup can make about 10 cups. During peak hours, it will be used up in three or four minutes.
Many Ba Wang Cha Ji store staff members feel that at least six out of every ten cups sold are Bo Ya Jue Xian. In 2023, a total of 230 million cups of Bo Ya Jue Xian were sold. (Heytea's Grape Yogurt sold a total of 150 million cups in six years of popularity.)
There's a saying in the tea beverage industry that "a brand only has a three - year glorious period," but an employee of Ba Wang Cha Ji believes that Ba Wang has broken this curse. Internally, Zhang Junjie often says, "We're not making delicacies; we're making the rice and noodles in the milk tea industry." Data shows that at least after 2019, the top five SKUs of Ba Wang Cha Ji always accounted for more than 50%.
But in fact, Ba Wang's menu wasn't always this simple. For example, they once learned from Naixue's Tea and made European - style bread. Around 2018, when Ba Wang Cha Ji had just expanded outside Kunming, it hired a master of European - style bread with high salaries and even stock options.
European - style bread has high labor costs and a short sales cycle. Unsold bread on the same day is a loss. A former senior executive told "An Yong Waves" that the European - style bread strategy finally resulted in a loss of millions. This also made him realize that "blind following has no vitality."
The stores were gradually closed, and the business finally shrank back to Yunnan, Guizhou, and Guangxi. "When the brand power is weak, it can only cover the neighboring provinces," said the above - mentioned senior executive.
Fruit tea is a product that has accompanied Ba Wang Cha Ji for a longer time. In the second year of Ba Wang's establishment, Heytea and Naixue, which focused on fruit tea, were very popular. But Ba Wang gradually realized that compared with the milk tea industry, the fresh - fruit supply chain is much more complex. For example, in October 2019, when Ba Wang Cha Ji launched a strawberry tea, the launch was postponed in East China and Guangxi due to climate reasons.
To solve this problem, the above - mentioned former senior executive said that Ba Wang also tried to purchase fruits centrally and distribute them nationwide, but later found that the loss was greater than the profit - this was called "the stupidest decision ever made." Helplessly, Ba Wang Cha Ji had to allow franchisees to purchase fresh fruits on their own, but the problem remained unsolved: the sweetness and taste of fruits couldn't be standardized.
To solve a similar problem, Heytea once used the method of relaying production areas, purchasing strawberries in Anhui, Yunnan, Jiangsu, etc., to ensure a year - round supply of fresh strawberries. The fact that Grape Yogurt sold 150 million cups is also partly related to the ease of grape cultivation and the continuous supply throughout the year.
Guming, which has the largest fruit - purchasing scale among several new - style tea beverage brands, first built warehouses and then opened stores. However, the price is that it has not been able to expand to most northern cities, including Beijing.
Zhang Junjie revealed in a private occasion that in the first year of establishment, the proportion of freshly - made tea with original tea leaves in Ba Wang was only 30%. The next year, it was 60%, and it wasn't until 2020 that the proportion exceeded 90%. But even in that year, more than half of the 20 new products launched were fruit teas.
After introducing capital, Ba Wang Cha Ji only had a small amount of fruit tea left. But completely eliminating them was still a decision as difficult as Heytea's price cut. "Although in terms of data, it already accounts for 90%, if the fruit tea is removed, the franchisees' income will be reduced by 10%, and the franchisees still have a profit margin from self - purchasing," an investor in Ba Wang told "An Yong Waves."
A former core member of Ba Wang Cha Ji recalled and summarized that almost all the problems that have occurred in the tea beverage industry have also happened to them. "We just didn't go out of business."
In September 2021, before the opening of the Chunxi Road store in Chengdu, the slogan on Ba Wang Cha Ji's official WeChat account was "Fresh taste in every sip of fragrant tea and sweet fruit." After that, it became "Freshly - made tea with original tea leaves, taste the real tea flavor." By the second half of 2023, Zhang Junjie reduced the fruit tea to only those made with seasonal fruits like lemons and coconuts.