Three Choices for CHAGEE

On November 28, CHAGEE released its Q3 financial report for 2025, with the overseas market emerging as a highlight. The overseas GMV this quarter reached 303 million yuan, a year-on-year increase of 75.3%. On the other hand, affected by market competition and the slowdown in expansion, the domestic GMV was 7.6292 billion yuan, a decrease compared to 8.1301 billion yuan in the same period of 2024.

Although not directly involved in the food delivery war, CHAGEE was still affected to some extent and faced pressure this quarter.

In fact, many domestic platforms and brands exhausted a large amount of resources in the food delivery war, yet no clear winner emerged. The three major platforms spent at least over 44 billion yuan in the food delivery war in Q3, resulting in a significant decline in profits. Some tea and coffee brands, as important participants, also saw an increase in revenue but not in profit due to large delivery fees.

Compared with most tea brands, CHAGEE seems to be rather special. This quarter, faced with an unprecedentedly complex situation and multiple choices, CHAGEE chose to exercise restraint in terms of scale, focus on product R & D and store models, and act as a steady player, making full preparations for the long - term stock market.

01. Choose franchisees or bargain - hunters?

Since the second half of the year, many issues related to CHAGEE have been put on the table for discussion.

One of them is not participating in the food delivery war.

Ms. Min, who has been a CHAGEE franchisee for 7 years and owns more than a dozen stores, told 36Kr that many franchisees, including herself, privately discussed whether the company's decision not to participate in the food delivery war was right or wrong.

The opinions were very polarized. Some franchisees believed that the company would miss a good opportunity for competition by not participating in the food delivery war. On the other hand, some franchisees thought that the subsidies in the food delivery war would definitely affect profits, and since CHAGEE has a large - store model, if in - store orders were converted into food delivery orders, franchisees would incur more costs.

Ms. Min told 36Kr that during the most intense period of the food delivery war, she, as a representative of franchisees, asked the company why it didn't choose to participate.

At that time, the company's real feedback to her was that it would not participate in the food delivery war because it would directly affect the actual income of franchisees.

Analyzing CHAGEE's franchise model algorithm, the situation becomes clear. Under the current algorithm, the cost of raw materials in stores accounts for a high proportion, and CHAGEE's profits mainly come from the price difference of selling raw materials. If it participates in the food delivery war, it means that regardless of how much franchisees earn, as long as the store has a higher cup - output volume, CHAGEE can continuously make profits.

"In other words, if CHAGEE's products are sold for only 9.9 yuan on the food delivery platform today, there will be no problem with sales. But if the company does so, the first to be hurt will be the franchisees," Ms. Min said.

After Q3, the results of the food delivery war are on paper. For some tea brands, the revenue and scale achieved this quarter were actually the result of sacrificing profits. Moreover, the platform's subsidy policy is constantly tightening, gradually shifting from the platform bearing the cost in the early stage to joint subsidies with brands and franchisees. For participating merchants, their profit margin per cup is still shrinking.

In addition, once the subsidies decline or stop, and consumers' minds are still fixed on the subsidized prices, it will inevitably affect store orders in the short term.

Not blindly participating in the war and ensuring the actual income of franchisees was CHAGEE's rhythm in Q3. Judging from the data, CHAGEE's store operations were healthy this quarter. As of September 30, CHAGEE's store closure rate has been 0.3% for three consecutive quarters, lower than the industry's closure rate of 2% - 10%.

Ms. Min also told 36Kr that starting from January 1, 2026, CHAGEE will have a key change, that is, to launch a new business model.

She provided 36Kr with an internal document. By comparing with the past, it can be found that the new business model has the following core changes: significant concessions on raw materials, the brand will underwrite discount activities, and the model will shift from the previous supply - chain model to GMV commission sharing. The sharing model can prompt CHAGEE to take more brand actions and jointly promote GMV growth with franchisees. At the same time, it will give franchisees more discount subsidies, enabling them to more flexibly cooperate with marketing strategies and reduce business risks.

A person close to CHAGEE told 36Kr that the core of the new model algorithm is to boost store GMV, and the brand and franchisees will share risks.

Ms. Min said that after the new model was introduced, many franchisees immediately found her to calculate how much they could earn. A few franchisees also directly expressed their doubts, believing that under the discount subsidies of the new model, if the store mainly relies on dine - in customers, their actual income might decrease.

But she believes that in the long run, this model is actually a good thing for franchisees.

"I understand there are three reasons. First, CHAGEE's core competitiveness lies in its products. In the past, the company made money from raw materials. Once a new product was launched, it was difficult to decide whether the company or the franchisees should bear the additional cost in this environment. Second, under the new model, the company no longer makes money from raw materials but shifts to GMV commission. In fact, it chooses to stand on the same side as franchisees. Only when the store's GMV is higher can the company's profit be higher. Third, the company is now willing to bear more discount subsidies, which allows us to better adapt to market changes. After all, no one can guarantee the future trend of the industry."

Obviously, by changing from the past supply - chain model to the sharing model, CHAGEE today chooses to closely tie its interests with franchisees and advance and retreat together.

02. Choose to follow the trend or stay calm?

Besides the food delivery war, there has been much discussion recently about what CHAGEE has been doing without launching new products for half a year.

Compared with the outside world, franchisees noticed and were more sensitive to this issue earlier. Ms. Min said that she never missed any quarterly meetings of CHAGEE, and this issue was publicly mentioned by franchisees at the latest meeting.

Facing the doubts of franchisees, CHAGEE did not avoid the issue. Ms. Min told 36Kr that the headquarters gave three responses to franchisees: first, to ensure the launch of new product raw materials in the national market, the stability of the supply chain needs to be considered; second, the production of new products in some markets may involve the upgrade or replacement of store equipment, which may increase the burden on franchisees; third, the cost of new product raw materials is high, and before changing the franchise model algorithm, it will directly affect the cost structure of stores.

In the past six months, CHAGEE's national product launch has not been fast, or even can be said to be "slow". One of the actions was the key iteration of the flagship product "Boyajuexian" in November, that is, the launch of the floral - scented version of "Boyajuexian" nationwide. The product refreshed the tea base and enhanced the floral aroma.

Ms. Min told 36Kr that the floral - scented version of the new product has been launched in her stores. She found that although the raw material cost of the floral - scented "Boyajuexian" has increased, the selling price remains the same as the previous tea - scented version without a price increase.

Later, she learned that the company actively subsidized the raw materials of the floral - scented version. Subsidizing more than 7,000 stores at the same time is not a small expense for CHAGEE.

In fact, behind the "slow" actions is the consideration of brand image and store operations. Since its inception, CHAGEE has maintained its distinct brand style through a flagship - product strategy. In other words, for CHAGEE with more than 7,000 stores in total, it is not difficult to follow the trend, but it is difficult to always maintain the consistency of product and brand value. Caution is actually a form of respect.

Although CHAGEE was restrained in national product launches, its exploration of regional new products did not stop this quarter and received good feedback.

In July, a limited - edition new product "Fenghe Quyuan" was launched in Zhejiang and quickly became one of the most popular new products in the Zhejiang region in 2025. In Sichuan and Tibet regions, CHAGEE launched a limited - edition new product "Chuan Shang Xing Ge" in collaboration with "Panda Hehua". In the first week of its launch, the new product accounted for nearly 20% of the total cups sold, which means that on average, one out of every five consumers bought this product.

In addition, the aforementioned person close to the company also told 36Kr that CHAGEE had many product strategy meetings in Q3 and Q4, and it is expected to launch more than a dozen new products in the future, far exceeding the frequency of previous years.

"In the past period, the company has mainly been observing the market, conducting research, and making new innovations around 'tea' itself," the person said.

At the quarterly earnings conference call, founder Zhang Junjie also specifically mentioned that CHAGEE will promote the implementation of the 4.0 menu. In the future, in addition to fresh milk tea made from original tea leaves, new product categories such as specially - blended pure tea will be launched.

Ms. Min also saw at the internal new - product tasting event that the company's new - product library includes not only tea lattes but also fruit - tea products. "To be honest, you get what you pay for. The taste of the tea soup is very good. The company's current strategy is correct. There is no point in getting involved in the cut - throat competition. We should build a high - value brand and offer customers a good cup of tea. That's the most important thing," she said.

03. Choose short - term interests or long - term value?

The new tea - drinking industry is particularly known for its "fast" development. As of September 2025, the total number of freshly - made tea - drinking stores nationwide exceeded 415,000, and some leading tea - drinking companies have reached the "10,000 - store" mark. In addition, new tea - drinking has become one of the categories with the highest chain - store rate in freshly - made beverages. According to the "2023 New Tea - Drinking Research Report", the chain - store rate of new - style tea - drinking reached as high as 55.2% in 2022. In the sampling surveys of core business districts in many cities, the chain - store rate of new - style tea - drinking exceeded 80%.

Stimulated by the Q3 food delivery war, the share competition among Chinese tea - drinking companies reached its most intense and brutal stage. While many brands were reluctantly involved in the game, CHAGEE chose to stay calm, slow down its pace, and look towards the long - term.

In Guizhou Province, a typical example in the south - western region where CHAGEE started, a local franchisee told 36Kr that the performance of many stores around her did not decline in the third quarter but instead increased. "In Guizhou Province, many consumers come to the stores because of CHAGEE's brand power," she said.

Most of these stores are long - standing ones that have followed CHAGEE for many years.

Around 2022, new tea - drinking became one of the most active investment areas in the consumer market. In the following years, countless new tea - drinking brands emerged, and leading brands expanded at an exponential rate. There were also countless people eager to join the franchise and make quick money.

It is worth mentioning that although CHAGEE itself is a relatively young leading brand in the new tea - drinking industry, franchisees have followed it for a long time.

Ms. Min is one of them. Since 2018, Ms. Min has officially joined the CHAGEE franchise, and it has been 7 years so far.

As an old franchisee, Ms. Min has truly witnessed every step of CHAGEE's store - model iteration, from the earliest POS - machine ordering system to the birth of 222 million users on the mini - program today. She has also witnessed how CHAGEE has optimized its cup - output efficiency to the extreme.

Over the past 7 years, amidst the intense tea - drinking wars, Ms. Min has never joined other brands. Instead, she has gradually expanded from a single store to more than a dozen stores, and opened her CHAGEE stores from the south - western region to many provinces across the country.

At the end of this year, Ms. Min still chose to open a large store in Hunan. "Product and brand value are the two things that distinguish CHAGEE most from other tea - drinking brands," Ms. Min said.

In the long run, the food delivery war is a structural reshuffle. For tea - drinking players, the real competitive barrier has never been short - term traffic. Instead of getting involved in cut - throat competition, it is better to focus more on long - term product R & D capabilities, single - store profit margins, and supply - chain strength and other comprehensive dimensions.

This quarter, CHAGEE is more like a steady player. It chose to exercise restraint in terms of scale, focus on product R & D and store models, and make full preparations for the future stock - market competition.

At the earnings conference call, Zhang Junjie also said that the company is systematically promoting its strategy from four dimensions: brand, product, experience, and channel.

These systematic strategies combined with the new business model in 2026 will bring an accelerating and systematic improvement to the stores.

All new tea - drinking companies are young. Even today, it is still too early to talk about when the Chinese new tea - drinking war will end. The battle has just begun. In a more long - term perspective, those with stronger determination, more forward - looking strategies, and higher execution capabilities are the ones who can truly survive the cycle.