Summary of the Analysis
This article discusses the new tea beverage industry, which has been popular for nearly a decade. The era of easy profits from opening new stores has come to an end. Leading brand “Bawang Cha Ji” is not satisfied with its main business of milk tea and has started selling 5-yuan “Dahongpao” tea eggs in its stores, essentially utilizing idle production capacity to increase profits. Meanwhile, its long-standing rival “Chayan Yuese” has closed two experimental sub-brands within half a year and shut down all its small restaurants and specialty tea houses, focusing its resources on its milk tea business. One brand is aggressively expanding its product range, while the other is contracting. This reflects a shift in the industry from a period of gaining new customers to one of competing for existing market share. Even cross-industry competitors are entering the market, offering milk tea at half-price to undercut the core business. Now, all tea beverage brands are struggling to manage every penny of their expenses, with survival being the top priority.
Detailed Explanation
1. Bawang Cha Ji’s tea egg sales are not just a publicity stunt; they are a strategic move to utilize idle capacity
Many people think Bawang Cha Ji is creating a buzz to attract attention, but the company has carefully calculated the benefits. The peak customer traffic for milk tea stores is between 2 PM and 9 PM, with almost no customers in the morning. However, rent is paid daily, and employees are paid monthly, meaning the morning hours are a complete waste of money with no revenue generated. Bawang Cha Ji’s tea eggs fill this gap by using their signature “Baiwu Hongchen” Dahongpao tea, which does not require additional supply chains. The cost of boiling eggs is minimal, and existing staff can handle this task without adding extra staff. The price of 5 yuan for an egg, plus 2.5 yuan for a milk tea, is designed to encourage customers to buy both in the morning. Even if a store sells just 100 eggs in the morning, it earns an extra 250 yuan a day, and with over 7,600 stores nationwide, the annual profit from eggs alone can amount to hundreds of millions. What’s more, customers who buy an egg are likely to also purchase a milk tea, turning the previously unprofitable morning hours into a new revenue peak.
2. Chayan Yuese’s closure of sub-brands is not due to innovation failure; it’s because its direct-operated model is too costly
Chayan Yuese has tried five new brands, including “Xiaoshenxian Tea House” and “Zhoyezhi Shijiu Xiaojiu House,” with only “Goodemo Ning” (lemon tea) being successful. The reason for these closures is its direct-operated model, which incurs high trial and error costs. Brands like Bawang Cha Ji and Mixue Bingcheng use a franchise model, where franchisees cover most of the expenses for rent, decoration, and labor, with the headquarters providing supply chain and operational support. In contrast, Chayan Yuese covers all these costs itself, resulting in significant financial losses. The company’s dream of covering all time periods with its products—selling coffee in the morning, milk tea in the afternoon, and tea in the evening—has not materialized due to competition from established players in those segments. With limited resources, it’s more rational to focus on its core business.
3. The competition for the milk tea market is not just among tea beverage brands; it includes snack shops in shopping malls
The new tea beverage industry’s growth has slowed significantly, with annual growth dropping from 19% to 6.4% in 2025. Brands like Mixue Bingcheng even experienced a revenue decline for the first time since going public. The competition has shifted from who dares to open the most stores to who can manage expenses most efficiently. Snack shops selling roasted nuts, marinated meats, and fresh bread have entered the market, offering milk tea at half-price, competing directly with tea beverage stores. These snack shops use milk tea as a marketing tool to attract customers, with the main profit coming from snacks. Traditional tea beverage stores, with high fixed costs, cannot afford such price wars.
4. The future of the new tea beverage industry depends on who can manage expenses best
The next phase of the industry will focus on efficiency and cost management. No longer is it about who dares to expand; it’s about who can make the most of every resource within existing stores. Brands like Bawang Cha Ji and Chayan Yuese are forced to innovate to stay competitive. The industry’s shift from gaining new customers to competing for existing market share means that survival is the ultimate goal.