Cha Baidao H1 2025 Operational Analysis and Overseas Expansion Outlook

According to Cha Baidao’s 2025 Interim Report, as of June 30, 2025, the company’s total number of stores nationwide reached 8,444, an increase of only 59 compared to 8,385 in the same period of 2024,

[0]. This data stands in stark contrast to previous years: Cha Baidao’s store growth rate was 22.64% in 2023, fell to 7.61% in 2024, and further slowed to less than 1% in H1 2025[1].

Even more noteworthy is the significant rise in store closure rate. Cha Baidao’s store closure rate reached 10.62% in 2024, with 890 stores closed throughout the year, compared to only 2.82% in 2023[1]. In the current market environment, the entire new tea beverage industry has shifted from incremental expansion to stock competition — as of July 2025, the total number of milk tea shops nationwide is approximately 426,300, with a net growth of -39,200 in the past year, meaning store closures outnumber new openings[2].

Another major challenge facing Cha Baidao is

. In 2024, the company’s franchisee churn rate reached 16.61%, ranking first among the five major new tea beverage brands (Mixue Ice Cream & Tea, CHAGEE, Cha Baidao, Guming, Aunt Shanghai)[1][2]. This means nearly 17 out of every 100 franchisees chose to exit, with a total of 1,144 franchisees leaving in 2024[1].

Data from H1 2025 shows that the situation has improved but still faces pressure: 505 franchisees terminated their cooperation during the period, of which 265 stopped cooperating by transferring their stores to other franchisees, 228 terminated due to their own reasons, and 12 were terminated by the company[0]. A total of 596 new franchisees were added during the period, resulting in a net increase of 91 franchisees, with the total number of franchisees rising from 5,742 to 5,833[0].

include: simultaneous increases in raw materials, labor, and rental costs, but customer unit prices are difficult to raise, leading to longer payback periods; some early “novice franchisees” exited due to poor site selection and insufficient operational capabilities[1][2].

Despite the slowdown in expansion, Cha Baidao’s

. In H1 2025, the company achieved revenue of RMB 2.5 billion, a year-on-year increase of 4.3%; net profit rose to RMB 333 million, a significant year-on-year increase of 39.50%[3]. Gross margin recovered from 31.2% in 2024 to approximately 32.9%[4].

The company has implemented multiple measures to improve store operation models:

• Optimize investment threshold
  : Launched installment payment policies to reduce initial investment pressure on franchisees
• Digital upgrade
  : Systems such as intelligent site selection, automatic replenishment, and AI inspection improve operational efficiency
• Accelerate product innovation
  : 55 new products were launched in H1 2025, far exceeding the 21 launched in the same period of 2024[4]

These adjustments have shortened the payback period of single stores by approximately 1-2 months compared to 2024[4], significantly improving the single-store model.

Cha Baidao has made

in supply chain capability building, providing important support for overseas expansion:

Supply Chain Indicators	Current Status
National Warehousing & Distribution Centers	26
Next-Day Delivery Rate to Stores	93.8%
Unified Fruit Distribution Rate	80%
Distribution Model	“Trunk + City + Express” three-tier distribution
Self-Produced Raw Materials	Expanded from packaging materials to tea leaves

The company has made a breakthrough in the efficient supply of perishable fruits (such as mulberries and lychees) from origin to stores, solving the cold chain problem that has previously plagued new tea beverage brands[3]. In addition, Cha Baidao has piloted coffee business in some stores in Sichuan and Guangdong provinces, with cup volume increasing by approximately 10% in pilot stores, providing a new direction for future product line expansion[4].

Cha Baidao’s

: as of June 30, 2025, it has 21 overseas stores, distributed in South Korea (11), Malaysia (4), Thailand (1), Australia (2), Hong Kong, China (1), Macau, China (1), and Spain (1)[0]. On August 16, Cha Baidao’s first North American store opened in Flushing, New York, marking its official entry into the North American market[5].

The company adopts a

in overseas markets:

• Store location and product development are close to local culture and consumption habits
• Adopts a “cross-border + local” mixed supply model, cooperating with local suppliers for fresh milk and fruits, while tea bases and packaging materials are transported via cross-border logistics
• Obtained franchise qualification in the South Korean market, with the ability to scale chain operations[3]

However, overseas expansion still faces multiple challenges:

1. High long-distance transportation costs for supply chains
   : Domestic supply chain advantages cannot be directly replicated overseas
2. Insufficient localized operation experience
   : Consumer preferences and regulatory requirements vary significantly across different markets
3. Intensified competition
   : Brands such as Heytea, CHAGEE, and Mixue Ice Cream & Tea are all accelerating their overseas layout

Cha Baidao is currently in a

: domestic store expansion has slowed significantly, the franchisee system is experiencing growing pains, but profitability is recovering, and supply chain capabilities are continuously strengthened. From a fundamental perspective, the company has “bottomed out and rebounded”, but the room for continuous improvement in the future still needs to be observed.

Regarding the question of “whether the supply chain can support overseas expansion”, the answer is

. The domestic supply chain system provides a basic guarantee for overseas expansion, but localized procurement, cold chain distribution, and store operations in overseas markets still need further adaptation. As the number of overseas stores increases, Cha Baidao is expected to gradually build a regional supply chain network, but this requires time and capital investment.

Looking forward, for Cha Baidao to maintain its advantages in the fierce market competition, it needs to continue to focus on the following aspects:

• Further stabilize the franchisee system and improve single-store profitability
• Accelerate the localization of overseas supply chains
• Strengthen product innovation capabilities to respond to changes in consumer demand
• Cautiously evaluate the pace of overseas expansion and avoid “great leap forward” style layout

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[0] Sichuan Baicha Baidao Industrial Co., Ltd. 2025 Interim Report (https://stockn.xueqiu.com/02555/20250925284202.pdf)
[1] Dahe Cube - A Batch of Milk Tea Franchisees Exit, Cha Baidao and Guming Have High Churn Rates (https://app.dahecube.com/nweb/news/20250815/244394n408432dd1b6.htm)
[2] Sina Finance - Cha Baidao’s Franchisee Churn Rate Reaches 16.6%, Aunt Shanghai Has the Highest Store Closure Rate (https://cj.sina.cn/articles/view/2516866423/9604557700101736y)
[3] Securities Times - Mid-Year Report Review of the New Tea Beverage Industry: Intensified Competition Leads to Obvious Performance Differentiation (https://www.stcn.com/article/detail/3316847.html)
[4] Eastmoney - Cha Baidao (2555.HK) Initiation Coverage Report (https://pdf.dfcfw.com/pdf/H3_AP202511241787234893_1.pdf)
[5] UhooGlobal - Cha Baidao Accelerates Overseas Expansion, Global Stores Exceed 20 (https://www.uhootea.com/archives/3443)