A few things on my radar #33 ☕️ 🍵
A Glimpse at China’s Coffee and Tea Earnings >> the deeper convergence of tea and coffee in China has made it increasingly necessary to discuss them in the same conversation.
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For years, China’s freshly made tea and coffee markets were treated as separate worlds — different price points, different consumers, different operating rhythms. That boundary has dissolved.
Today, tea brands are installing coffee machines by the thousand. Coffee chains are building non-coffee menus that rival their core offerings. They’re chasing the same customers, in the same delivery apps, across the same dayparts. So we’re now looking at a more integrated battleground — and the 2025 earnings offer the clearest snapshot yet of who’s holding up and who’s not.
Some more context: growth in both categories appears to be slowing.
On the coffee side, according to data from Canbaodian (餐宝典) cited by 36Kr, China’s freshly made coffee market was valued at RMB 193.04 billion in 2024 and RMB 223.84 billion in 2025, with year-on-year growth rates of 18.9% and 16%, respectively — a sharp deceleration from the 30%+ rates seen in earlier years.
As for tea, I noted in a previous post: “China now has over 400,000 freshly made tea shops. From 2025 to March 2026, 120,000 new stores opened and 140,000 shut down. It’s a massive market, but it has clearly entered a phase of brutal internal competition and rapid upgrading. In this arena, any brand without real differentiation is destined to be eliminated.”
Plus - even though the usage occasions, production processes, and supply chains of tea and coffee are not entirely identical, but they overlap more significantly over other categories.
Those two points may be few of the key reasons why the two categories have started to compete so directly.
With that backdrop, here’s how the listed players performed 👇.
Tea: Six Listed Companies, Four Profitable, Two in the Red
(2025FY Full-Year Base + 2026 Incremental)
Mixue (蜜雪冰城) ✅ Solidly profitable, growth decelerating
2025FY: Revenue RMB 29.75B (+20.5% YoY); adjusted net profit RMB 8.92B (+4.6% YoY)
2026Q1: Pending August 2026 interim report
Guming (古茗) ✅ Profitable, growth leading
2025FY: Revenue RMB 12.91B (+46.9% YoY); adjusted net profit RMB 2.575B (+66.9% YoY)
2026Q1: Pending August 2026 interim report; company guidance: same-store GMV -0.5% to -1.5% YoY (first post-IPO same-store decline)
Chabaidao (茶百道) ⚠️ Thin profit, second year of revenue decline
2025FY: Revenue RMB 6.33B (-5.7% YoY); adjusted net profit RMB 833M (+29% YoY); attributable net profit RMB 821M (+71% YoY)
2026Q1: Pending August 2026 interim report
Auntea Jenny (沪上阿姨) ⚠️ Thin profit tier
2025FY: Revenue RMB 4.47B (+36.0% YoY); adjusted net profit RMB 570M (+36.4% YoY) (disclosed, not estimated)
2026Q1: Pending August 2026 interim report
Chagee (霸王茶姬) ❌ Q4 2025 operating loss; full-year profit halved
2025FY: Revenue RMB 12.91B (+4% YoY); attributable net profit RMB 1.19B (-52.4% YoY); Q4 operating loss RMB 35.5M
2026Q1 ✅: Revenue RMB 3.31B (+21.3% YoY); attributable net profit -33% YoY; domestic same-store sales -16% YoY (narrowed from -25.5% in Q4 2025); operating margin 1% → 17.1%
Nayuki (奈雪的茶) ❌ Net loss RMB 241M
2025FY: Revenue RMB 4.31B (-12% YoY); 152 net store closures; delivery accounts for 52.6% of directly-operated revenue; in-store dine-in <10%; bakery revenue share 10.7% → 8.1% (-33% YoY)
2026Q1: Pending August 2026 interim report
The divergence between the profitable and loss-making names is fundamentally a story of two different operating models.
The profitable chains share a lighter, more resilient structure: they anchor themselves in lower price points to capture the largest customer base, control raw material costs through deep supply chain integration, iterate products rapidly, and deliver competitive overall value at their respective price tiers. In an oversupplied market, this model has proven far more resistant to pressure.
This pattern also holds true in the coffee sector — seen most clearly in Luckin's success and the wave of other coffee brands now imitating its small-store model.
On the loss-making side, Chagee and Nayuki face structurally similar challenges — premium positioning, larger stores, elevated operating costs, low table turnover, insufficient depth in product management and innovation, and an expansion of portfolios that quality control can’t keep up with.
These problems mirror the difficulties confronting Starbucks China: when spatial premium is diluted by delivery platforms and by rivals offering a sharper value proposition (lower price combined with higher perceived quality), sustaining both a premium price and healthy volume becomes exceedingly difficult.
Coffee: Two Profitable, Three in the Red — Even the Leaders Are Feeling Unit-Economic Strain
(2025FY Base + 2026 Incremental)
Luckin (瑞幸) ✅ Profitable, but margin thinning
2025FY: Total revenue RMB 49.29B (+43% YoY); stores 31,000
2026Q1 ✅: Revenue RMB 12.00B (+35.3% YoY); GAAP operating margin 8.3% → 6.0%; net profit RMB 506M (-3.6% YoY); first negative same-store for company-operated: -0.1% YoY; delivery cost RMB 689M → 1.31B (+89.8%), 8% → 11% of revenue; delivery mix <40% (Q4) → ~30-35% (Q1)
Starbucks China (post-Boyu: Boyu 60% / SBUX 40%, closed April 2 2026; deconsolidated from Q3 FY26) ✅ Profitable, carried by non-beverage channel
FY2025: Revenue ~USD 3B; same-store 6 consecutive quarters negative
FY26 Q2 (natural year March 2026) ✅: Revenue USD 799.8M (+8% YoY); same-store +0.5% (txn +2.1% / ticket -1.6%); stores 7,991 (20 net closures vs Q1); channel development (RTD + merch + licensing) op margin 40.5%; June 10 2026 non-coffee price cut -5 RMB, floor RMB 23; “Thousand Stores Thousand Faces” compact rollout (200–300㎡ → 10㎡ kiosk / pop-up)
Tims China (THCH) ❌ Penny stock, chronic loss
2024/25: Est. annual net loss RMB 200–300M (no standalone FY2025 audit); share price $1–2 post-SPAC
2025 pilot: “Tims Go” 20–30㎡ compact format
Cotti (库迪) ❌ Negative unit economics, closure wave
Unlisted, no audited FY2025; est. cost ~RMB 11.1/cup at 9.9 price → ~RMB 1.2 loss/cup
2026 updates ✅: June 30 canceled franchisee buyback guarantee → pre-deadline closures; forced coffee-machine upgrade on renewals; americano subsidy cut RMB 9.5+ → RMB 2.5–3.5 (franchisee take-home <RMB 6/cup); Mar–May 2026: 762 new / 722 closed (~zero net); third-party (GeoHai): 722 closures / 90 days (4.5% of 16,000 footprint)
Seesaw ❌ Bankrupt 2026
Unlisted; founder hit with consumption restriction order; tens of millions in wage & supplier arrears; peak 140+ stores → dozens remaining
The two profitable players represent the sector’s absolute leaders — Luckin standing for the small-format model, Starbucks for the large-format one.
Luckin’s earnings power requires little elaboration.
Starbucks China has managed to remain profitable, and even showed nascent signs of recovery, thanks to a series of forceful adjustments: recalibrating price points, optimizing store sizes, strengthening product innovation, stepping up promotions, and pushing deeper into lower-tier regions.
Remarkably, the roots of the losses at Tims, Cotti, and Seesaw are distinct.
Tims’ “beverage + food” portfolio appears elegant on paper but suffers from serious quality-control failures — its coffee, at the very least, falls dramatically short of reasonable expectations and comes across as even less honest than Starbucks. How such a poor product came to market is a question best directed at its management.
Cotti, the other brand founded by Luckin’s founder, has stubbornly pursued subsidy-driven growth, resulting in persistently inverted unit economics. Its founding motive seems to have been fueled, at least in part, by a sense of revenge — a narrative that has not translated into consumer appeal. Today, its brand perception lags well behind Luckin, which has already cemented itself as the go-to choice for affordable daily coffee. There may be a sense of inevitability here: once a mental moat is formed around a brand, it becomes exceedingly difficult to dislodge it with a similar playbook.
Seesaw’s failure — by consensus, it lies in its prolonged indecision between a specialty-coffee ethos and a scaled chain model, ultimately dragging itself into collapse (though I personally remain less convinced by this view).
Consolidated Observations on both Tea and Coffee Sector
On the “Consumption Downturn” Narrative
“Weakening consumer demand” is frequently invoked to explain the industry’s troubles, but it functions more as a shared backdrop than a specific cause of any single company’s losses.
A more accurate explanation might be that a subdued consumer mood amplifies pre-existing model mismatches — where costs are allocated and whether the model is adapted to China’s structural realities (high delivery penetration, the blurring boundary between tea and coffee) matters far more than the macro climate alone.
On Delivery’s Role
Several disclosed figures reveal just how much delivery now dominates revenue.
At Nayuki, delivery accounted for 52.6% of direct sales; dine-in was below 10%. This means a significant portion of revenue does not depend on in-store consumption — an intrinsic contradiction for a large-format spatial model.
At Luckin, the delivery share was under 40% in Q4 2025 and approximately 30–35% in Q1 2026; Luckin appears to be deliberately lifting average ticket prices and even expanding its proportion of larger-format stores.
In short — the delivery war has never gone away, and it never will, because delivery has become a deeply embedded part of Chinese consumer behavior. For tea and coffee chains, balancing physical space with delivery economics may become one of the central strategic questions navigating the next phase.
On Differentiation
In a market defined by brutal homogenization, cross-category expansion, SKU proliferation, and experiential layering have become the default paths in search of differentiation. But when quality control and innovation fail to keep pace, new SKUs merely disperse supply-chain focus, turning into items that consumers regard as “not terrible, but not worth remembering.”
Meaning — the short-term revenue bump from superficially adding categories and simply piling on experiences rarely translates into durable repeat purchase.
This may be the best product-level explanation for why tea and coffee have so aggressively encroached on each other’s turf. As noted earlier, the usage occasions, production processes, and supply chains of tea and coffee are not entirely identical, but they overlap significantly — especially when it comes to creative drinks. The overlap is far greater than with categories like alcohol, desserts and bakery, or hot food, all of which require a heavier operational model. This shared foundation gives brands significantly more control over both quality and creativity.
On the Unlisted Blind Spot
The analysis above rests entirely on publicly disclosed financials from listed companies, except Seesaw. A considerable number of unlisted brands remain financially opaque, and independent shops are not captured here at all. Any conclusions drawn from current public data should therefore be treated as inherently limited and potentially unrepresentative of the full market picture.