Economic Observer reporter Zheng Yuxin, intern Fan Xingqi

In July 2026, at the franchisee conference held in the southwest region, the management of Nayuki Tea (02150.HK, hereinafter referred to as "Nayuki") spent nearly an hour introducing a new small store model: the area can be reduced to 30-40 square meters, the investment amount can be reduced to 3-4 million yuan, and old franchisees are mobilized to continue opening stores.

Offline, franchisee Wang Wei has no plans to open another store. Because since 2024, none of the stores she invested millions of yuan in have been profitable, let alone recouping their costs.

On August 26th, one month after the franchisee conference, Naixue released its 2026 semi annual report, which showed that its actual operating revenue was 1.893 billion yuan, a year-on-year decrease of 13.1%; During the period, there was a loss of 97.49 million yuan, which narrowed by about 18% compared to the same period last year.

From landing on the Hong Kong Stock Exchange as the "first stock of new tea drinks" with a market value of HKD 34 billion at one point, to now falling to HKD 0.65 and becoming a "miracle stock", Nayuki took five years. As of the end of June 2026, the market value of Nayuki is only about HKD 1 billion, which is less than a quarter of the net fundraising of HKD 4.842 billion from its IPO (initial public offering) that year. During the same period, the market value of Meixuebing City exceeded HKD 90 billion.

During this process, Naixue tried to lower prices, open up franchise opportunities, and adjust store models, but it became increasingly difficult to answer the question: why do consumers choose it?

Reduced Losses Saved

In August, reporters visited nearly 10 Nayuki stores in Beijing and found that most of them had few customers, few people placed orders on site, and a large number of orders came from takeaway customers rather than dine in customers. Even if a customer is already sitting in the store, they still place an order on the food delivery platform first, and then go to the pick-up counter to pick it up.

The financial report data also confirms the trend of "quiet dine in and delivery volume": the proportion of delivery revenue has increased from 48.1% to 55.9%, the proportion of on-site ordering in stores has decreased from 10.6% to 7.7%, and the proportion of self pickup has decreased from 41.3% to 36.4%. It is worth noting that Nayuki's advertising and promotion expenses increased by 6.2% to 99.78 million yuan, and the financial report explained that they were mainly used for promoting food delivery platforms.

Naixue's ability to reduce losses relies on reducing staff, closing stores, and controlling costs.

According to the financial report, the cost of raw materials and consumables decreased by 106 million yuan year-on-year, employee costs decreased by 107 million yuan, and the total depreciation and amortization of right of use assets decreased by approximately 61.95 million yuan. The total reduction of three costs was about 275 million yuan, which led to a narrowing of losses despite the decline in revenue.

Meanwhile, Nayuki's sales situation has not improved. In the first half of the year, the average daily sales revenue of Naixue's directly operated stores decreased from 7600 yuan to 7000 yuan, the average daily order volume decreased from 296.3 to 286.7, and the average sales revenue per order decreased from 25.7 yuan to 24.3 yuan. The six key cities of Shenzhen, Shanghai, Guangzhou, Wuhan, Xi'an, and Beijing have seen no increase in daily same store sales.

From the Third Space to the Small Shop

In November 2015, Naixue's first store opened in Shenzhen. It places fresh fruit tea, milk covered tea, and soft European buns in large stores in shopping malls, with early Nayuki standard stores typically ranging in size from 180 to 350 square meters. Peng Xin, the founder of Nayuki, has publicly stated that he wants to benchmark against Starbucks.

At that time, Nayuki stood on the shining stage of China's new tea drinks and together with Heytea, defined the market pattern of high-end freshly made tea drinks. By the end of 2020, Nayuki had opened 489 stores in 66 cities across mainland China. According to the prospectus of Naixue, citing data from Zhuoshi Consulting, at that time Naixue's market share was about 18.9%, second only to HEYTEA; The average selling price of freshly made tea drinks is about 26 yuan, and the average sales per order is about 43 yuan. And the average customer price of Nayuki in 2025 has dropped to 24.4 yuan.

On June 30, 2021, Nayuki was listed on the Hong Kong Stock Exchange at a price of HKD 19.8 per share, becoming the "first stock of new tea drinks". The net proceeds from the IPO were approximately HKD 4.842 billion, and the public offering was oversubscribed 431 times.

Large stores bring brand awareness and high investment. From 2018 to 2020, Nayuki's revenue increased from 1.087 billion yuan to 3.057 billion yuan, but she incurred losses of 69.73 million yuan, 39.68 million yuan, and 203 million yuan respectively during the same period.

Before going public, Nayuki had already started to "reduce weight" for the large store model. The Naixue PRO store launched in 2020 cancelled the on-site bakery, reducing the investment cost from approximately 1.85 million yuan to 1.25 million yuan and the number of employees from approximately 21 to 13. Afterwards, Nayuki's stores became smaller and her business increasingly relied on takeout.

In July 2023, Naixue, who has long insisted on direct sales, opened up franchise opportunities. At that time, since 2021, brands such as Heytea and Bawang Tea Ji have opened up large-scale franchising and rapidly expanded. The franchise threshold for Nayuki is quite high: initially, the store area is required to be between 90 and 170 square meters, with an investment budget starting at 980000 yuan, and a minimum working capital proof of 1.5 million yuan is required.

Afterwards, Nayuki gradually relaxed the conditions: in February 2024, the investment budget was reduced to a minimum of 580000 yuan, and the area was reduced to about 40 square meters; The capital verification requirement has been reduced from 1.5 million yuan to 800000 yuan. In contrast, Bawang Tea Lady initially invested about 200000 yuan, Guming about 230000 yuan, Meixue Ice City about 210000 yuan, and Naixue's threshold for opening a store is still several times that of its peers.

In 2024, Wang Wei initially wanted to join Meixue Ice City, but the store locations she found did not pass the review. She also submitted applications to Xicha, Bawang Tea Lady, and Naixue. Naixue replied in less than a week, from submitting the documents to going to the Shanghai headquarters for an interview, it took no more than two weeks. When the other two replied, her Nayuki store had already been prepared.

Wang Wei recalled that the investment personnel at Nayuki headquarters repeatedly emphasized the halo of being the "first stock of new tea drinks", saying that the brand is "more stylish than fast-moving milk tea" and is expected to recoup its investment in two to three years. But at that time, the stores of top new tea beverage brands could achieve a return on investment within six months to a year.

In fact, the reality faced by franchisees is even more cruel. Starting from 2024, Wang Wei has invested in multiple Nayuki stores, accumulating several million yuan. The first one is the local first store, which attracts customers with freshness and promotions for 2 months before opening. It starts monthly subsidies in the third month and insists on closing after about a year. The second store covers an area of over 100 square meters and had a slightly better business in the early stages of opening. However, after the freshness period, the store can only maintain a profit without loss.

In addition to opening up franchise opportunities, Nayuki has also tried other types of stores such as Nayuki Life and Nayuki Tea House; In 2025, we will launch Nayuki Green, Multi Fiber Light Drink concept stores, and freshly made pure drink stores, constantly seeking new consumption scenarios from lifestyle, business socializing, healthy meals to take out quick pickup. The reporter found that all Nayuki Green stores in Beijing have been closed.

Who Is Nayuki

In Shenzhen in 2015, Nayuki opened up a new scene for afternoon tea with "a cup of good tea, a sip of soft European bread". The domineering cheese strawberry paired with durian European bun was once a popular way for urban white-collar workers to check in at the mall. At its peak, baked goods contributed about 25% of Nayuki's sales, with a stable unit price of over 43 yuan, far ahead of its peers. On the prospectus, "dual category" is solemnly listed as the core competitiveness and has become an important pillar of the valuation story.

But this model comes with high costs. Freshly baked goods require ovens, workstations, and bakers, which means that store space and labor costs cannot be reduced. Starting from 2022, Nayuki's newly opened stores will be mostly converted into PRO light stores, with the removal of on-site baking rooms and the use of central kitchens for unified cold chain distribution of prefabricated baked goods.

By 2025, Nayuki will no longer bake European style buns on-site in the vast majority of its stores across the country. Wang Wei said that almost all the bread in the store is pre made, and the store's process is thawing, re baking, and then serving. Her store cannot sell out 10 breads baked every day, and the sales of desserts are even worse. Due to the lack of refrigerators for display, consumers are unaware that the store is still selling desserts and can only rely on takeout to increase sales.

According to financial report data, Nayuki's baking revenue in 2024 was about 527 million yuan, which dropped to 352 million yuan in 2025, a year-on-year drop of 33%, and its proportion of total revenue decreased from 10.7% to 8.1%.

The core competitiveness is weakening, and the brand attractiveness is also continuously losing. At the end of 2024, Nayuki had 102.8 million registered members and 4.8 million monthly active members; By the end of 2025, the registered members will increase to 118.9 million, but the monthly active users will decrease to 3.6 million; By the end of June 2026, the registered members will reach 125.7 million, and the monthly active users will further decrease to 3.02 million.

At a Naixue store in Xidan, Beijing, the reporter also randomly interviewed several consumers. A girl waiting for a meal with a friend said, "In the past, Naixue's bread was pretty good, but now there are fewer varieties of bread, and it feels no different from other milk tea shops." A young consumer who was comparing coupons on their phone said, "There are too many milk tea brands now, and Naixue doesn't have any particularly impressive products. In my impression, it's quite expensive. If I didn't happen to pass by, I wouldn't come here to buy it

The 2026 annual shareholders' meeting of Nayuki held on June 24th this year was described by investors present as a 'verbal battle'. A shareholder asked the management, "Before the company achieves profitability, should the founder's salary be linked to performance? Or should they just pay 1 yuan?" In response, founder Zhao Lin said that after going public, the two have never reduced their holdings to cash out and rely on their salaries to make a living. "It is unrealistic to pay 1 yuan.

An investor who has held Nayuki stock for nearly three years said that they have liquidated their position in the first half of this year. He bought it initially because he believed in the high-end tea beverage market and the narrative of Nayuki Third Space, but now neither of these things exist. Price reduction, store reduction, and franchising are all negating the initial positioning at every step. Nowadays, Nayuki is neither a high-end brand nor a truly affordable brand, and it is very awkward to be stuck in the middle. I'm not sure if the company has figured out who Naixue is, "said the investor.

Peng Xin wrote down the company's mission in 2018: to be an innovator and promoter of Chinese tea going global. In 2018, Nayuki was the first to open its first overseas store in Singapore, and early stores were subsequently closed; At the end of 2023, we will restart our overseas operations from Thailand and currently have nearly 30 overseas stores. By comparison, Meixue Ice City has over 4000 overseas stores and Bawang Tea Lady has over 200 stores.

The reporter sent an interview outline to Naixue regarding financial report related issues, but as of press time, no response has been received.

(At the request of the interviewee, Wang Wei is a pseudonym)

(Author Zheng Yuxin)