The era of storytelling in the tea industry's frenzied expansion may be coming to an end. At the beginning of 2025, the head brand Heytea dropped a bombshell on the industry - announcing the suspension of franchises. In an internal letter, Heytea pointed out that the "number game" of the tea industry has come to an end, and product homogenization and excessive scale expansion have endangered the foundation of the industry.
In fact, since last year, the number of stores in the tea industry has declined, and the industry ecology has quietly entered an inflection point. Heytea took the lead in "stop loss" and pushed the "franchisee", a player hidden behind the brand, to the front of the stage. The market has entered the era of stock competition, and the competition for good points will only become more intense, and the franchise model, which is an important source of profit for the brand, can still make money
The point is difficult to grab, and the payback period is extended by 2 times
"This year's Bawang Tea Ji is estimated to take 18 months to return to its original cost, and a slightly better 12 months", a franchisee who opened 4 Bawang Chaji franchise stores in a first-tier city sighed to a reporter from Nandu.
Zhang Junjie, the founder of Bawang Chaji, once publicly stated in mid-2023 that the average payback period for franchisees is 5.5 months, compared to less than two years, the payback cycle for franchisees has been extended by up to 12.5 months. The franchisee told the reporter that he joined Bawang Chaji in May 2023, and the stores are currently in a state of benign profitability. And at this node, it happens to be the time when Bawang Chaji begins to expand its stores frantically, and franchisees can still enjoy the early dividend of "5.5 months return on investment".
"Now the good points are to be grabbed", the franchisee said that one of their stores in the corresponding business area "squatted" for more than half a year to win the point. He revealed that he was a relatively lucky group of franchisees, and he also saw a friend open a Bawang tea in a second-tier city, and the business was good. But now that the number of stores is increasing, he does not recommend that everyone blindly join the tea brand. "The current cost of trial and error is too great, I have a friend who joined Chahua Lane, opened it for more than four months, and lost more than one million."
The threshold for joining the head brand has risen to millions
Not only is it difficult to grab points, but now the franchise cost of the head tea brand is also rising. Nandu reporters have reported that in the franchise policy announced by Heytea, the single-store cooperation fees handed over to the brand alone include single-store cooperation service fees, first training fees, design fees, operation and management fees, engineering supervision fees, system operation and use fees, security deposits, etc. In addition, coupled with the cost of equipment and decoration, as well as the cost of shop rent, manpower, water and electricity, etc., it will cost four or five hundred thousand yuan to invest in a Heytea franchise store to really "do it", and the investment in the core area of the first-tier city will be even higher, which may be close to one million.
In the past two years, the industry's "popular fried chicken" Bawang Chaji has a higher capital threshold for joining. Some netizens revealed on Xiaohongshu that the total landing cost of a Bawang Chaji store in a second-tier city in 2025 has reached 1.2 million yuan, and the payback days are more than 400 days. Regarding this data, the above-mentioned franchisee said: "1.2 million + is right, and there is basically no lower than this number now." ”
Jason, the founder of a lemon tea brand, told a reporter from Nandu that in fact, the gross profit of the head brand franchise store is not so high, and some single stores may not be as good as the mid-waist brand. "Because the head brand has to pay operating expenses, raw materials also have to be purchased from the headquarters, the number of employees who need to keep the store running is more, and the decoration cost is also a lot, then the profit you get in the end will definitely be low. Many franchisees will have a higher tolerance for losses based on their trust in the head brand, and feel that it is normal to lose money in the first few months. ”
He revealed that at present, it is indeed more difficult for franchisees who enter the market in the later stage to make money. "A cake is so big, and that's all there is to make money. Like my friend's Bawang Chaji who joined in Foshan in 2023, it cost about 700,000 yuan to do it, and now their store is estimated to cost millions. You can make money in the early stage, and it's good to break even in the later stage. That day, he complained to me that the store needed more people and that the gross profit had not been able to be high. ”
Franchise stores support the majority of brand revenue
For investors, the inertial path to risk aversion is to join the head brand with a certain brand effect. Jason said that the first thing for the top brand to the franchisee is to verify the capital, to assess how long its funds can maintain the operation of the store, and whether the franchisee has a deep understanding of the industry. "Now is not the time to join the head brand casually with a little money in hand, but everyone still prefers to join the head brand."
Even though the franchise business is becoming more and more difficult, franchise stores are still the lifeblood of most tea companies. From the prospectus submitted by the tea brands that were listed at the beginning of last year, it can be seen that the franchise stores basically contributed more than ninety percent of the revenue, because "selling milk tea" itself is not the most profitable, and the sale of goods, equipment and paid services to franchisees is the majority of the profits of most tea companies.
Zhuo Yujie, the founder of Keke Milk Tea, revealed a group of data on the profitability of franchised stores to reporters from Nandu: 85% of the stores are in a benign profit cycle of 10-14 months to return to the cost; 10% of stores are at breakeven; The remaining 5% have not yet achieved profitability due to comprehensive reasons such as regional market differences, old store types, and site selection errors. Up to now, there are about 550 contracted stores nationwide, of which franchised stores account for 92%, contributing 87% of the brand's total revenue.
It is not difficult to see that although the scale is not as large as that of head brands such as Bawang Tea and Heytea, the profitability of waist brand franchise stores is not bad, but even so, the payback cycle is as long as nearly a year.
Pausing extensive expansion may become a turning point in the industry
Even though "point determines profitability" is the common perception of franchisees, Zhuo Yujie said that in fact, according to the different scale of investment in a single store, the factors that affect profitability are also different. For the asset-heavy model with a single store investment of more than 400,000 yuan, brand potential energy and market influence are the core success factors. The high initial investment and continuous rental labor costs must rely on the high unit price and high unit volume brought by the brand premium to support the profit model.
The above-mentioned franchisees of Bawang Chaji also expressed similar views, and he believes that for single stores with high investment thresholds, brand positioning and brand promotion effect play an extremely important role in profitability.
For the asset-light model in the range of 150,000 yuan to 400,000 yuan, Zhuo Yujie believes that the key to victory lies in brand differentiation and headquarters operation service system, including accurate site selection model, product iteration ability, standardized operation system and cost control ability. "Taking Cosco as an example, we have compressed the investment of a single store to 150,000-200,000 yuan through 0 franchise fees and high subsidies for store opening, and cooperated with the full-cycle operation and trusteeship to effectively ensure the profitability of the store and the return cycle."
Regarding Heytea's suspension of franchises at the beginning of the year, the above-mentioned interviewees all mentioned that the current tea industry simply relies on the expansion of stores to achieve growth, which is obviously unsustainable. Zhuo Yujie said that the current tea market has entered the stage of stock competition, the industry is transforming from "store scale orientation" to "store quality", and the suspension of extensive expansion is the inevitable choice for the head enterprises to carry out strategic calibration, and then there is a high probability that it is more likely to consolidate the market position by optimizing the single store model and improving the customer experience, which is a positive signal for the industry to mature.
Industry prediction: partnership may become the mainstream model in the future
It is reported that Heytea mentioned in the internal letter announcing the suspension of the franchise that it will continue to adhere to the "no low-price involution", strengthen the deep connection between the brand and users, and return to the user and the brand.
For the industry's leading brands to take the initiative to stop the pace of expansion, Zhuo Yujie told the reporter that a series of store adjustments may give brands in the same industry a certain respite in the short term, but in the medium and long term, the industry will accelerate differentiation. "Brands with differentiated positioning and continuous innovation capabilities have a chance to survive and develop, while the living space of brands with serious homogeneity will be further compressed."
Jason told the reporter that at present, their brand basically does not accept franchisees, and more will consider implementing a partnership system to expand stores in the future, and it is more convenient to increase the operation of the private domain on this basis. Coincidentally, Zhuo Yujie also mentioned that the joint venture partnership system is expected to become the mainstream in the future, that is, the store is jointly invested by the headquarters, franchisees, resource parties and store managers, and the brand headquarters will strengthen terminal control through the store manager appointment system to improve the comprehensive ability of the store, and the franchisee and resource party will not be responsible for the specific operation and management of the store.
Written by: Nandu reporter Xu Bingqian