Chagee (NASDAQ:CHA) executives used the company’s fourth-quarter 2025 earnings call to detail a year of internal restructuring and slower product cadence that weighed on domestic performance, while pointing to accelerating overseas growth and outlining priorities for 2026 centered on operational stability and same-store sales recovery.
Management reviews a volatile 2025 and strategic reset
Chairman and CEO Junjie Zhang said the company spent 2025 navigating market volatility and a more complex competitive environment. He described a consumer “K-shaped divergence,” with some consumers pursuing value and others seeking premium experiences, a split he said was intensified by delivery-platform price wars.
Starting in the second half of 2025, management implemented organizational restructuring and a business-model transition, and “strategically” slowed new product launches. Zhang said these actions had a measurable impact on revenue and that the company underestimated the effect of delivery-platform price competition on offline sales. Still, he emphasized the company avoided short-term tactics and maintained its premium positioning.
Q4 pressures: same-store sales decline and model changes
Zhang highlighted fourth-quarter same-store sales as the company’s biggest challenge in 2025, saying same-store sales declined 25.5% year-over-year in the quarter. He attributed the decline to both external pressures and internal execution delays during restructuring. In response to an analyst question, Zhang said the company underestimated the complexity and time required to implement changes at a company with more than 3,000 employees, adding that the rollout effectively cost the company about half a year in execution speed.
Looking to 2026, Zhang said Chagee will prioritize same-store sales recovery as its top KPI and will not pursue growth “for its own sake.” He added that the company expects 2026 revenue and profits to be “broadly flat” versus 2025, while aiming for same-store trends to stabilize operationally, with a healthier second half. He also said that if there is a conflict between market share and profitability, management would prioritize market share.
Financial results: revenue decline in Q4, margin improvement, net profitability maintained
CFO Aaron Huang reported that full-year 2025 total GMV reached RMB 31.6 billion, up 7.2% from RMB 29.5 billion in 2024. Fourth-quarter GMV was RMB 7,322.9 million, which Huang said reflected a challenging home-market environment but strong overseas momentum.
Net revenue in the fourth quarter was RMB 2,974.5 million, down from RMB 3,334.4 million in the prior-year quarter. For the full year, net revenue rose 4% to RMB 12.9 billion. Huang said franchisee teahouses generated RMB 2,434.9 million of Q4 revenue, or 81.9% of total revenue, compared with RMB 3,095.9 million a year earlier, citing the cadence of new product launches and delivery-platform competition. Company-owned teahouse revenue was RMB 539.6 million, up 126.2% year-over-year, driven by network expansion in Greater China and overseas.
Huang said gross margin improved to 53.2% from 51.6%, attributing the increase mainly to lower packaging, equipment, and supply chain costs. On profitability, Chagee posted a GAAP operating loss of RMB 35.5 million versus operating income of RMB 642.5 million a year earlier; Huang attributed the decline mainly to approximately RMB 320 million in costs tied to structural optimization and business-model transition.
Despite the transition, Huang said the company extended its profitability streak at the net income level, marking its 12th consecutive quarter of profitability. GAAP net income was RMB 33.9 million in Q4. Non-GAAP net income, excluding RMB 66.1 million in share-based compensation, was RMB 100 million, with a non-GAAP net margin of 3.4% versus 9.3% last year. Full-year 2025 GAAP net income was RMB 1,186.3 million and non-GAAP net income was RMB 1,909.9 million.
Chagee ended the quarter with RMB 7,892.4 million in cash and cash equivalents, restricted cash, and time deposits, up from RMB 4,868.7 million at year-end 2024. Huang said the balance sheet provides flexibility to fund growth investments while supporting shareholder returns through disciplined capital allocation.
Network update: franchise-to-company conversion and overseas acceleration
As of December 31, 2025, Chagee’s network totaled 7,453 locations across Greater China and overseas, up 15.7% from 6,440 a year earlier. Huang said franchisee teahouses totaled 6,838, down from 6,971 in the third quarter, while company-owned teahouses rose to 615, reflecting a net increase of 248 sequentially due largely to converting some franchise locations into company-owned stores in China.
In Greater China, Huang reported average monthly GMV per teahouse of RMB 337,000 in Q4 and RMB 387,000 for the full year. Overseas GMV in the fourth quarter grew 84.6% year-over-year to RMB 371.9 million.
Responding to questions about international performance, Zhang said overseas operations added a net 83 stores in the fourth quarter, bringing the overseas total to 345, with overseas GMV up 23.9% quarter-over-quarter and 84.6% year-over-year. He added that average monthly GMV per overseas store outperformed domestic stores, which he said supports the model’s replicability outside China.
Management said it entered four new markets in 2025—Indonesia, the United States, Vietnam, and the Philippines—and now operates across seven countries: Singapore, Malaysia, Thailand, Indonesia, Vietnam, the Philippines, and the U.S. Zhang cited examples of early traction, including Vietnam opening performance and a Hello Kitty co-branded product launch across five Southeast Asian countries.
2026 priorities: same-store recovery, measured domestic growth, and a new franchise partnership model
For 2026, Zhang outlined initiatives across store operations, customer experience, product innovation, and organizational efficiency. He said the company will slow domestic expansion and focus on improving health of existing stores, including continued optimization and upgrading of underperforming locations, and building an end-to-end quality management system “from sourcing to after-sales.”
Management provided store opening targets for 2026:
- Mainland China: about 300 net new teahouses in strategic locations, with management stressing the count “is not the goal” versus profitability and store health.
- Overseas: about 200 net new teahouses, with 2026 described as a “foundation building year.”
Zhang also said the company plans to enter an eighth overseas market with a Korea debut in the second quarter of 2026. He described U.S. expansion as a long-term effort requiring higher investment, saying the company is choosing a more difficult approach than licensing or rapid franchising in order to build tea consumption habits over time.
COO and Global Executive President Dengfeng Yin addressed the business-model transition, saying its core motivation is to create “shared risk, shared reward” partnerships with franchisees. Yin said intensifying price wars pressured franchisees with declining sales and rising costs, and that the prior raw-material supply model did not provide enough buffer in downturns. Management said it has shifted to a GMV-based revenue-sharing model, with slightly higher brand fees offset by tighter discount management through targeted marketing and a reduced raw material and consumables cost ratio for franchisees.
On cost controls, management said efficiency efforts are designed as a long-term organizational health initiative rather than a short-term response. The company said it has completed a first phase of organizational optimization by integrating mid- and back-office functions and reducing duplication, while also implementing stricter budgeting and expense controls. For 2026, management said it expects sales and marketing investment to remain stable, while continuing to improve G&A efficiency without compromising international expansion.
About Chagee (NASDAQ:CHA)
Our Mission With every cup of our tea, we aspire to foster a global connection of people and cultures. Our Vision To modernize the tea-drinking experience through technology and innovation. Our Core Values “Customer First” is the foundational philosophy of how we make decisions and run our business. “Caring for Partners” is the core value that defines how we interact with consumers, franchise partners, suppliers, and employees. “Quality, Health, and Convenience” is the guiding principle of how we make our products.
