The archive · Consumer Apps · Strategic decision · 2017–2025
Chagee bets premium original-leaf milk tea can scale like coffee; Nasdaq IPO
Chagee (霸王茶姬) grew from one Kunming shop in 2017 to 6,440 teahouses and a $411M Nasdaq IPO in 2025.
Chagee (霸王茶姬)
What the business is
A franchise-led premium tea chain selling original-leaf milk tea (tea latte) in large, high-traffic mall stores, with revenue mainly from selling ingredients and packaging to franchisees.
Starting capital：About CNY 620M equity across three pre-IPO rounds (A: Fosun+XVC ~CNY 164M, B: ~CNY 128M, B+: CNY 330M); IPO raised $411M.
How it started
Founder Zhang Junjie, a Yunnan tea-industry veteran, opened the first store on Wuyi Road, Kunming on 2017-11-17. Instead of chasing fruit-tea and toppings, he bet on original-leaf fresh milk tea at 16–25 yuan, with a deliberately short menu.
What happened
By end-2022 the chain passed 1,000 stores; 2023 it opened 2,317 and reworked the brand and product line around tea lattes (91% of China GMV by 2024). Revenue went from CNY 4.9B (2022, net loss ~CNY 90M) to CNY 46.4B-equivalent scale in 2023 and CNY 12.4B revenue / CNY 2.52B net profit in 2024. Store monthly average GMV hit CNY 511,700 in 2024, highest of listed milk-tea chains.
How it ended up
Listed on Nasdaq (ticker CHA) 2025-04-17 at $28, raising $411M at ~$5B valuation; shares closed +16% to $32.44. It became the first Chinese new-tea brand on a US exchange, ahead of planned US, Malaysia and Indonesia expansion.
Background
Chagee (霸王茶姬) is a Chinese premium tea chain that bet young consumers would treat tea the way they treat coffee: a standardized drink bought by brand and taste consistency, not by menu novelty. Founder Zhang Junjie opened the first store in Kunming in November 2017, deliberately avoiding the fruit-tea and toppings arms race by selling original-leaf fresh milk tea at 16–25 yuan with a deliberately short menu.
The bet compounded: by end-2022 Chagee had ~1,000 stores; 2023 added over 2,300; by end-2024 it ran 6,440 teahouses in China, Malaysia, Singapore and Thailand, with 2024 GMV of CNY 29.5B (+173%) and revenue of CNY 12.4B (net profit CNY 2.52B, ~20% margin). Its single hero drink, Boyajuexian, passed 600 million cups and drove over half of China GMV, and a coffee-like store standard (60–80 sqm, 8-second cup production) pushed monthly store GMV to CNY 511,700 — the highest among listed Chinese milk-tea chains.
On 2025-04-17 Chagee listed on Nasdaq under ticker CHA, raising $411M at $28 per ADS (about $5B valuation); shares opened +49% and closed +16% at $32.44, and the company said it would open its first US store in Los Angeles. Total pre-IPO equity raised was roughly CNY 620M, so the IPO was both a funding event and a validation of the premium tea-latte positioning.
The open question was saturation: same-store GMV growth in China turned negative in Q4 2024 as store density rose, while overseas same-store GMV was still growing strongly — which is where Chagee pointed the IPO proceeds.
What has to be true
- Repositioning, not more variety: Chagee defined a new 'tea latte' category inside milk tea instead of competing SKU-for-SKU.
- Coffee discipline applied to tea: low menu count, standardized ingredients, machine-made cups in seconds, premium mall locations.
- Geography as strategy: starting in the southwest let it prove unit economics away from the coastal wars before national scaling.
- Franchise economics inverted the usual race: high store-level GMV and profitability attracted capital and franchisees without discounting.
What can be applied
A crowded category can be won by repositioning, not variety: a short menu, premium ingredients, and coffee-chain operations let a late entrant out-earn larger rivals.
Aftermath
As of 2025-04-18 Chagee was a Nasdaq-listed company with 6,440 stores, targeting 1,000–1,500 net new stores in 2025 and building an overseas supply chain; its first US store at Westfield Century City, Los Angeles was due to open in spring 2025, with Indonesia planned. The founder kept ~89% voting control via dual-class shares.
Sources
- Chinese tea chain Chagee climbs 15% in stock market debut
- Chinese Tea Chain CHAGEE Files for U.S. IPO
- 霸王茶姬斩获360亿IPO（STCN/新财富）
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