What does the tea store shakeout mean for a chain of coffee shops?

More than 160,000 tea beverage stores closed in a single year, according to Narrow Door Dining Eye data. The industry counted 412,600 stores and 142,300 new openings, but net growth was -17,700, meaning closures far outpaced openings. Leading brands such as Mixue Ice City, Goodme, Shanghai Auntie, and ChaPanda still grew, though their expansion slowed markedly.

Nayuki's stock fell 93%, wiping out nearly HK$27 billion in market value, as product homogenization and consumer fatigue weighed on the category. The slowdown has been sharpest in the autumn and winter off-season. For anyone running a chain of coffee shops, the lesson is that store count alone does not signal health, and closing loss-making locations is now standard practice.

Over the past year, the tea beverage market has undergone a dramatic reshuffle. According to Narrow Door Dining Eye data, the total number of stores in the milk tea beverage industry reached 412,600, with 142,300 new openings, but net growth was -17,700, meaning more than 160,000 stores exited the fiercely competitive market. Although leading brands such as Mixue Ice City, Goodme, Shanghai Auntie, and ChaPanda still saw growth, their pace of expansion has slowed markedly. Nayuki's stock price plunged 93%, wiping out nearly HK$27 billion in market value. Product homogenization is severe, consumers are experiencing aesthetic fatigue with similar drinks, and the industry is accelerating into a harsh winter during the off-season in autumn and winter.

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Recently, users on social platforms often mention when sharing their lives that a tea beverage shop they frequently visit has suddenly posted a closure notice, or that the store they pass by daily is left in a messy state after decoration workers have torn it apart.

Faced with this situation, some people reminisce about the milk tea they drank in these shops and sigh at how quickly time flies; some believe the shop's lease expired and was not renewed, so there is no need to make a fuss; others think that brands adjusting their market layout and closing loss-making stores is normal business behavior. However, compared with previous years, many users clearly feel that there has been more news of store closures in the tea beverage industry this year.

In fact, the public's intuition is not wrong. According to Interface News, Narrow Door Dining Eye data shows that the total number of stores in the "milk tea beverage" industry reached 412,600, with 142,300 new stores opened in the past year, but net growth was -17,700.

This indicates that in the past year, more than 160,000 stores in the industry have struggled to survive and disappeared from the fiercely competitive tea beverage market. At the same time, it also shows that the number of store closures in the industry currently far exceeds the number of openings, and more competitors may quietly exit in this great wave of elimination in the future.

Looking back at 2024 as it draws to a close, almost all leading tea beverage brands have seen their expansion stall. Industry giant Mixue Ice City currently has a total of 32,400 stores, still leaving other brands far behind in number, but compared with the 32,200 stores disclosed in its prospectus at the beginning of the year, this figure can only be regarded as standing still.

Among other brands that also submitted prospectuses at the beginning of the year, Goodme currently has 9,675 stores nationwide, while its prospectus disclosed 9,001 as of the end of 2023; Shanghai Auntie currently has 8,536, while its prospectus disclosed 7,297 in the first nine months of 2023; ChaPanda's prospectus disclosed 7,927 in February this year, and its interim report in June disclosed 8,385. Although the number of stores of these chain brands is still growing, the pace of expansion has clearly slowed.

In the fierce competition and broader economic downturn, it is not easy for chain brands to be profitable, and some brands have even fallen into losses. For example, Nayuki, the "first stock of new tea drinks," had a listing price of HK$19.8 per share on the Hong Kong Stock Exchange. After about three and a half years, Nayuki's stock price has plunged 93%, and its total market value has plummeted from the original HK$29.363 billion to around HK$2.5 billion today.

In addition, product homogenization has also invisibly affected many consumers' desire to buy. Previously, Chagee became popular with light milk tea, and overnight many mainstream tea beverage brands followed suit with similar tea products. Even Luckin from the neighboring track came to join in, so much so that users, looking at similar drinks on the market, bluntly said they were "tired of it."

At present, Heytea has carved out a new track with fruit and vegetable tea, attracting public attention, and many brands are also trying to follow suit by bringing all kinds of fruits and vegetables into their production rooms. But after the initial novelty wore off, the appeal of these novel products to customers declined, leading some customers to remark, "Why is it fruit and vegetable juice again?"

After entering the autumn and winter off-season, although competition in the tea beverage track remains fierce, the industry also seems to have entered a harsh winter as time passes. More and more milk tea brands that are barely holding on can only let go of their persistence in the face of increasing losses, becoming a wave in the tide of store closures.

Image source: Internet

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The above content is compiled by CoffeeHunters, a coffee news website.