At a franchisee conference held in southwest China in July 2026, the management of NAYUKI (HK: 02150) spent nearly an hour presenting a new compact store model designed to shrink floor space to as little as 30-40 square meters and cut initial investment to around 300,000-400,000 yuan, urging existing franchisees to open additional locations. Yet franchisee Wang Wei had no intention of expanding. Since 2024, none of the several stores she opened with investments totaling millions of yuan have turned a profit, let alone recovered their initial capital.

One month after that conference, on August 26, NAYUKI released its interim results for 2026, showing revenue of 1.893 billion yuan, down 13.1% year-on-year, with a net loss of 97.49 million yuan, narrowing approximately 18% from the prior-year period. It took the company five years to go from listing on the Hong Kong Stock Exchange under the halo of being the "first new-style tea stock," with a market value once reaching HK$34 billion, to seeing its share price fall to HK$0.65 and being classified as a "penny stock." By the end of June 2026, its market capitalization had dwindled to roughly HK$1 billion, less than a quarter of the HK$4.842 billion net proceeds raised from its initial public offering, while rival Mixue Group boasted a market value exceeding HK$90 billion during the same period. Throughout this journey, NAYUKI has tried price cuts, opening up franchising, and store format adjustments, yet it faces an increasingly difficult question: why should consumers choose it?

Loss reduction achieved through cost-cutting

In August, visits to nearly 10 NAYUKI stores in Beijing revealed sparse in-store foot traffic, with most orders originating from food delivery platforms rather than dine-in customers. Even patrons seated in the stores tended to place orders via delivery apps before picking them up at the counter. This trend is reflected in the financial data: delivery revenue share climbed from 48.1% to 55.9%, while in-store ordering dropped from 10.6% to 7.7%, and self-pickup fell from 41.3% to 36.4%. Notably, advertising and promotional expenses rose 6.2% to 99.78 million yuan, attributed by the company primarily to delivery platform marketing. The narrower losses were achieved through workforce reductions, store closures, and cost controls. Raw materials and consumables costs dropped by 106 million yuan, employee costs declined by 107 million yuan, and depreciation and amortization of right-of-use assets and other items decreased by approximately 61.95 million yuan, for a combined reduction of about 275 million yuan that helped offset declining revenue. Sales performance, however, showed no improvement. In the first half, average daily sales per directly operated store fell from 7,600 yuan to 7,000 yuan, average daily order volume slipped from 296.3 to 286.7, and average order value dropped from 25.7 yuan to 24.3 yuan. Same-store daily sales declined across all six key cities: Shenzhen, Shanghai, Guangzhou, Wuhan, Xi'an, and Beijing.

Pivoting from the third-place concept to compact stores

When NAYUKI opened its first store in Shenzhen in November 2015, it introduced fresh fruit teas, cheese-topped teas, and soft European-style breads into large mall locations, with early standard stores typically spanning 180 to 350 square meters. Founder Peng Xin publicly stated her ambition to benchmark against Starbucks. At that time, NAYUKI stood at the pinnacle of China's new-style tea sector, defining the premium ready-made tea market alongside Heytea. By the end of 2020, it had opened 489 stores across 66 mainland Chinese cities. According to data cited in its prospectus from CIC Consulting, its market share was about 18.9%, second only to Heytea, with an average selling price of approximately 26 yuan and average order value of around 43 yuan. By 2025, its average ticket had dropped to 24.4 yuan. On June 30, 2021, NAYUKI listed on the Hong Kong Stock Exchange at HK$19.80 per share, raising net IPO proceeds of approximately HK$4.842 billion with an oversubscription of 431 times. The large-store model brought brand recognition but also hefty costs. From 2018 to 2020, revenue grew from 1.087 billion yuan to 3.057 billion yuan, yet the company recorded losses of 69.73 million yuan, 39.68 million yuan, and 203 million yuan, respectively. Before listing, NAYUKI had already begun trimming its large-store format with the launch of NAYUKI PRO stores in 2020, which eliminated in-store bakeries, reduced investment costs from approximately 1.85 million yuan to 1.25 million yuan, and cut staffing from about 21 to 13 employees. Over time, stores grew smaller and operations increasingly relied on delivery. In July 2023, the company, which had long insisted on direct operations, opened up franchising. By then, competitors such as Heytea and Chagee had already scaled up their franchise networks rapidly. NAYUKI's entry requirements, however, were steep: initial stores needed 90 to 170 square meters, investment budgets starting at 980,000 yuan, and proof of at least 1.5 million yuan in liquid assets. Conditions were gradually relaxed: in February 2024, the investment threshold was lowered to 580,000 yuan, store size reduced to about 40 square meters, and the liquid asset verification requirement cut to 800,000 yuan. By comparison, initial investments for Chagee were around 200,000 yuan, Guming about 230,000 yuan, and Mixue around 210,000 yuan, making NAYUKI several times more expensive to enter. In 2024, Wang Wei initially wanted to franchise Mixue, but her chosen locations failed approval. She simultaneously applied to Heytea, Chagee, and NAYUKI. NAYUKI responded within a week, and the entire process from submitting documents to interviewing at its Shanghai headquarters took less than two weeks. By the time the other two brands replied, her NAYUKI store was already in preparation. Wang recalled that NAYUKI's franchise recruitment staff repeatedly emphasized the "first new-style tea stock" label, describing the brand as having "more sophistication than fast-moving consumer milk tea," and projecting a payback period of two to three years. At that time, however, leading peers were achieving payback within six months to a year. The reality for franchisees proved harsher. Starting in 2024, Wang invested in multiple NAYUKI stores with cumulative investments in the millions. Her first store, a city debut, attracted customers for two months through novelty and promotions, but by the third month it was losing money monthly and closed after about a year. Her second, exceeding 100 square meters, performed better initially but eventually plateaued at break-even. Beyond franchising, NAYUKI has experimented with other formats such as NAYUKI Life and NAYUKI Tea Court, and in 2025 introduced NAYUKI·green, multi-fiber light beverage concept stores, and freshly brewed pure tea shops, searching for new consumer scenarios from lifestyle to business socializing, health drinks, and takeaway convenience. However, inspection revealed that all NAYUKI·green locations in Beijing have been shuttered.

Defining what NAYUKI stands for

Back in 2015 Shenzhen, NAYUKI carved out a new afternoon tea niche with "a good cup of tea paired with a soft European bun." The signature Bubbly Cheese Strawberry tea with durian bun became a trendy social media staple among urban office workers. At its peak, bakery products contributed about 25% of sales, with average order values consistently above 43 yuan, well ahead of competitors. The dual-product category was prominently listed in its prospectus as a core competitive advantage and a pillar of its valuation story. But this model was costly. In-house baking required ovens, prep stations, and bakers, keeping store sizes and labor expenses high. Starting in 2022, new NAYUKI openings switched to PRO lightweight stores, eliminating in-store baking in favor of centrally produced, cold-chain-delivered par-baked goods. By 2025, the vast majority of its stores no longer baked on-site. Wang Wei noted that nearly all bread items in her store are now pre-made, with staff only thawing and re-toasting. She said her store sells fewer than 10 breads per day, with dessert sales even weaker, partly because the lack of display freezers means customers are unaware desserts are even available, leaving delivery orders as the main sales channel. Financial data shows bakery revenue fell from 527 million yuan in 2024 to 352 million yuan in 2025, a 33% drop, shrinking its share of total revenue from 10.7% to 8.1%. As its core differentiator weakened, brand appeal continued to erode. Registered members grew from 102.8 million at the end of 2024 to 118.9 million by the end of 2025, but monthly active users fell from 4.8 million to 3.6 million, and by the end of June 2026, with 125.7 million registered members, monthly actives had dropped further to 3.02 million. At a NAYUKI store in Beijing's Xidan area, random consumer interviews painted a similar picture. One woman waiting with friends said, "Before, NAYUKI's bread was pretty good, but now the selection is much smaller and it feels no different from other milk tea shops." A younger customer comparing coupons on her phone remarked, "There are so many milk tea brands now. NAYUKI doesn't have anything that stands out to me. I remember it being pricey, and if I hadn't passed by, I wouldn't go out of my way to buy it."

At the company's annual general meeting on June 24, 2026, attending investors described the atmosphere as a "war of words." One shareholder asked management directly: "Before the company turns profitable, shouldn't the founders' salaries be tied to performance? Or maybe just pay them 1 yuan?" In response, co-founder Zhao Lin stated that neither founder had sold any shares since listing and that they rely on their salaries, calling the 1-yuan idea impractical. An investor who held NAYUKI shares for nearly three years said he had liquidated his entire position in the first half of this year. He had originally bought in believing in the premium tea track and NAYUKI's third-place narrative, but now, he said, neither of those concepts exists anymore. Price cuts, store downsizing, and franchising have all, in turn, negated the original positioning. Today, NAYUKI fits neither the premium nor the truly affordable category, stuck awkwardly in between. "I'm not sure the company itself has figured out what NAYUKI stands for," the former investor said. Peng Xin once wrote in 2018 that the company's mission was to be an innovator and promoter of bringing Chinese tea to the world. NAYUKI actually opened its first overseas store in Singapore in 2018, though those early stores later closed. It restarted international expansion from Thailand in late 2023 and now has nearly 30 overseas locations. By comparison, Mixue has over 4,000 overseas stores and Chagee more than 200. Questions sent to NAYUKI regarding its financial results were not answered by the time of publication.