China Freshly Made Tea Sector – Sept 2026

China’s freshly made tea industry is shifting from store-count expansion toward franchisee economics, with Chagee offering the strongest potential earnings inflection in 2H26.

• 1H26 results diverged: Guming delivered the strongest earnings growth and store productivity, Mixue began a multi-year transition toward slower expansion and better existing-store quality, while Chagee appeared to be emerging from its operating trough.
• The chains monetize franchises differently: Mixue earns mainly from manufacturing and distributing ingredients at markups of roughly 20%-35% on COGS; Guming derives around 99% of revenue from raw materials and equipment, including espresso machines sold for about RMB80k; Chagee is moving toward a model charging roughly RMB17 plus RMB10 per RMB100 of domestic franchisee GMV.
• Chagee’s new model, introduced from 4Q25, cuts raw-material, equipment and consumables markups by 20%-40% while linking headquarters revenue more directly to store GMV and limiting the centrally managed marketing contribution to around 10% of GMV.
• The FY25 working-capital comparison shows Chagee at 11 inventory days and a total working-capital cycle of -112 days, versus 47 days and -20 days for Mixue and 48 days and -2 days for Guming; Chagee also had a 53.5% gross margin, compared with 31.1% for Mixue and 33.0% for Guming.
• The food-delivery subsidy war exposed the old model’s incentive problem: Luckin reported 14.4% same-store sales growth in 3Q25 while adjusted net profit fell 2% year on year, and Guming’s CFO said its franchisees experienced similar trends in 2H25.

Takeaway: Investors should focus less on gross openings and more on store productivity, closure rates and sustainable franchisee returns; Chagee could see the strongest relative earnings momentum in 2H26, although Mixue and Guming face tougher comparisons and Chagee must prove that its new GMV-linked model improves franchisee economics.