VESSEL GLOBAL CAPITAL / GLOBAL CAPITAL INSIGHTSISSUE 04 · JULY 2026

CONSUMER · U.S. IPO · GLOBAL EXPANSION

From franchise velocity to global operating proof.

CHAGEENASDAQ: CHA

Chagee’s post-IPO challenge is not opening more teahouses. It is proving that brand, store economics and organizational control can travel together.

Growth can hide a strategic transition—until public reporting makes every cost of that transition visible.

Chagee built scale around a focused premium tea-latte proposition and a franchise-heavy network. That model enabled fast expansion and attractive asset efficiency. The company’s public-market chapter introduces a more complex question: how should it balance franchising with company-owned stores as it enters markets where direct operating control may matter more?

The 2025 numbers show that shift clearly. Total revenue rose only modestly, company-owned revenue nearly doubled, administrative expense increased, and net income declined. These are not isolated figures; together they describe an organization investing in international capabilities and a different store mix after its U.S. IPO.

Chagee’s post-IPO challenge is not opening more teahouses. It is proving that brand, store economics and organizational control can travel together.

02 / THE MACRO TREND

China’s beverage leaders are exporting formats, supply chains and membership systems—not simply drinks.

Global expansion in modern tea sits at the intersection of consumer taste, store-level execution, ingredient supply, digital membership and local real estate. Franchise speed can create reach, while company-owned stores can protect learning and brand control. The strategic design is deciding where each model earns the right to scale.

CHAGEE, IN PLAIN ENGLISH

Chagee develops a premium tea brand, supplies products and equipment to franchisees, collects service fees and increasingly operates its own stores—especially where tighter control supports international expansion.

Create

Develop focused tea products and a premium brand system.

Supply

Provide ingredients, packaging, equipment and operating standards.

Operate

Earn from franchise partners and company-owned teahouses.

Learn

Use membership and store data to refine products and expansion.

SCALE + FINANCIAL PROOF

Most recent fiscal year · Company-reported

2025 REVENUE

RMB12.9bn+4.0% year over year

TEAHOUSES

7,453345 outside China

OWNED-STORE REVENUE

RMB1.49bn+92.7% year over year

NET INCOME

RMB1.19bndown from RMB2.51bn

Can greater operating control create stronger global economics without permanently resetting margins?

WHAT IS WORKING

The network grew 15.7% to 7,453 stores.
Company-owned store revenue rose 92.7%.
Operating cash flow remained positive at RMB1.64bn.
The company ended 2025 with 345 overseas teahouses.

WHAT NEEDS PROOF

Franchise-derived revenue declined 1.9% in 2025.
Net income fell as expansion and organizational costs rose.
G&A increased to 19.0% of revenue, including IPO and infrastructure costs.
International store cohorts need clearer productivity disclosure.

THE DATA, VISUALIZED

The operating evidence behind the thesis.

Comparable periods, explicit units and primary-source definitions. Bar length shows magnitude; labels provide exact values.

REVENUE · RMB BN

Growth paused as the operating model changed

Company revenue by fiscal year; RMB billions.

2023RMB4.6bn

2024RMB12.4bn

2025RMB12.9bn

READ-THROUGHRevenue nearly tripled between 2023 and 2024, then grew 4.0% in 2025. The new investor question is the quality and cost of the next phase, not historical network velocity.

Source: Chagee 2025 Form 20-F

NET INCOME · RMB BN

Profit absorbed the transition cost

Net income by fiscal year; RMB billions.

2023RMB0.8bn

2024RMB2.5bn

2025RMB1.2bn

READ-THROUGHNet income fell 52.8% in 2025 as the company invested in public-company infrastructure, international expansion and a larger company-owned store base.

Source: Chagee 2025 Form 20-F

06 / LONG-FORM ANALYSIS

What the numbers change—and what they still cannot prove.

Company-owned stores exchange capital efficiency for control and learning.

A franchise-heavy system allows a brand to expand quickly while partners fund much of the store-level investment. Company-owned stores do the opposite: they place leases, labor, working capital and execution risk on the corporate income statement. In return, management receives direct control over service, pricing, data and the pace of local experimentation.

Chagee’s 2025 mix shift is therefore strategic, not merely accounting. Company-owned revenue rose 92.7%, while franchise-derived revenue declined. The crucial question is where direct ownership is necessary and when a market is mature enough for franchising. Investors need a decision framework linking ownership to market stage, brand-control requirements and expected cash-on-cash return.

FOUNDER TAKEAWAYDefine which markets require ownership, the milestones for changing models and the return threshold for corporate capital.

Network count should be replaced by a cohort view of store productivity.

A store opened twelve months ago is economically different from one opened last week. Blending the two can make fast expansion look weaker than the mature base or hide underperformance behind new-store growth. The right view separates stores by opening period, geography and ownership model, then tracks sales ramp, margin, closure and payback.

That cohort architecture is especially important internationally, where real estate, labor, pricing and consumer acquisition may differ substantially from China. A compact disclosure of mature-store sales, new-store payback and closure by region would let investors distinguish deliberate investment from structural underperformance. It would also give management a more disciplined internal capital-allocation language.

FOUNDER TAKEAWAYReport store cohorts by age, region and ownership so growth and productivity can be evaluated together.

The franchisee’s economics are part of the public company’s asset quality.

A franchise network can appear asset-light at the corporate level while accumulating risk among operators. If partner returns deteriorate, the consequences surface through slower openings, closures, discounting, weaker service and pressure on supply revenue. The health of the partner base is therefore a leading indicator of brand and financial performance.

Useful disclosure includes initial investment, mature-store sales, cash payback, renewal, closure and the share of franchisees operating multiple locations. Those measures should be presented as ranges or cohorts rather than promotional averages. The objective is to demonstrate that growth is supported by viable partners rather than by replacing unsuccessful operators with new ones.

FOUNDER TAKEAWAYTreat franchisee returns and closures as core risk indicators, not optional operating detail.

A focused menu is an advantage only when the operating system travels.

Chagee’s product focus simplifies training, supply and consumer recognition. Yet international markets introduce new ingredient rules, labor practices, delivery economics, real-estate formats and taste expectations. The brand must decide which elements are non-negotiable and which can be adapted without losing identity.

Company-owned launch stores can serve as learning laboratories, but laboratories need exit criteria. Management should disclose what the first stores are testing, how learning changes unit economics and when a market is ready for accelerated expansion. Otherwise direct ownership risks becoming a permanent cost justified by an indefinitely broad strategic label.

FOUNDER TAKEAWAYGive every international test a hypothesis, a measurement period and a scale-or-stop decision.

Public capital should make the transition measurable rather than merely faster.

The 2025 decline in net income does not by itself prove the strategy is failing. Some costs relate to the IPO, public-company systems, people and international infrastructure that may support future scale. But investors cannot assign credibility to a temporary-cost explanation unless management identifies the items, gives their timing and shows how the steady-state model should operate.

A strong bridge would separate one-time listing expenses, recurring public-company costs, market-entry investment and store-level economics. It would then connect those categories to milestones such as international cohort maturation, owned-store contribution and franchise recovery. That is the difference between asking investors for patience and giving them a framework for evaluating progress.

FOUNDER TAKEAWAYName transition costs precisely and pair each one with the operating milestone that should absorb it.

07 / TRANSACTION BREAKDOWN

The U.S. IPO supplied capital for a more controlled global buildout.

Chagee priced 14.68 million ADSs at $28.00 in April 2025 for about $411.2 million of base gross proceeds. After full exercise of the over-allotment, the total offering reached approximately $472.8 million across 16.89 million ADSs.

CAPITAL / SECURITIES16.89m ADSs

⇄

ISSUER / INVESTORS$28.00

NASDAQ GLOBAL SELECT MARKET · SYMBOL CHA

08 / SIGNATURE IR ANALYSIS

The messages management should keep proving.

Segment the store base

Separate mature, new, company-owned, franchised, China and international cohorts.

Explain the model transition

Quantify why ownership is increasing and the return threshold for direct investment.

Bridge growth to margins

Identify temporary public-company and expansion costs versus the durable cost base.

Report partner health

Show franchisee economics, closures, payback and supply-chain quality consistently.

International expansion is a capital-allocation decision disguised as a growth story.

Founders should not let store count become the narrative’s only measure. The better question is whether each new cohort strengthens brand control, local learning and cash-on-cash returns after the full infrastructure required to support it.

Chagee’s mix shift deserves transparent explanation. If company-owned stores are strategic laboratories for new markets, management should define the milestones that turn those laboratories into repeatable economics.

01Explain why the operating model changes by market.
02Disclose cohort economics before investors have to estimate them.
03Separate transition costs from the steady-state organization.

ABOUT VESSEL GLOBAL CAPITAL

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PRIMARY SOURCES

Source notes

IMPORTANT NOTICE

This publication is for informational and educational purposes only and does not constitute investment, legal, accounting or tax advice, an offer to sell, or a solicitation to buy any security. Vessel Global Capital expresses no securities recommendation or price target. Public information is believed reliable but has not been independently verified. Readers should conduct their own diligence and consult appropriate advisers.

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