base shrank during the quarter. And the rapid growth of its overseas business is being driven primarily by new store openings rather than stronger sales at established locations. “The more complex the market, the more important it is to return to the fundamentals,” Junjie Zhang, CEO and chairman of Chagee Holdings, said during the company earnings call. “The more intense competition, the more important it is to perfect every consumer touch point. All of our work in the second quarter was built around this logic.” He added the tea industry is going through a structural change and called this year a year of adjustment and stabilisation.  Fewer cups, fewer members Chagee’s total gross merchandise value fell 5.5 per cent year on year to RMB7.66 billion in the second quarter. The decline was concentrated in Greater China, where GMV fell 9 per cent to RMB7.16 billion. Same-store GMV in Greater China declined 16.1 per cent year on year. It was the fifth consecutive quarter in which the company reported a double-digit decline, following falls of 23.1 per cent, 27.9 per cent, 25.5 per cent and 16.1 per cent in the previous four reported quarters. Meanwhile, Chagee’s active members were down from 50 million in the first quarter to 47.1 million in the second quarter.  The company has been converting franchised teahouses into company-owned ones. In Greater China, company-owned stores rose from 164 a year ago to 624, while franchised stores fell to 6,616 from a peak of 6,836 in September 2025.  Company-owned stores accounted for only 11.6 per cent of Chagee’s total network at the end of the quarter, but generated 27.5 per cent of total revenue. Revenue from company-owned teahouses rose to RMB940.6 million, while revenue from franchised stores fell 18.1 per cent to RMB2.47 billion. Overseas: Real growth, small base International markets provided the clearest growth story of the quarter.  Overseas GMV more than doubled, rising 114.3 per cent year on year to RMB504 million. The company ended the quarter with 399 teahouses outside Greater China across its overseas markets, up from 208 a year earlier. Its first three Seoul teahouses sold more than 16,000 cups in three days. But overseas same-store GMV fell 15.1 per cent, worse than the 12 per cent fall in the March quarter. The growth is coming from opening stores, not from existing stores getting busier. A market trained on cheap tea Part of the problem belongs to the industry. China’s delivery platforms spent 2025 fighting a subsidy war that, at its peak, sold bubble tea for a yuan or two, until regulators labelled it a case of involution. Meituan chief executive Wang Xing told analysts in June that subsidies were becoming more rational, a change he said plays to the company’s strengths.  Chagee’s CEO said the company among delivery platforms is reshaping consumer behaviour in China and traffic has become increasingly diversified and fragmented, leaving brands to closely track where consumers are moving and allocate resources efficiently.  “The old playbook built on high-profile positioning and loud marketing has lost its effectiveness,” he said. “What customers are looking for today is individual self-expression and a genuine sense of comfort. Brands need to become gentle touch points that resonate with the individual, connecting through sincerity and responding to consumers with care.”