King Tea Princess Zhang Junjie is reflecting.

What are the deeper reasons behind the performance turning point for Bawang Tea Princess in 2025?

Jiemian News Reporter | Ya Hanxiang

Jiemian News Editor | Xu Yue

On the evening of March 31, after releasing its 2025 financial report, founder and CEO Zhang Junjie nearly apologized as he reviewed the past year during a conference call.

“We underestimated the complexity and timeliness of organizational adjustments for Bawang Tea Princess as a large company,” he said. “The market competition in 2025 exceeded expectations, and we also truly underestimated the impact of price wars on delivery platforms on offline stores. Tea Princess basically lost half a year in 2025.”

For Bawang Tea Princess, which had surged forward over the past two years, this is a financial report with a clear inflection point.

The financial report shows that in 2025, Bawang Tea Princess achieved a total GMV of 31.58 billion yuan, a year-on-year increase of 7.2%; net revenue of 12.91 billion yuan, up about 4%. However, the full-year net profit attributable to the parent was 1.14B yuan, down more than 50% year-on-year; adjusted net profit was 1.91 billion yuan, a decrease of over 20% year-on-year.

If we look further back in time, this change becomes even more apparent. In 2023, Bawang Tea Princess’s revenue growth exceeded 843%, and net profit growth surpassed 982%; by 2024, revenue and profit still grew by 167% and 214%, respectively.

As one of the most watched star companies in the new tea beverage industry over the past two years, Bawang Tea Princess is now entering a stage of development that is completely different from before.

Zhang Junjie also mentioned during the conference call that Bawang Tea Princess experienced some ups and downs last year and took some detours, even facing highly uncertain decisions at certain moments.

To some extent, this is also the first time Bawang Tea Princess has explicitly acknowledged that the issues with organizational operation and business models, which were masked by rapid growth, have now been exposed.

[Image source: Bawang Tea Princess]

An intuitive industry background is that the competitive logic of the new tea beverage market has changed in 2025.

In the past, Bawang Tea Princess’s advantage lay in using flagship products and high brand momentum stores to quickly open up the market, maintaining brand tone within a relatively restrained pricing system. But by 2025, industry competition shifted to price wars on delivery platforms, dispersing foot traffic for offline new tea stores.

However, Zhang Junjie insists on not participating in the delivery price wars.

During the Q2 earnings call last August, Bawang Tea Princess management explicitly stated that they would not join the price war because it would harm franchisee profits and damage the high-end positioning the brand aimed to preserve.

A franchisee also expressed similar views in an interview with Jiemian News. He believed that participating in delivery price wars often results in “artificially inflated” revenue, but the actual income does not necessarily increase proportionally. “A milk tea that originally sold for 20 yuan might be perceived as only worth 10 yuan after the delivery war,” he told Jiemian News.

But from the results, Bawang Tea Princess clearly underestimated the impact of this round of price competition on store sales and consumer decision-making. After the delivery wars, consumers’ perceptions of the price and purchasing methods for a cup of milk tea changed, leading to a significant decline in Bawang Tea Princess’s performance, which was mainly focused on high prices and offline sales. The financial report shows that in Q4 2025, the average GMV per store per month in Greater China dropped by 25.5% to 337k yuan.

However, attributing this decline entirely to the delivery price war is not entirely accurate.

In the view of the aforementioned franchisee, the delivery war was more like a trigger. He told Jiemian News, “The real problem is that Bawang Tea Princess expanded too quickly before, opening many stores in large, prime, high-rent locations. Once brand marketing efforts decline and consumption is diverted by price wars, the risk resistance of these high-cost stores will quickly be exposed.”

Zhang Junjie himself also recognized the problem. During the conference call, he repeatedly emphasized another keyword: “internal adjustment.”

He admitted that in the second half of 2025, Bawang Tea Princess’s response slowed down during organizational restructuring, business model switching, and slowing down the pace of new product launches, causing it to miss many market opportunities.

The so-called business model switch refers to Bawang Tea Princess’s adjustment of its franchise cooperation model.

Yin Dengfeng, COO, Global President, and China CEO of Bawang Tea Princess, stated during the conference call that over the past year, due to the escalation of industry price wars, franchisees faced dual pressures of declining performance and rising costs. The original raw material sales model could no longer provide sufficient support to stores during the industry downturn. Therefore, the company began restructuring its profit-sharing structure, shifting from a traditional supply and sales relationship to a deeper GMV sharing cooperation model.

This means Bawang Tea Princess is trying to transform itself from a supplier of raw materials to franchisees into a partner sharing sales results with them.

Specifically, in the past, the headquarters mainly profited from the supply chain, requiring stores to purchase tea leaves, fresh milk, and materials from the company; but when store performance declined after the delivery wars and franchisee profits were squeezed, the raw material sales model became harder to sustain—if franchisees can’t make money, they will leave, creating a cycle of shrinking store scale and further deteriorating performance.

[Image source: Bawang Tea Princess official website]

Perhaps to facilitate this transition, the management repeatedly emphasized during the conference call that in 2026, they would not pursue high growth alone but would prioritize restoring same-store sales as the primary KPI.

By the end of 2025, Bawang Tea Princess had 7,453 stores worldwide. Zhang Junjie said that this year, they will appropriately slow domestic expansion and focus on improving same-store growth to ensure the health of existing stores. For underperforming stores, they will continue to optimize site selection and upgrade the brand. The plan is to add 300 new stores at strategic locations this year.

Whether it’s Pop Mart or Bawang Tea Princess, both have experienced rapid expansion in a short period. The risk of such speed is that the company’s organizational and operational capabilities cannot keep up with the scale. They are now at a stage where growth inertia has been broken.

Currently, Bawang Tea Princess has accelerated the launch of new products and also sped up its overseas market layout. Zhang Junjie stated that for globalization, Bawang Tea Princess is investing in the next decade’s growth engine.

But at this stage, Bawang Tea Princess still feels some anxiety.

Zhang Junjie frequently reflected during the conference call with a sincere attitude; at the same time, he also sought to reassure investors.

“I want everyone to pay attention not only to the numbers themselves but also to the fact that under short-term performance pressure, we have not taken short-term actions but have maintained our long-term bottom line,” he said. “In 2026, the recent domestic same-store sales data has shown a month-on-month improvement, which makes us confident about stabilizing in the first half and recovering in the second half of the year.”

In Bawang Tea Princess’s expectations, in 2026, the company’s revenue and profit will basically remain flat compared to 2025.