Food & BeverageChina
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JOURNEY · DETAIL
Nie Yunchen and HEYTEA: How a small alley milk tea shop in Jiangmen used cheese foam to build a 60 billion yuan new-style tea beverage pioneer
Founded: Nie Yunchen · Shenzhen Meixixi Catering Management Co., Ltd. (HEYTEA)
JOURNEY
Key Fields
FIELD STAMPSIndustryFood & Beverage
RegionChina
ScaleGiant
ChannelOther
Origin
Nie Yunchen was born in Jiangxi in 1991 and later moved with his parents to Jiangmen, Guangdong, holding a junior college degree. Around 2010, he initially ran a mobile phone shop selling smartphone accessories, but his store business became unsustainable due to the impact of e-commerce. In May 2012, at the age of 21, he used his previously saved 200,000 to 300,000 yuan to open his first milk tea shop named Royaltea in an alley in Jiangbianli, Jiangmen. The reason was simple: the milk tea on the market was entirely made from powder blends, and he wanted to make a higher-quality cup of milk tea using real tea and fresh milk.
Milestones
2010
First Venture Failure
In 2010, Nie Yunchen sold smartphones and accessories in Jiangmen. Due to the rise of e-commerce, customer traffic to physical stores plummeted, making the phone shop business unsustainable. This failure made him realize he had to shift to an industry with differentiated barriers that could not be easily replaced online, thus turning his focus to freshly made beverages.
2012
Startup PMF
At 21 years old, Nie Yunchen opened his first Royaltea store of about 30 square meters in an alley in Jiangbianli, Jiangmen. He personally developed the method of whisking fresh tea, fresh milk, and cheese to create cheese foam tea, pioneering the cheese freshly-brewed tea category. The store drew long lines, and over the next few years, dozens of stores were replicated in tier-3 and tier-4 cities across the Pearl River Delta.
2016
Brand Rebranding Turning Point
In 2016, because the Royaltea trademark was heavily squatted and pre-registered by copycats and could not be registered, Nie Yunchen was forced to abandon the brand name he had operated for four years and spent a hefty sum to buy the HEYTEA trademark, completely renaming the brand. In the same year, he secured over 100 million yuan in investment from IDG Capital and He Boquan, bringing the new brand out of the Pearl River Delta and into core commercial districts in Guangzhou and Shenzhen.
2017
National Explosion Growth
In 2017, HEYTEA entered Raffles City Shanghai, creating a queuing phenomenon that sparked hours of waiting and topped trending searches, with scalpers driving up prices for a single cup to dozens of yuan, propelling brand awareness nationwide. Afterward, stores accelerated their entry into tier-1 and new tier-1 cities, completing a 400 million yuan financing round in 2018 as valuation continued to climb.
2021
Peak Expansion Growth
In 2021, HEYTEA completed its 500 million dollar Series D financing, with a post-investment valuation of about 60 billion yuan, setting a new financing record for China's new-style tea beverage industry and surpassing 800 stores nationwide. However, during the same period, single-store sales efficiency began to decline, store densification brought cannibalization, and high-end pricing faced pressure amid expectations of consumption downgrading.
2022
Price Cuts and Model Reversal Inflection Point
In 2022, HEYTEA announced price reductions across its entire product line, promising not to launch products priced above 30 yuan, pushing its mainstream price band down to 15-19 yuan and bidding farewell to high-end pricing. In November of the same year, it officially opened up the business partnership model, breaking its ten-year stance of full direct operation and recruiting partners in non-tier-1 cities, with initial single-store investment starting at approximately 408,000 yuan.
2024
Contraction and Reflection Inflection Point
The industry entered a wave of store closures. HEYTEA successively closed nearly 700 stores, stepping back from the ten-thousand-store track to focus on slow-paced business and single-store health priority. Nie Yunchen publicly stated that he would not follow the aggressive franchise expansion of Chagee's Zhang Junjie, refocusing instead on product and brand experience, shifting the valuation logic from store count to operating quality. This phase lasted from 2024 through 2025.
Turning Points
- Forced to rename to HEYTEA in 2016 due to the inability to register the Royaltea trademark, it instead leveraged the opportunity to complete a brand upgrade and secured 100 million yuan in financing to move beyond the Pearl River Delta.
- In 2022, price cuts across the entire line bade farewell to the 30-yuan price band, compromising high-end positioning for the mass market for the first time.
- In November 2022, the opening of the business partnership model reversed a decade-long stance of full direct operation, trading franchising for expansion speed in lower-tier markets.
- Starting in 2024, it proactively closed stores, contracted, and exited the ten-thousand-store race, pivoting the narrative from scale to single-store models and slow-paced business.
Failures & Pitfalls
- The first venture, a mobile phone accessory shop, went under due to the impact of e-commerce, tasting for the first time the vulnerability of a business without barriers.
- Due to trademark layout errors, the Royaltea brand was wildly imitated by copycat stores, leaving the original creator unable to register its own name and reducing four years of accumulation to nearly zero.
- High-density store openings after 2021 led to same-store cannibalization and declining single-store revenue, placing performance under pressure after hitting a peak valuation of 60 billion yuan.
- Price cuts and opening up franchising diluted the brand's sense of scarcity, ending the myth of queuing economics and forcing the brand to face a fiercely competitive red ocean after moving its positioning downward.
关键成功要素
- Using cheese foam to create an-phenomenon-level differentiated product, bypassing the homogenized red ocean of powder-blended milk tea.
- Riding the early dissemination wave of Weibo and WeChat Moments, turning the act of queuing itself into free social currency marketing.
- Sticking to direct-operation and site-selection standards under capital backing, turning single stores into city landmarks rather than assembly-line outlets.
- Daring to personally overthrow one's own pricing and model during a cyclical downturn, cutting through the arm to survive with three simultaneous arrows: price cuts, franchising, and store closures.
Lessons
- Brand names and trademarks must be carefully protected from day one; the lesson of Royaltea is worth hundreds of millions of yuan.
- Queuing is a result, not a method. Queuing generated purely through marketing will backlash against the brand if product capability fails to keep pace.
- High-end positioning is leveraging momentum rather than a lifelong identity; cutting prices earlier than competitors when the market turns cold is the only way to find opportunity.
- Direct operation trades for quality, while franchising trades for speed. There is no right answer to this choice, only an answer that matches your capital and cycle.
Core Data
- 2021年第四轮融资金额：500 million USD (based on publicly available information, independent verification pending)
- 2021年投后估值：Approximately 60 billion yuan (based on publicly available information, independent verification pending)
- 2016年首轮融资：Over 100 million yuan (based on publicly available information, independent verification pending)
- 2018年融资金额：400 million yuan (based on publicly available information, independent verification pending)
- 首店启动投入：Approximately 200,000 to 300,000 yuan (based on publicly available information, independent verification pending)
- 巅峰期门店规模：Over 800 stores (nearly 700 subsequently closed) (based on publicly available information, independent verification pending)
- 事业合伙单店前期投入：Starting from approximately 408,000 yuan (based on publicly available information, independent verification pending)
Competitors / Peers
Mixue Bingcheng achieves over 30,000 stores globally through a franchise and supply chain model, focusing on the price band below 10 yuan and crushing competitors with scale and cost advantages. Chagee positions its original-leaf fresh milk tea around national style, opening over 6,000 global stores in three years through aggressive franchising and going public in 2025. Naixue and HEYTEA share a high-end direct-operation path but have sustained continuous losses since listing on the Hong Kong Stock Exchange. Chabaidao, Guguming, and Auntea Jenny anchor the 10-20 yuan mid-market segment, rapidly sinking into lower-tier markets via franchising. HEYTEA has lost scarcity at the high-end and lacks cost advantages at the affordable end, placing it in a squeezed position on both sides.