Tea Franchise Profitability Race: Re-engineering the Unit Economics of HEYTEA (沪上阿姨)

📌 Background

In 2026, the tea franchise industry shifted from a race for store count to a race for profitability, with the industry collectively facing the pain of store closures. HEYTEA has shifted its focus from store quantity to the quality of unit-level profitability. According to the company's H1 2026 financial report, revenue reached 2.589 billion RMB, a year-on-year increase of over 40%. Net profit attributable to the parent company grew by over 58%, adjusted net profit rose by 64.2% year-on-year, and the gross margin climbed to 31.6%. The global store count exceeded 13,000, with 53.4% of these locations situated in tier-3 cities and below.

👤 Target Customers

Franchisees, tea beverage consumers, commercial real estate developers, and suppliers of tea ingredients and equipment.

💰 Revenue Streams

1) Franchise fees and deposits: Collected as a one-time payment upon signing, with annual brand management fees; 2) Supply chain procurement: Earning margins by marking up tea ingredients, packaging, and equipment based on franchisee order volume; 3) Regional agency fees: Collected based on authorized territories; 4) Store upgrades: One-time fees charged for renovation projects (an opportunistic item; the long-term revenue potential of upgrade fees remains unclear).

🧮 Cost Structure

Franchisee recruitment and training, supply chain warehousing and logistics, digital ordering and store management systems, brand marketing, and post-closure support.

🛡️ Moat

The bargaining power in the supply chain brought by a network of over 10,000 stores, combined with continuous iteration of the unit profitability model, results in higher franchisee renewal and expansion rates compared to competitors of similar scale.

🔑 Keys to Success

• Unit profitability model
• Supply chain efficiency
• Franchisee quality control

⚠️ Risks

• Rising store closure rates among franchisees
• Food safety issues
• Intense homogenization in the tea beverage market

🏢 Cases

• HEYTEA recorded 2.5 billion RMB in revenue in H1 2026, successfully navigating the 'danger zone' of the 10,000-store milestone
• Zhongfang.com reported on HEYTEA's strategic pivot from a store-opening race to a profitability race

📊 SWOT Analysis