"Zero-dollar purchase" is gone. Does the milk tea still taste good?

Ask AI · Why has the subsidy war put the biggest pressure on high-end milk tea brands?

“0-yuan checkout,” “drink milk tea for 1 cent,” “free milk tea vouchers”… In 2025, the hundred-billion-yuan subsidy battle among food delivery platforms turned the tea beverage market into a brief carnival. However, the carnival eventually ends. As subsidies gradually fade, milk tea prices are back in the 20-yuan range.

Recently, six listed tea beverage companies that operate made-to-order drinks have successively released their 2025 performance reports. The impact of the subsidy battle is clearly visible in their financial statements: some are under pressure and hurt, some seize the opportunity to move up, and some even actively hope the subsidies will end sooner.

Same stage, different fates

“The one that got hurt the most” is the brand positioned as high-end. In the fourth quarter of 2025, Bawang Chaji’s revenue was 2.97B yuan, down 10.8% year over year; operating profit turned from profit to loss, recording a loss of 35.5 million yuan. Attributable net profit also plunged 95.3% year over year to 28.54M yuan.

Founder Zhang Junjie said in a performance conference: “We also indeed underestimated the impact of the price war on food delivery platforms on offline operations.” When competitors competed for traffic with subsidies, Bawang Chaji chose to “not participate” to maintain its high-end brand positioning. As a result, a large portion of offline foot traffic was diverted, and in 2025 it “basically wasted about half a year.”

Nayuki’s Tea also suffered heavily. In 2025, revenue was 4.33B yuan, down 12% year over year. After adjustments, it recorded a net loss of 241 million yuan, becoming the only brand among the six listed tea beverage companies that was still losing money. The share of delivery revenue first exceeded 50%. However, both in-store ordering and pickup orders declined, average order value kept falling, and it has dropped to 24.4 yuan.

Nayuki’s Tea: the share of delivery revenue first exceeded 50%.

On the other hand, brands focused on lower-tier markets absorbed this wave of traffic. Chatime Bai Dao emphasized it does not rely on subsidies; it only leverages the trend to increase order volume and shape user habits. Guming (Guming) proactively raised prices on delivery platforms starting in July 2025 to protect the interests of franchisees.

Consumer habits have been reshaped

The turning points in the financial data of the “tea beverage stars” are closely related to the food delivery subsidy war. When “drink milk tea for 9.9 yuan” became the norm, tea beverage consumption scenarios quickly shifted from offline stores to online delivery platforms, and consumer habits were reshaped.

For Nayuki’s Tea, which focuses on the “large-store model,” shrinking in-store dine-in customer flow and a decline in average order value mean profit margins are severely squeezed. High rent and labor costs can’t be supported. In its financial report, Bawang Chaji said last year’s fourth-quarter revenue fell mainly because the timing and cadence of new product launches differed between last year and the year before, and also due to changes in the competitive landscape of subsidy battles among online delivery platforms.

Worth noting is that even some tea beverage brands that gained growth during the food delivery subsidy war also hope the subsidies will end as soon as possible.

Guming CEO Wang Yun’an did the math: delivery only brings limited improvement to full-year performance, about 5% to 10%. With an order of 3,000 yuan for delivery, the profit is even less than that of a 1,000-yuan dine-in order. The core reason is that delivery requires paying additional delivery fees and also bearing the platform’s commission deductions.

Source image: a Mi Xue Bing Cheng offline store. Photo by Zuo Yuqing

Mi Xue Bing Cheng’s newly appointed CEO Zhang Yuan also said in a performance conference: “In the fourth quarter of last year, growth in store sales slowed compared with mid-year and the third quarter; orders accelerated the shift toward online channels, leading to fewer customers who dine in at stores. Offline dine-in operations have been the group’s most skilled model in the past, so it was hit.”

Jiang Han, a senior research fellow at PanGu Think Tank, told reporters that in the short term, delivery subsidies significantly amplified the transaction scale of the tea beverage market. By injecting capital through the platforms, consumption thresholds were artificially lowered, stimulating the release of non-mandatory demand and forming a brief window for a “traffic bonus.” But at the same time, subsidies distorted price signals, causing consumers’ price sensitivity to rise abnormally, creating “subsidy dependence.” Once the discount period fades, consumption frequency quickly falls back, revealing the unsustainability of such demand.

Where is the tea beverage market headed

Subsidies will eventually ebb, and this carnival can’t become the norm. In January this year, the Office of the State Council’s Anti-Monopoly and Anti-Unfair Competition Commission announced that it would, in accordance with the Anti-Monopoly Law, carry out an investigation and assessment into market competition conditions in the food delivery platform services industry. In March, the State Administration for Market Regulation released its latest progress, showing that it had, together with the relevant member units of the State Council’s Anti-Monopoly and Anti-Unfair Competition Commission, gone to relevant delivery platforms to conduct on-site investigations and comprehensively collect information. It also organized and held symposiums with merchants to communicate with industry associations and operators within the platforms. Through face-to-face interviews, it extensively understood the concerns and demands of multiple parties, such as merchants on the platforms, delivery riders, and consumers.

As this “low price” carnival gradually comes to an end, the competitive logic of the tea beverage market is also changing. Leading brands are turning their attention overseas; some brands are listing coffee as a new strategic support point, hoping to complement tea beverages.

But ultimately, industry competition still needs to shift from “price” to “value.”

Jiang Han believes that tea beverage brands must shift from “price competition” to “value competition.” By building differentiated barriers through product innovation, they should focus on upgrades to healthier, more functional, and region-specific recipes. They should replace “subsidy-led traffic acquisition” with “quality premium” and reshape consumers’ perception of brand value.

Even after the ebb of food delivery subsidies, product innovation remains the most effective way to activate existing users and maintain brand premiums. When prices return to rationality, that cup of milk tea in consumers’ hands ultimately has to rely on quality, experience, and brand warmth to win people’s hearts. The ebb of subsidies is the necessary path for the industry to move from “burning money to buy traffic” to “intensive cultivation and fine-tuning.”

Editor: Zhao Xiaoqian

Responsible editor: Wang Shanshan