On 26 March, “new-style” Chinese tea chain CHAGEE submitted its prospectus to the US Securities and Exchange Commission (SEC) for an IPO to raise 100 million USD and to be listed on the Nasdaq under the ticker symbol CHA. If successful, CHAGEE will become the first Chinese bubble tea chain to go public in the United States.
Commentators are even more impressed with what CHAGEE has shown in its prospectus. According to the document, CHAGEE’s gross merchandise value (GMV) reached 29.46 billion RMB (4.06 billion USD), up 173% year-on-year (YoY), meaning CHAGEE’s GMV grew 22 times in 3 years. Net profit was 2.52 billion RMB (347.23 million USD), a whopping 213.32% YoY increase with a profit margin of 20.27%. The margin exceeds competitors Mixue’s 18.7% and Goodme’s 17.4%.
Not only does CHAGEE have a healthy cash flow, but it has also kept its momentum in branch openings. Its global branch numbers were 1,087, 3,511 and 6,440 in 2022, 2023 and 2024, respectively, growing sixfold in 2 years. Interestingly, CHAGEE now has over 3,000 branches in new tier-1 and tier-2 cities, more than it has in tier-3 and four cities. More importantly, its sales have not been compromised by its rapid expansion and it has only a 1.5% closing rate.
CHAGEE’s strategy focuses on “hero items” such as the “tea latte” that contributed to 91% of its GMV in Mainland China. It is also developing automated processes for standardised and efficient tea making. Its powerful marketing machine with both collaborations and “culture goes overseas” (文化出海) concept. But the real question is: after the CHAGEE IPO, can it continue its momentum, both in and outside China?
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