Bawang Tea Ji's transformation sees revenue increase but not profit in the first quarter; direct operation serves as a safety net for franchisees.

In the first quarter of its high-profile transformation, Bawang Tea Princess chose a more intensive approach to stabilize its system, leaving more pressure on its own profit statement.

In the first quarter of 2026, Bawang Tea Princess achieved net revenue of 3.546 billion yuan, up 4.5% year-on-year; however, operating profit fell from 821 million yuan in the same period last year to 547 million yuan.

After excluding equity incentive expenses, the Non-GAAP net profit margin dropped from 20.0% in the same period last year to 14.3%.

This is not simply profit fluctuation, but the result of a shift in the business focus.

Entering 2026, Bawang Tea Princess shifted from pursuing store expansion to stabilizing same-store sales, stabilizing franchisees, and stabilizing operating quality, supporting the system through direct management, product launches, and franchise policy adjustments.

In the first quarter, Bawang Tea Princess launched 12 new products, with nearly one new launch per week, covering a matrix of original leaf milk tea, tea lattes, tea specials, and light drinks.

Marketing activities during the Spring Festival coupled with frequent new launches boosted user activity. In the first quarter, active members reached 50 million, an increase of 11.7% quarter-on-quarter; the average monthly GMV per store in Greater China was 356,100 yuan, up 5.5% quarter-on-quarter.

However, the year-on-year pressure remains significant. In the first quarter, Bawang Tea Princess' same-store GMV decreased by 16.0% year-on-year, with Greater China down 16.1% and overseas markets down 12%.

Against this backdrop, the company accelerated its pace of direct management. By the end of the first quarter, franchise stores totaled 6,741, nearly 100 fewer than at the end of 2025; directly operated stores increased from 615 to 790, a net increase of 175 stores in a single quarter.

Direct management is not just an adjustment of store structure, but also an important means to strengthen headquarters' control.

In an environment of intensifying competition and pressured franchisees, increasing the proportion of direct management helps strengthen operations in key commercial districts and major cities, and maintains unified standards in products, services, and pricing systems.

But the cost is also obvious. In the first quarter, operating costs for directly operated stores reached 497 million yuan, up 216.6% year-on-year. With single-store sales not yet fully recovered, rising costs directly compress profit margins.

Another important change comes from the adjustment to the franchise commission mechanism.

Starting in 2026, Bawang Tea Princess has shifted from a supply-and-sales model of "selling raw materials to franchisees at a markup to earn the price difference" to charging a fixed percentage of GMV per store.

In addition, the brand takes on the difference in discounts for marketing activities, and the upper limit of the discount cost borne by franchisees is fixed at 10% of turnover.

This helps ease operating pressure for existing stores, but with same-store sales yet to recover, it also weakens the flexibility of the headquarters’ income and profits.

The new tea beverage industry has entered the phase of stock competition, with low-price competition, store density, and product homogenization continually squeezing single-store efficiency.

For Bawang Tea Princess, maintaining single-store profitability and franchisee confidence is harder than continued store openings.

If same-store GMV continues to be under pressure, direct management and profit-sharing measures are more about redistributing pressure; only when store turnover resumes growth can investments in direct management and franchise reform potentially translate back into profit flexibility.

Risk warning and disclaimerThe market carries risks, and investment should be done cautiously. This article does not constitute personal investment advice and does not consider the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their particular circumstances. Investments made accordingly are at one's own risk.