By LU Yibei

Bubble tea chain Cha Yan Yue Se finally learned the hard way that there really is such a thing as bad publicity. On payday last week, workers were shocked to find their salaries in November slashed by almost half to 3000 yuan (US$470), hardly a living wage in Changsha, the capital city of Hunan Province where the chain is based. When they voiced their anger in a group chat, senior managers, including the CEO himself, blamed the pandemic and reprimanded them for being ungrateful. A female worker ridiculed the explanation. Why, she asked, did you open so many stores during the pandemic? The 13 people who liked the message were told "they could choose to leave if they were not happy about it."

Screenshots of the fight quickly made rounds on social media. By December 17, the hashtag #ChaYanYueSe was clicked a billion times on Weibo. After all, Cha Yan Yue Se has always been as big on the internet as it is in real life. Although the chain has largely refrained from expansion outside its home city of Changsha, a conscious decision to create a sense of novelty and scarcity, it has amassed a cult-like following nationwide. The internet is full of tourist photos of its quaintly designed cups, often accompanied with captions recounting being pampered by the staff. When it opened in Wuhan in December last year, its first location outside Changsha, the line was eight hours long. Scalpers flipped 20-yuan bubble teas for 500 yuan, but it only generated publicity.

Now the online crowds are shocked to learn how the famously “service-obsessed” brand treats its staff. Long working days are common, breaks are discouraged, if allowed at all, and workers often have to stay until midnight to finish cleaning.  “Servers make 9 yuan an hour. Senior staff make 10 yuan 20 cents,” a cafe worker told Jiemian News. Hourly wages have always been low, she said, but what changed last month was that all benefits, including housing and meal subsidies, were canceled. She logged 171 hours in November, had six days off, and was paid 3200 yuan.

Cha Yan Yue Se tweeted that the pay cut was a less painful alternative to mass layoffs. The chain is in distress as a result of aggressive expansion gone wrong. From June 2020 to this November, it opened 330 new stores, bringing the total number to 560. The problem is, almost all of them are in Changsha. Visitors to the city are often surprised at how ubiquitous the brand is. The train station alone has four stores. In the Wuyi Square shopping district, there is a Cha Yan Yue Se, sometimes more than one, literally on every block.

The company had hoped to lock in cheap rent during the pandemic. But the decision to confine itself to Changsha also makes it vulnerable to local outbreaks and lockdowns. Cha Yan Yue Se has had three mass shutdowns since last year, the most recent in November. Tourism, an increasingly important source of income for Changsha, has suffered greatly. In 2020, the number of visitors dropped 16 percent. LU Liang, founder and CEO, said the company has been losing 20 million yuan a month due to the pandemic. It is a struggle to uphold quality standards, and all the pampering and indulgent service, once an asset, has become a time-consuming burden.

From day one, Cha Yan Yue Se has tied its identity to Changsha, branding itself as the bubble tea of locals, by locals and unavailable anywhere else. For a while, the strategy worked brilliantly, but fundamentally it is incompatible with the chain’s goals and even business model. To keep growing, it has to open new stores. And to open more stores, it has to expand outside Changsha.

Cha Yan Yue Se seems to have realized the unsustainability of having 500 stores in one city. It now has 24 stores in Wuhan, and plans to open more in nearby cities, likely with the blessing of its many big-name investors. They may have cheered before when Cha Yan Yue Se popped up on the trending list. But this time, they may feel different.