By LU Yibei

Bubble tea chain Nayuki turned to a loss of 145 million yuan (US$22.8 million) last year in its full-year earnings report since its Hong Kong IPO flopped. Revenue grew 40 percent to 4.3 billion yuan, mostly down to new stores. In 2020, Nayuki made 16.6 million yuan in profit.

Costs ate up 85 percent of revenue, of which 33 percent went to raw materials, 33 percent to wages, and 19 percent to rent and new stores. The company opened 326 new stores last year, pushing the nationwide total to 817. The same again will open this year. CEO ZHAO Lin said Nayuki would take advantage of a slow market to secure low rents and “solidify consumer habits”

Although sales went up as expected, profits didn’t. Hopes were riding on a new store model, called Nayuki Pro, smaller than standard cafes and more cost-efficient, but standard cafes sold about twice as much as Pro shops on a per-store basis last year. Most new stores opened last year were Nayuki Pros.

Nayuki blamed a lack of customers due to “quickly changing economic conditions” in the second half. The company is piloting an automatic tea dispenser in some stores for mass deployment by Q3. 

Like its main competitor Hey Tea, Nayuki lowered prices in Q1, attracting some customers but also entering the realm of mid-range brands. Bottled drinks and packaged pastries in supermarkets made a fourth of total revenue.

Bubble tea chains are gradually losing the confidence of investors. Nayuki opened lower than its IPO price last June and is now trading at less than a third of the original valuation. The poor results may discourage other beverage brands waiting to go public, including Hey Tea.