Nayuki Pro flops as costs exceed expectations

The smaller and less heavily staffed Nayuki Pro was launched in November 2020, but did not perform well.

Photo by Fan Jianlei

Photo by Fan Jianlei

By LU Yibei


Bubble tea chain Nayuki is to open its 1000th shop, but its real estate strategy is again under scrutiny. The most recent disclosure shows that takeaway-focused Pro shops, which Nayuki has been opening since last year, make less than large sit-down cafes.

Nayuki makes no secret of its ambition to become the Starbucks for bubble tea with large cafes in high-end locales, each with a “bakery” attached, but founder PENG Xin has been struggling to convince customers and investors that Nayuki still loves sit-downs, while struggling to make Pro competitive.

At a recent event, she acknowledged that sit-down cafes cost more, but outlined her vision in which families, on their weekend outings, bypass Starbucks and walk into a Nayuki shop next door instead.

The smaller and less heavily staffed Pro was launched in November 2020 in cheaper locations such as office buildings, without the ovens. But it didn't perform well. Rent as a percentage of total costs has ballooned, despite the fact that almost all new shops since 2021 have been Pros, which are supposedly cheaper to rent.

A conventional café makes 13,200 (US$1,800) yuan per day and Pros make 9,600 yuan. Margins are higher for cafes too, at 11.5 percent versus 10.5 percent.

Sales were hit by the pandemic, but so were competitors’. Nayuki says it has been trying to automate and digitize to save on costs. The company recently started selling tea leaves and tea bags to expand revenue sources.