Chagee's Turnaround: From Same-Store Slump to Consumer Value Focus and a $150M Buyback

The Turnaround Narrative

Chagee's first-quarter 2026 results mark a decisive inflection point after a year of strategic retrenchment. Revenue reached RMB 3,546 million, up 4.5% year-over-year and 19.2% sequentially, while non-GAAP net income quadrupled sequentially to RMB 506.7 million. More importantly, same-store GMV growth in Greater China improved by 9.4 percentage points sequentially, a clear signal that the company's pivot from expansion to operational quality is working. As CEO Junjie Zhang put it, “the ability of the company to navigate cycles ultimately depends on genuine consumer recognition.” — Junjie Zhang, CEO · 2026-05-29 This focus on consumer value—not external trends—is a strategic shift that has reshaped everything from product cadence to capital allocation.

The company's own keyword trajectory underscores this pivot. strategic direction and repurchase program surged in momentum in Q1 2026, while prior favorites like Indonesia, Thailand, and Malaysia declined—reflecting a deliberate deceleration of overseas expansion in favor of same-store health. This is a company that has listened to its investors and its own data.

Overseas and Product Momentum

Overseas remains the brightest growth engine. GMV from international markets grew 139% year-over-year and 14.6% sequentially, with 374 teahouses now operating across Southeast Asia and the United States. COO Aiden Yin highlighted, “It is clear that overseas markets are becoming an increasingly important growth engine.” — Dengfeng Yin, COO · 2026-05-29 The company is doubling down on localization: the Tea Latte line, for instance, captured 18% cup share in Singapore during campaigns, and new products like the Da Hong Pao series exceeded historical launch benchmarks. Product innovation is no longer a scattergun; it's a disciplined process aimed at deepening consumer loyalty, as evidenced by repeat purchase rates holding at 42.3% among active members.

The new GMV-based franchisee model is foundational to this recovery. By aligning the brand's economics directly with store performance, management has effectively created a shared-risk partnership. CFO Aaron Huang explained in the prior quarter, “In the new model, brand fees do go up slightly, but those fees come with 2 strong offsets.” — Hongfei Huang, Unknown · 2026-03-31 That alignment is already visible: gross margin expanded to 55.6% from 53.1% a year ago, driven partly by the higher-margin company-owned store mix, while franchisee gross margin remained flat.

Capital Return and Shareholder Value

Perhaps the most striking signal is the USD 150 million share repurchase authorization. Management's conviction is explicit:

We believe the current share price does not fully reflect the continued recovery in our business fundamentals or our long-term growth potential.

This is also a contrast to the broader consumer-restaurant tape. While many peers are still mired in delivery-platform subsidy wars and deep discounting, Chagee has held its premium pricing and instead concentrated on margin recovery and operational efficiency. The company's franchisee teahouse network—over 6,700 stores—provides scale, but the real story is the 9.5 percentage-point sequential improvement in same-store GMV growth, which signals that the consumer is responding to the value proposition, not just the price.

Whether consumers genuinely recognize this is not measured by what we say, but by what they do.

That quote from COO Yin encapsulates the quarter. The actions—248 million registered members, 76% of orders from repeat purchasers, and a repurchase program—are the evidence. Chagee is not just stabilizing; it's building a durable franchise.