lion, while operating margin shrank to just 3.2 per cent from 24.6 per cent a year earlier.  Same-store gross merchandise value (GMV) in Greater China fell 23.1 per cent year-on-year, while overseas stores dropped 18.1 per cent.  “We expected continued pressure on the same-store GMV in the second half of 2025,” Hongfei Huang, CFO of Chagee, said in the company’s earnings call. “So we are moderating store expansion in 2025, which eases growth pressure on the same stores.” Chagee’s CEO, Junjie Zhang, said third-party online delivery platforms may drive GMV in the short run, but they erode profitability and do little to build durable customer relationships. “So the key issue with the platforms is that they mainly attract price-sensitive customers who don’t have strong brand loyalty, and will switch quickly to whoever offers the lowest price,” Zhang said. “So that makes it really hard to build lasting customer relationships.” By June, the company operated 7038 stores across Greater China and overseas, up 41 per cent year-on-year. Its mini-program saw membership surging to 206.9 million, with more than 14 million new members joining in the quarter alone.  Ramping up overseas expansion  While domestic conditions remain challenging, Chagee is increasingly looking abroad for growth. International GMV surged 77.4 per cent year-on-year, supported by store expansion from 128 outlets at the start of this year to 208 by June. “The overseas markets have demonstrated strong growth momentum and are becoming an increasingly important growth engine for the company,” Zhang said.  The company’s first US store, in Los Angeles, opened in May to long lines and sold 5000 cups in a single day. A second location opened in August, with more to follow. To accelerate its US push, Chagee hired Emily Chang as chief commercial officer for North America and Aaron Harris as chief development officer. Both bring heavyweight experience from Starbucks China, Dutch Bros Coffee and McCann Worldgroup. Southeast Asia is proving even more fertile ground. In Malaysia, Chagee’s largest overseas market, profitability exceeded expectations, while Singapore stores are now recovering their upfront investments in under 12 months. The opening of a store in Indonesia attracted approximately 35,000 new member registrations during the launch week. Thailand is showing momentum, with new store launches driving double-digit daily sales growth. The brand is also rapidly expanding in new markets, including Vietnam and the Philippines.  “In the second half of this year, we will continue to invest strategically in overseas markets, steadily enhancing the development of a global talent pipeline and operational system,” Zhang said.  Meanwhile, Huang said the Philippines, where the company made its debut last week, will be the last market the company enters into this year.  Premium tea in a price war world  Chagee’s dilemma highlights a broader shift in China’s food-and-beverage sector. The heyday of discount-fueled expansion is colliding with consumer fatigue and slowing macroeconomic growth. While rival chains may win on volume, Chagee is betting that Chinese consumers, and global ones, are entering an era where quality and brand equity matter more than price. “We’re not going to get pulled into price wars,” Zhang said, adding that the company is rolling out ingredient upgrades and introducing a new generation of automated brewing machines to cut labour costs and boost efficiency. Chagee has leaned on both product localisation and cultural storytelling. Its Hojicha Genmai milk tea became a social media hit in Southeast Asia, while a co-branded Earl Grey line with the British Library in June tapped into heritage branding. Experiential pop-ups in Singapore and Malaysia drew tens of thousands of visitors, boosting brand visibility. Further reading: How Chagee’s first quarterly results signal a global growth story in the making.