The beverages served to shareholders held far more sincerity than the current share price.
The carefully maintained decorum at NAYUKI (HKEX: 02150) finally gave way. The company's annual general meeting for 2026 was held on the afternoon of June 24th at its headquarters in Shenzhen. According to individuals present, the meeting notice was issued on May 29th, and any shareholder registered by the close of trading on June 17th was eligible to attend, even if they held just a single share.
The venue was the "Boldness Meeting Room," internally referred to as the "Boldness Room." However, the company's stock performance that day was anything but bold. NAYUKI shares closed at HK$0.62 on June 24th, giving the company a market capitalization of approximately HK$10.5 billion. This represents a stark decline from earlier levels, having fallen about 48% from around HK$1.20 at the start of 2026 and plummeting roughly 96% from its post-IPO high of HK$18.98 in 2021.
A comparison with other listed tea chains on the same day highlights the challenging position for NAYUKI's shareholders. For instance, Mixue Bingcheng closed at HK$249.4, Guming at HK$220.78, Chabaidao at HK$4.71, and Auntie Jennifer at HK$139.7.
One attending shareholder noted the palpable discontent among those present. A person familiar with the company's internal discussions revealed that while some shareholder frustration was anticipated before the meeting, the intensity ultimately exceeded expectations.
Among the roughly ten attendees was a shareholder in his 20s, who attended partly out of convenience and partly to receive complimentary beverages, noting the low barrier to entry for the meeting. He described the company's office as lacking a separate executive floor, with the meeting room located at the end of a corridor. The meeting began with attendees receiving a bottle of the company's own fruit and vegetable juice, followed by an orange americano arranged by General Manager Peng Xin.
While the initial atmosphere was civil, tensions surfaced during the Q&A session. A shareholder holding over four million shares, facing paper losses in the millions, questioned why NAYUKI's costs were so high compared to peers and asked about improvement plans. Another shareholder, with a cost basis in the double digits, pressed the board on whether there was a market value management plan and questioned the use of cash reserves, including investments in financial products.
In response, Chairman Zhao Lin outlined two key points: a shift from large-format stores to smaller ones, acknowledging the former as a cost drain, and highlighting the strong performance of overseas stores, particularly in the US, where six locations reportedly average monthly revenue of US$300,000. He defended holding dollar-denominated assets due to favorable interest rates.
More pointed criticism was directed at executive compensation. A shareholder reportedly asked if Chairman Zhao Lin's salary could be tied to company performance or reduced to a symbolic one dollar. Management responded that post-IPO, executives had not sold shares and that a one-dollar salary was impractical. Public filings show Zhao Lin and Peng Xin received combined remuneration of approximately 3.1 million yuan in 2025.
Other shareholders, loyal customers rather than speculators, raised concerns from a consumer perspective. They questioned how the company would maintain quality while reducing raw material costs, why freshly baked breads had been replaced with pre-made items, and whether downsizing stores would damage the brand's hard-earned premium image. These questions cut to the core of NAYUKI's dilemma: balancing cost-cutting with preserving its upmarket brand positioning.
The stark reality is reflected in the share price. Since its IPO in June 2021, the stock has fallen over 96% from its issue price of HK$19.80 to around HK$0.67, with a market cap now just over HK$10.9 billion. The deeper crisis lies beyond the stock price, in the underlying performance. How did this former star of the new tea drink scene fall so far?
Strategic Missteps and Delayed Pivots
Chairman Zhao Lin's admission that the company's previous reliance on large, company-operated stores drove up rental and labor costs amounted to a critique of its past decade's strategy. NAYUKI was once a market darling, riding the narrative of being the "Chinese Starbucks" with its large stores and "third space" concept. This narrative has since been disproven.
The large stores became profit black holes. In 2021, employee and rental costs together consumed over a third of revenue. This high-cost structure collided with a consumer shift towards value, causing the average order value to nearly halve from its peak. While competitor Heytea pivoted earlier, NAYUKI only began franchising in 2023 with a high initial threshold. By the end of 2024, it had only 345 franchised stores, compared to tens of thousands for rivals like Mixue Bingcheng.
On cost reduction, General Manager Peng Xin explained that savings were being achieved by adjusting fruit procurement standards, such as sourcing medium-sized fruit instead of premium large fruit, without compromising taste. This contributed to an 18.7% year-on-year decrease in raw material costs in 2025.
The controversial shift to pre-made breads, which disappointed many loyal customers, was framed as a response to changing consumption patterns favoring online orders and delivery. Centralized production with flash-freezing was said to ensure more consistent quality than in-store baking, which could lead to dried-out products. This move also significantly reduced costs associated with in-store baking staff and equipment.
However, the consequence was a weakening of a key brand differentiator. Revenue from bakery items fell over 30% in 2025, accounting for less than 10% of total revenue.
Regarding the store downsizing's impact on the premium positioning, Peng Xin argued that the core brand identity is "healthy tea drinks," not large physical spaces. She contended that competition now hinges on store density and value for money. Smaller stores could accelerate expansion and improve repurchase rates by being closer to customers.
This logic faces market skepticism. Having initially emulated Starbucks to build a premium image, NAYUKI's average order value has steadily declined alongside store downsizing, diluting its high-end cachet. The brand finds itself squeezed between ultra-low-cost giants and other premium players scaling down.
Market observers note that the large-store model, once a moat, has become a major profit drag. With rental and labor costs historically consuming a third of revenue, the company lacked the scale advantages of heavily franchised rivals. With a store count a fraction of Mixue's, its bargaining power in the supply chain is limited, making cost reduction through "slimming down" a necessary, if painful, path.
Underlying Systemic Challenges
However, the business model may only be one facet of the problem. Sources indicate that past efforts, such as assembling a large, high-cost digital team from tech companies, failed to yield a leading technological edge. Some insiders suggest the root issues may lie deeper, in management systems, corporate culture, or product innovation capabilities.
Industry veterans point out that while NAYUKI has often been an early mover in popular product categories, it has frequently failed to capitalize and own the resulting blockbuster trends. A key insider pointed to several deeper strategic misjudgments: clinging to the Starbucks narrative and the large-store model too long despite clear trends like rising delivery orders; weakening the "tea + soft bread" dual-engine strategy due to cost cuts; failing to effectively integrate high-profile hires; missing the optimal window for franchising expansion; and being caught in an uncomfortable middle ground on pricing as the broader market softened.
Share Buybacks Fail to Stem the Tide
According to shareholder Xie Haicheng, investor sentiment at the meeting varied. Some with lower cost bases were betting on a turnaround, while others with heavier losses were frustrated but largely resigned. A central tension throughout was investors' lack of confidence in domestic profitability, contrasted with management's focus on overseas growth, particularly in the US.
Despite the company undertaking numerous share buybacks in recent months, spending millions of Hong Kong dollars, the stock remains mired near HK$0.60. The buybacks have failed to halt the decline because the market lacks faith in the domestic fundamentals. The company reported a 12% revenue decline and a net loss of 241 million yuan for 2025, and it closed over 150 domestic stores that year.
Management repeatedly highlighted the profitability of US stores, which operate on a hybrid company-operated and franchised model, claiming they do not require continuous capital infusion from headquarters. However, with only a handful of US stores, their impact on overall revenue is minimal. The high operating costs in overseas markets and the lack of detailed profit disclosure for international operations leave investors skeptical.
The company's investment of idle cash in dollar-denominated assets, while a rational move to capture higher interest rates, is viewed by some investors as a sign it lacks viable investment opportunities in its core business.
The shareholder meeting laid bare the accumulated contradictions of NAYUKI's decade-long journey. Loyal customers mourn the loss of freshly baked bread and spacious stores. Long-term investors are dismayed by persistent losses and a sinking stock price. The capital market is unconvinced by sluggish domestic growth and an overseas story that is still too small to move the needle.
Management's proposed solutions include completing the store downsizing, expanding through franchising, pursuing a second growth curve in the US, and continuing share buybacks. Yet critical questions remain unanswered: How will the premium brand image be maintained post-downsizing? Can its franchise system replicate the supply chain efficiencies of a Mixue? Will the US success story be scalable? Are buybacks sufficient to restore investor confidence?
As shareholders left the meeting with their remaining juice bottles, the view from the office building reflected the competitive landscape: ubiquitous, ultra-low-cost chains below, and a once-premium leader now struggling to reinvent itself, its share price teetering. The fundamental question persists for brands that once championed a premium stance: should they fully embrace a down-market shift, or hold onto their brand essence and hope for a market cycle turnaround? For now, NAYUKI and its investors are still searching for that answer.
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