The management of Chagee Holdings Limited has defined 2026 as a year dedicated to structural adjustment and stabilization. The second-quarter results indicate that this restructuring effort has touched the organization, its store network, and product development, while early signs of operational improvement are beginning to surface.

On August 28th, Chagee Holdings Limited disclosed its unaudited financial results for the second quarter of 2026. The company reported net revenue of 3.415 billion yuan, a modest 2.5% increase year-over-year. However, adjusted net profit slipped to 489 million yuan, marking a 22.4% decline from the same period last year.

During the quarter, the tea beverage chain launched 17 new drinks in the Greater China region, setting a new single-quarter record for the company. Over the first half of the year, the total number of new products reached 29, averaging one new offering per week, spanning series such as original-leaf milk tea, specialty tea blends, lemon milk, and global tea varieties.

In an earnings call, management highlighted that the geelato soft-serve ice cream, introduced in May, has already been rolled out to more than 190 locations. These stores have experienced an average uplift in offline gross merchandise value (GMV) of over 20%. The company’s membership base has climbed to 257 million people. As the third quarter progresses, the firm expects the dessert item to deliver an even stronger incremental contribution to store sales.

Operational metrics are also showing signs of stabilization. Management noted that the decline in same-store GMV narrowed to a low single-digit percentage in July, and they anticipate a return to positive same-store growth in August. If this momentum holds, the transition from restructuring to a period of stability will become much more evident for Chagee Holdings Limited.

Still, the second-quarter figures fully reflect the operational pressures experienced earlier in the year. Total GMV reached 7.66 billion yuan, a 5.5% drop compared to the prior year. Within the Greater China region, GMV contracted by approximately 9% to 7.156 billion yuan.

Same-store sales in Greater China fell 16.1% year-over-year, a decline that was largely flat compared to the first quarter. Average monthly GMV per store decreased by roughly 5% quarter-over-quarter, falling from 356,100 yuan to 338,300 yuan. The number of active members also dipped from 50 million to 47.1 million.

Despite the pressure on GMV, revenue growth was supported by a shift toward a heavier store footprint. Revenue from franchise-operated stores declined 18.1% year-over-year to 2.474 billion yuan. In contrast, revenue from company-owned locations surged about 202% to 941 million yuan, raising their contribution to total revenue from 9.3% in the same period last year to 27.5%.

By the end of the second quarter, Chagee Holdings Limited operated 883 directly-owned stores, an increase of 93 from the first quarter. Meanwhile, the number of franchise outlets grew by just 15, reaching 6,756.

This pivot towards direct ownership allows the leadership to strengthen oversight of prime locations, product consistency, and service quality. However, it also means that the financial burden of store operations is now more concentrated on the company’s own balance sheet. Excluding share-based compensation, the adjusted net profit margin dipped from 18.9% to 14.3% in the second quarter.

International markets continue to provide a fresh stream of growth. Overseas GMV surged 114.3% year-over-year to 504 million yuan during the quarter. The company now operates 399 locations abroad, having recently entered South Korea and Macau as new markets.

Existing overseas territories are also expanding their reach. On June 4th, the company opened three stores simultaneously in Surabaya, Indonesia’s second-largest city, and followed up with an entry into Bandung in July. In the United States, the brand currently has 10 stores operating.

For Chagee Holdings Limited, the critical test in the third quarter will be confirming that same-store sales indeed turn positive in August, revitalizing its active member base, and proving that the expansion of company-owned stores can sustain revenue growth while also improving profitability.

Should these indicators continue to stabilize, the operational narrative for 2026 will gradually shift from proactive restructuring towards a phase of recovery and delivery on promised improvements.