Core Viewpoint - The new tea beverage industry is entering a period of stock competition, with store turnover becoming a market norm. While brands like Mixue Ice City and Gu Ming continue to consolidate their scale advantages, Heytea is experiencing a contraction in its store count, with a significant decline in total stores over the past year [1][4]. Store Count and Franchise Challenges - Heytea has seen a net decrease of over 600 stores, as franchisees face profitability issues and begin to withdraw from the market. The first batch of franchise agreements is nearing expiration, and it remains unclear whether both parties will choose to renew [4][12]. - As of October 2024, Heytea's total store count was 4,610, which decreased to 3,930 by October 2025, marking a net reduction of 680 stores within a year. This represents a year-on-year decline of 15.41% [5][6]. Franchisee Experience and Investment - Franchisees report significant losses, with one franchisee stating a loss of over 1 million yuan from a single store closure. Many stores across various provinces, including Shandong and Guangdong, have closed this year [5][6]. - The initial investment for opening a Heytea store was high, with costs reaching over 1 million yuan, including rent and personnel expenses. Despite high initial revenues, many franchisees are struggling to achieve profitability [6][7]. Operational Challenges - Franchisees face high costs and low efficiency, with some reporting that the cost of materials supplied to franchise stores can increase by up to 40%. This, combined with the pursuit of higher quality products, has further squeezed profit margins [9][10]. - The operational model of Heytea relies heavily on manual labor, leading to slower service times compared to competitors that utilize more automated processes. This has resulted in lower sales volumes for Heytea stores during competitive periods [10]. Strategic Adjustments - In response to market pressures, Heytea has temporarily halted new franchise applications, indicating a strategic correction to address issues of market saturation and overexpansion. This move is seen as a way to refocus on product innovation and brand building [12][15]. - The company is providing support to existing franchisees, including financial incentives based on order amounts, while also increasing oversight on franchise operations, which adds to the operational pressure on franchisees [14][15]. Market Position and Future Outlook - The shift from a scale-driven growth model to a value-driven approach reflects a fundamental change in the growth logic of new tea brands. Heytea must prioritize resolving the profitability challenges faced by existing franchisees and work on restoring its high-quality brand image [15].