The once-flourishing milk tea business in China that began in 2017 has now faced a wave of closures. According to statistics, nearly 200,000 milk tea shops have closed over the past year, affecting both franchise stores of top brands and small, independently owned artsy shops alike.
According to the Sing Tao Daily on the 12th, the wave of closures is attributable to overly rapid expansion, leading to an oversupply of tea shops and a dilemma of product homogeneity, exacerbating the industry's struggles with price wars.
Data from China's restaurant media outlet "Hongcan Network" indicates that from last November to this November, as many as 197,000 milk tea shops have shuttered. In this wave of closures, those impacted include not only the once-ambitious top brands and their thousands of franchisees but also many ordinary entrepreneurs who flooded into the milk tea market.
Analyses suggest that multiple factors have led to the current predicament of the milk tea industry. First, in recent years, various brands have been aggressively expanding, while workplace pressure, or "involution," has driven many young people into the milk tea entrepreneurship boom, resulting in an oversupply.
As more and more milk tea shops opened, flavors became increasingly similar, and severe product homogenization made operations more difficult. Under dismal business conditions, they resorted to "price wars," ultimately accelerating the capital depletion of the entire industry.