FAST NEWS: Nayuki Adds More Than 200 Shops in First Nine Months of 2022

The latest: Premium tea chain operator Nayuki Holdings Ltd. (2150.HK) said on Friday its same-store sales in August and September recovered to similar levels from a year earlier, and same-store orders recorded “promising” year-on-year growth.

Looking up: The company continued to expand in the third quarter, adding 69 teahouses and closing 17. It added more than 200 new teahouses this year through the end of September, for a total of 973.

Take Note: Covid-19 flareups in Shenzhen and other major cities in late August and September affected consumer travel and spending, hurting the company’s business those cities. Restrictions on power use in some areas of Southwest China also had a negative impact, though the number of affected stores was relatively small.

Digging Deeper: Like other Chinese food and beverage operators, Nayuki has taken a hit from the Covid-19 outbreak and resulting government control measures over the past two years. Partly in response to that, and also to lower costs, the company changed its business strategy last year to move away from its larger Nayuki teahouses, which typically have higher rents and labor costs, to focus on its smaller-format PRO teahouses, which have automated tea-making machines and pre-baked products in commercial and residential areas. As of the end of June this year, it had 410 Nayuki teahouses, down by 84 from a year earlier. But its PRO teahouses, which are typically 80 to 200 square meters in size, jumped to 494 from 84, allowing the company to reduce prices and compete for customers with major rivals such as Heytea.

Market Reaction: Nayuki shares followed the broader market lower on Monday, dropping 4.6% to close at HK$4.39 at the midday break, at the lower end of their 52-week range.

Translation by Jony Ho

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