Chinese bubble tea chain Chagee has reportedly hired Li Tao, vice president of Starbucks China, paving the way for the rising brand’s further expansion, according to local media outlet 36Kr. However, the report was quickly denied by the company.

Founded in 2017, the bubble tea maker has found widespread success in China’s crowded ready-to-drink beverage industry through its addition of fresh milk to raw-leaf tea.

Why it matters: The reported move comes as Chagee mulls a US listing to widen its access to financing.

Details: The 36Kr report added that Chagee is also looking at hiring professionals from rivals such as Tims China (Tim Hortons’ China offshoot), while attempting to lure marketing staff from social media platform Xiaohongshu and tech giant Huawei.

• Chagee founder Zhang Junjie has set a goal of surpassing Starbucks China in terms of sales volume in 2024. In the first quarter of this year, Chagee made more than RMB 5.8 billion in gross merchandise value (GMV), slightly exceeding half of its total sales for 2023, Zhang told the public in May.
• For the same three-month period, Starbucks recorded a decline in both revenue and net profit, with earnings landing at $706 million, approximately RMB 5.1 billion. 
• Although Chagee has kept silent on its profit figures, local media outlet LatePost reported in May that the company earned a net profit of between RMB 800 million and RMB 1 billion in 2023, versus a loss around RMB 48 million on RMB 500 million revenue a year prior.
• Beverages are mostly priced at around RMB 20 ($2.75) at Chagee, the fourth-largest Chinese to-go beverage chain. Zhang recently revealed that the brand sold over 230 million cups of one of its flagship products, a jasmine green milk tea, in 2023. Chagee tends to use ancient Chinese idioms to name its beverages; the aforementioned jasmine drink is named with a four-character idiom that translates to “the difficulty of finding a soulmate.” The name alone doesn’t give buyers an immediate idea of the drink’s ingredients.

Context: The past 18 months has been a period of wild expansion for Chagee, which opened more than 3,500 new stores in 2023. It took the chain more than five years to open its first 1,000 stores and it has over 4500 in total as of May.