Who Pays for CHAGEE's Buy-One-Get-One? The Franchisees, About 5 Yuan a Cup
CHAGEE's one-day buy-one-get-one giveaway to celebrate Zheng Qinwen's China Open title crashed its app and buried its stores in orders — and franchisees say they are carrying most of the cost, about 5 yuan on every free cup, against a brand subsidy of around 3 yuan.
On October 12, the day after tennis player Zheng Qinwen won the China Open, the tea chain CHAGEE announced a one-day, all-drinks buy-one-get-one giveaway in her honor. Its app collapsed within hours, some stores switched their status to "resting" after a backlog passed four hundred cups, and the question that has outlasted the promotion is a simple one: who pays for a free drink?
The first answer is the franchisees. CHAGEE runs almost entirely on franchised stores, and one franchisee told Red Star's capital desk that the cost of the giveaway drinks is being borne by store owners, with the brand paying a subsidy the franchisee put at "about 3 yuan a cup." On CHAGEE's menu, drinks run 13 to 23 yuan. Media estimates put the raw-material cost of the chain's best-seller, Boya Juexian, at under 8 yuan — roughly 5 yuan of jasmine tea, milk and creamer base — which means the brand's subsidy covers about a third of what each free drink costs to make. The company had not formally answered Red Star's questions by the report's deadline.
The costs were not only financial. A store employee told Red Star that by early afternoon her shop had more than four hundred drinks waiting to be made and had switched off online ordering, with waits of two to three hours. On Baidu's hot board, an entry asking whether the campaign "overdrafts frontline workers" collected staff accounts of twelve-hour shifts without overtime pay during past surges; the brand said it is optimizing scheduling and worker protections. The same day, CHAGEE announced it would hand 13.5 million yuan to frontline employees — ten million in red packets and 3.5 million for team building — a figure that landed while the complaints about surge-time workloads were still circulating.
Individual workers' accounts carried the day's argument. One widely liked post read: "Put yourself in an employee's shoes and you'd want to quit on the spot. If you really want to celebrate, don't restrict it to one day — every order in the city lands on this one, staff are exhausted, customers wait and wait." By evening the queues had emptied, and China Blue News found customers ordering in five minutes; one of its sub-tags ran "the last batch of people buying the deal are the geniuses" (最后一批买霸王茶姬的都是大聪明).
CHAGEE built its brand on Zheng: as we noted when her win crashed the app, she is its global brand ambassador and fronts an endorsement portfolio that runs to fourteen deals in all. This year the chain also switched franchisees to a fee charged as a share of store sales. Both changes are why the fallout is being watched beyond one chain: when a brand hands a promotion to its franchisees and its baristas to celebrate an athlete's prize money, the arithmetic of who absorbs the surge — brand, store owner, or worker — is the story.