Yidiandian faces backlash over tea safety and worker dispute

A labour dispute at Yidiandian has become a reputational crisis after company representatives allegedly visited an elderly relative's home to pressure a former employee who had reported foreign objects in tea leaves and filed for arbitration.

The case has drawn widespread public anger and exposed weak management at one of the oldest Taiwanese-style milk tea chains in mainland China. The company denies any coercion and says market regulators have tested the tea.

Ownership and litigation record

Corporate records on Tianyancha, a Chinese business database, show Yidiandian's operating company, Shenggen Catering Management (Shanghai) Co Ltd, was set up in August 2011 with 8 million yuan (about $1.1 million) in registered capital. Its legal representative is Lou Gengshen.

The company is wholly owned by foreign entity EAGLE INFRASTRUCTURE FUND LIMITED. Tianyancha records show dozens of lawsuits involving Shenggen, with labour contract and unfair competition disputes appearing frequently.

Yidiandian helped popularise free toppings and boba milk tea in mainland China. After more than a decade of rapid growth, its legal and compliance systems appear overwhelmed by friction in frontline labour relations.

Flexible hiring used to avoid obligations

The employee worked full time cooking tea, mixing drinks and cleaning, but was signed to a third-party "platform worker service agreement" that classified them as a self-employed flexible worker, according to the report.

The arrangement let the company avoid a formal labour contract and statutory social insurance costs. The practice is widely used across the fresh tea and light catering sector to shift costs onto young frontline workers.

An arbitration body ordered the Shenggen system to pay 15,900 yuan in wage differences and compensation, rejecting the "fake outsourcing, real employment" arrangement.

Supply chain rules bent at store level

Internal communications cited in the report show that when stones and other foreign objects were found in tea leaves, supervisors told staff to pick them out and keep using the batch.

Tea is a primary agricultural product, and occasional stems or small stones are a known result of harvesting. Chain brands justify their premiums partly through industrial screening, colour sorting and sieving that remove such risks at the factory.

Once foreign objects reach a store's cutting board, the compliant response is to return or scrap the entire batch. Allowing staff to hand-pick and continue brewing to protect store margins crosses a legal red line under food safety law.

A heavy-handed response

The most damaging element has been the company's handling of the complaint. People involved allegedly used private identity details from the employee's hiring file to travel to the employee's remote hometown and pressure elderly grandparents.

The employee's girlfriend, who worked part time at a Yidiandian franchise, was reportedly pushed to resign. Extending a commercial dispute into an employee's family has struck a public nerve.

Consumers reason that a brand willing to silence a junior worker's legitimate complaint is unlikely to show real care for food safety behind closed kitchen doors.

Pressure from newer rivals

The lawsuits and repeated labour disputes on Tianyancha foreshadowed the backlash. Yidiandian is already under pressure as Chagee, Guming and ChaPanda expand aggressively with digital, multi-thousand-store models and heavy marketing.

Its product line is ageing and its store count is shrinking. If management keeps relying on flexible hiring to hold down labour costs and private pressure instead of the law, the cost will go beyond 15,900 yuan in arbitration payments.

It risks losing the remaining affection it holds among young consumers.