Two decades ago, a humble restaurant located in one of China's poorest provinces transformed its fortunes by offering cut-price soft serve ice cream for just 1 yuan (approximately 15 cents) per cone. Today, that same restaurant has evolved into Mixue Bingcheng, now recognized as the world's largest food and beverage chain by the number of outlets, surpassing giants like McDonald’s and Starbucks. As of September, Mixue boasts over 45,000 outlets globally, and its journey is a testament to the power of affordability and innovative marketing.
Mixue Bingcheng, often referred to as Honey Snow Ice City, has made headlines with its recent initial public offering (IPO) in Hong Kong, raising $444 million. In its first day of trading, the company's shares surged by more than 40%, indicating strong demand from both retail and institutional investors. Devi Subhakesan, co-founder of Investory Pte, noted, “The demand from retail and institutional investors has been strong, as was expected.” This listing marked the largest in Hong Kong this year and the fifth-largest over the past twelve months, according to the Hong Kong Stock Exchange.
With its signature drinks priced between 2 to 8 yuan (30 cents to $1.20), Mixue has resonated with a wide customer base across China. The company is particularly known for its bubble tea offerings, catchy theme song, and a lovable snowman mascot. Since its inception in Henan province nearly three decades ago, Mixue has captured the hearts of consumers, especially during an economic downturn. Wang Li, a 42-year-old retail worker in Hong Kong, expressed her satisfaction with the brand's affordability, stating, “I don’t even bother checking the price.”
According to Mixue's prospectus, over 99% of its stores are franchised, with the majority of revenue generated from selling food materials, equipment, and packaging to franchisees. The company's financial performance has been impressive, with a net profit increase of 42% to 3.49 billion yuan ($479 million) in the first nine months of 2024, compared to the same period last year. Revenue also rose by 21% to 18.7 billion yuan ($2.6 billion).
Founded in Zhengzhou, the capital of Henan province, Mixue began as a shaved ice shop in 1997. Its founder, Zhang Hongchao, hails from a farming family and initially struggled to find success. After building a homemade shaved ice machine and launching a venture called Coldsnap, he pivoted to open a restaurant named Mixue. In 2005, the introduction of 1-yuan ice cream cones became a game-changer, attracting customers and leading to rapid expansion.
With the addition of boba drinks and the coffee brand Lucky Cup in 2017, Mixue's growth trajectory accelerated, rising from fewer than 10,000 shops in 2019. Zhang’s younger brother, Hongfu, joined the company in 2007 and now serves as its CEO. The recent IPO has elevated the brothers' fortunes, with a combined wealth of $8.1 billion, surpassing even Howard Schultz of Starbucks fame.
Despite the excitement surrounding Mixue's IPO, the company faces significant competition in the bubble tea market. Smaller competitors that recently went public have struggled to maintain momentum amid fierce competition. Investor June Zhao highlighted that the demand for Mixue shares was overwhelming, with the offering being oversubscribed by more than 5,200 times. “Mixue’s future growth will largely depend on its overseas expansion,” she noted, emphasizing the broader hope for Chinese companies to thrive internationally.
With nearly 90% of its operations based in China, Mixue is strategically positioned to leverage its value-for-money proposition to outpace rivals in the competitive tea market, which is projected to grow to $66.5 billion by 2027. Its overseas expansion in regions like Southeast Asia, including Indonesia and Vietnam, indicates a promising future for this burgeoning brand. While Mixue may have more outlets than McDonald’s, Starbucks, and Subway, the challenge remains to match their sales figures and establish a robust global presence.
