Mixue Ice Cream and Tea, a Chinese food chain, has dramatically altered the fast-food market, disproportionately shifting sales and outlets away from traditional giants like McDonald’s and Starbucks. This transformation was underscored by its recent achievement of surpassing both companies to become the largest fast-food chain globally.
According to Mall & Retail Facts And Events, Mixue now boasts over 45,000 outlet locations worldwide, overtaking McDonald’s, which has around 43,000, and Starbucks’ 38,000. The company’s rapid expansion is nothing short of remarkable, particularly considering its humble beginnings as primarily focused within China.
The significant milestone of Mixue was highlighted when the company made its debut on the Hong Kong Stock Exchange, recording impressive stock price gains of 40% and generating $444 million. This influx of capital reflects the growing relevance and consumer interest around the brand, earning it recognition not only as a formidable competitor but also as the largest fast-food entity based on sheer number of restaurants.
The company’s thriving presence, with 90% of its outlets located within China—operated through franchising—demonstrates its effective business model. Yet, this strategy is branching out beyond its home turf. Recently, Mixue has begun to establish its foothold internationally, with expansions across various Asian markets, including Indonesia, Vietnam, Malaysia, and several others.
Analysts believe this trend signals not only the potential for sustained growth but also projections indicating Mixue could attain 100,000 outlets—an unprecedented number within the fast-food industry. "According to estimates by experts, Mixue could reach 100,000 points of sale, unprecedented in the fast-food industry," stated Mall & Retail Facts And Events.
What makes Mixue particularly attractive to consumers is its unbeatable pricing strategy. A range of products—ranging from bubble teas and lemonades to ice cream and coffees—are all sold at prices significantly less than competitors. While other chains, such as Nayuki, price their drinks around $3.80, Mixue offers products priced from just $0.03 to $1. This accessibility has led to Mixue being dubbed the "Pinduoduo of bubble tea," referencing the Chinese e-commerce platform known for slashing prices.
Founded by Zhang Hongchao, who started the business at just 21 years old with limited resources, Mixue has come a long way since its inception. Zhang initially launched the company with aspirations to provide affordable desserts and drinks, and, after facing early failures, hit upon the formula for success with the opening of Mixue Bingcheng (“Sweet Palace of Snow”) in 1999. By 2005, the expansion strategy relying on benefit-cost relationships was successfully implemented, skyrocketing Mixue’s growth.
The business model at Mixue diverges from conventional fast-food methods by obtaining most of its income through the supply of goods to its franchisees rather than direct product sales at the stores themselves. This includes providing the required equipment, ingredients, and logistical support which ensures not only uniformity across outlets but also reaps substantial profits for Mixue.
Zhang Hongchao and his brother, Zhang Hongfu, now recognized by Forbes as key players among China’s new generation of billionaires, have envisioned and turned their dream of transforming Mixue from a small ice cream store to what is now considered a billion-dollar empire.
Despite its meteoric rise, Mixue’s financial performance remains notable. According to reports from recent months, the company has sold around 5.8 billion beverages globally within just the first nine months of 2023, positioning them as the world’s second-largest vendor of prepared beverages, right behind Starbucks.
While the American giants struggle with their sales, Mixue’s rapid progress shines as evidenced by McDonald’s reporting decreased net profits—dropping from $2.04 billion to $2.02 billion between the last quarters of 2023 and 2024. Mixue, without significant penetration yet within Western markets, seems poised for outstanding future growth fueled by its business strategy and consumer appeal.
This evolution within the fast-food sector is indicative of larger shifts in global consumption patterns. The entry of Chinese brands like Mixue signifies not just competition but is emblematic of changing consumer preferences. Mixue Ice Cream and Tea is not only redefining its segment but also presenting challenges to established western brands long considered untouchable. With innovation, affordability, and successful management, this Chinese company is on course to potentially reshape the fast-food market on a global scale.