When Mixue Group's shares surged 47% on their Hong Kong debut in March 2025, casual observers might have dismissed it as yet another Chinese beverage company riding the bubble tea craze. They would be profoundly mistaken. Behind the HK$202.50 IPO price and subsequent HK$3.45 billion fundraising lies one of the most sophisticated franchise operations in global food service—a business model so effective it has quietly surpassed McDonald's in total store count whilst maintaining industry-leading profitability metrics.
For Singapore's discerning investors, Mixue Group (2097.HK) represents far more than a regional F&B play. Trading at HK$543.50 as of 7 July 2025—a 168% premium to its IPO price—the company embodies the evolution of Chinese consumer brands from copycats to category creators, with profound implications for Southeast Asian markets where Singaporean capital increasingly seeks alpha.
The Franchise Economics Revolution
The numbers tell an extraordinary story. Mixue concluded 2024 with revenue of RMB24.83 billion, representing 22.3% year-on-year growth, whilst profit soared 39.8% to RMB4.45 billion. More remarkably, the company achieved these results with gross margins of 32.5%—a figure that would make established Western franchise operators envious.
"Revenue from sales of goods and equipment increased by 21.7% from RMB19,896.8 million in 2023 to RMB24,208.8 million in 2024. Revenue from franchise and related services increased by 52.8% from RMB405.7 million in 2023 to RMB620.1 million in 2024," according to the company's 2024 annual results announcement.
The genius lies in Mixue's revenue model. Unlike traditional franchisors that depend heavily on franchise fees, Mixue generates approximately 97% of its revenue by selling ingredients, equipment, and supplies to its 46,479 franchisees. This creates a unique symbiosis: franchisees benefit from proven systems and supply chain efficiencies, whilst Mixue scales revenue without the capital intensity of company-owned stores.
According to industry analysis, a typical Mixue franchisee requires an initial investment of approximately RMB210,000 (US$29,000)—significantly lower than premium competitors. Under base-case scenarios, franchisees can generate annual net profits of RMB89,145, representing payback periods of roughly 2.4 years. Even under conservative assumptions, annual returns exceed RMB42,644, making Mixue franchises among the most attractive unit economics in global food service.
Supply Chain as Competitive Moat
Mixue's true competitive advantage lies not in its Snow King mascot or viral marketing, but in vertical integration that would make Amazon blush. The company operates five production bases across Henan, Hainan, Guangxi, Chongqing, and Anhui, with 100% self-production of core ingredients.
"As the first company to establish centralised factories in the freshly-made drinks industry in China, we operate an expansive and highly digitalised end-to-end supply chain, with the core ingredients being 100% self-produced," the company stated in its annual report.
This vertical integration enables extraordinary cost control. Mixue's gross profit margin for goods improved from 28.8% in 2023 to 31.6% in 2024, "primarily attributed to enhanced supply chain efficiency as well as decreased purchase cost for certain raw materials." For franchisees purchasing at scale, this translates to ingredient costs below industry averages—a sustainable competitive advantage in price-sensitive markets.
The supply chain extends beyond production. Mixue operates 27 warehouses across mainland China and local warehouse systems in four overseas countries, supporting a distribution network covering 31 provinces and over 300 cities. This infrastructure represents billions in sunk costs that would take competitors years to replicate.
The Singapore Investor Angle
For Singapore-based investors, Mixue's Southeast Asian expansion represents a compelling regional play with insider knowledge advantages. The company already operates approximately 4,900 international stores as of December 2024, with Singapore serving as a key testing ground for premium market penetration.
"Overseas, while our specific plans for each country or region will be adjusted based on the local operational environment and our performance, we will remain focused on cultivating the Southeast Asia market, and continue to expand our franchised store network locally," management confirmed in their forward guidance.
The Singapore market offers unique insights into Mixue's international viability. Unlike mainland China where stores typically occupy lower-rent heartland locations, Singapore outlets must compete for premium real estate alongside established players like Gong Cha and KOI. Success here validates the brand's ability to command higher price points whilst maintaining its value proposition.
Moreover, Singapore's regulatory environment and sophisticated consumer base provide an ideal laboratory for testing product innovations before broader regional rollouts. The company's ability to maintain margins whilst adapting to local tastes and preferences will determine its long-term international success.
Valuation Considerations and Investment Thesis
At current levels of HK$543.50, Mixue trades at approximately 24x trailing earnings—a premium to many established restaurant chains but justified by its growth trajectory and unique business model. The company's return on equity of 29.6% and net margins of 17.9% place it among the most profitable franchise operations globally.
Critical to the investment thesis is Mixue's franchise expansion velocity. The company opened 10,555 net new stores in 2024 alone—an average of 29 stores daily. This expansion rate, if maintained, suggests store count could reach 60,000+ by 2026, driving proportional revenue growth given the direct correlation between store count and ingredient sales.
However, investors must consider execution risks. International expansion requires cultural adaptation, regulatory compliance, and operational excellence across diverse markets. The company's ability to maintain quality standards and supply chain efficiency at scale will determine whether current valuations prove prescient or optimistic.
The Broader Implications
Mixue's success illuminates broader trends reshaping global food service. Traditional models emphasising premium real estate and high average unit volumes are being challenged by high-frequency, low-ticket strategies optimised for digital ordering and suburban locations.
"Our value proposition of offering value-for-money products and our brand culture centred around sweetness and love have enabled Mixue to become a household brand with a vast consumer and fan base," the company noted, highlighting the power of accessible luxury in emerging markets.
For Singapore investors seeking exposure to China's domestic consumption story whilst diversifying geographically, Mixue offers a rare combination: a proven business model, defensible competitive advantages, and early-stage international expansion with significant upside potential.
The Verdict
Mixue Group represents more than a beverage company—it's a case study in how Chinese enterprises are redefining global franchise models through operational excellence and technological integration. The company's ability to generate sustainable profits whilst offering genuinely affordable products to price-conscious consumers suggests a formula that could prove globally scalable.
At current valuations, the stock appears fairly valued for core China operations but offers asymmetric upside potential if international expansion proves successful. For Singapore investors comfortable with growth-stage companies and emerging market exposure, Mixue deserves serious consideration as both a China consumption play and a regional F&B consolidator.
The Snow King's global ambitions are just beginning to unfold. Whether those dreams translate into shareholder returns will depend on execution—but the early signs are remarkably promising.
Key Financial Metrics (2024):
Current share price as of 7 July 2025: HK$543.50 (168% above IPO price)
Sources:
Let us know what you think about this topic, and what do you want to hear next.
You can now be our community contributor and make a pitch to have your favourite personality be on our show.
Join our community group and drop us your insights on this topic.