Mixue Ice Cream and Tea, a bubble tea chain that has surpassed industry giants like McDonald’s and Starbucks in outlet numbers, made a remarkable entry into the Hong Kong Stock Exchange. On Monday, the company’s shares surged by over 40% on their debut, marking a significant milestone.
In what has become the largest initial public offering (IPO) of the year in Hong Kong, Mixue successfully raised $444 million (£352 million). This influx of capital comes at a time when many consumers in China are navigating economic challenges, such as a property crisis and a dip in business confidence. Despite these hurdles, Mixue has found a loyal customer base, offering ice creams and drinks at an average price of six Chinese yuan (approximately $0.82 or £0.65).
From humble beginnings to market leader
Founded in 1997 by Zhang Hongchao, who was a student at Henan University of Finance and Economics, Mixue began as a part-time venture aimed at alleviating his family’s financial situation. The brand’s name, Mìxuě Bīngchéng, translates to “honey snow ice city”, a fitting title for a company that has become synonymous with sweet iced treats. The vibrant stores are easily recognizable, featuring the Snow King mascot and playing the official theme tune on a continuous loop.
As of now, Mixue boasts over 45,000 locations across China and in 11 other countries, including Singapore and Thailand. The company has ambitious expansion plans, which could further solidify its dominance in the beverage and dessert market. For context, McDonald’s operates over 43,000 locations, while Starbucks has approximately 40,576 outlets.
Business model and market positioning
While Mixue is often hailed as China’s leading bubble tea and ice cream chain, its operational model differs significantly from that of Starbucks. The majority of Mixue’s stores are franchise-owned, contrasting with Starbucks, which directly manages more than half of its outlets. This unique approach has allowed Mixue to scale rapidly and maintain its market presence, even amidst economic turbulence.
The contrasting performance of Mixue’s market debut with that of smaller competitors highlights the volatile nature of the bubble tea market. For example, rival Guming experienced a drop in its share price on its initial trading day earlier this year. Likewise, the parent company of another bubble tea chain, Chabaidao, saw its shares decline upon listing last year.
“Mixue’s strong market debut showcases the brand’s resilience and the growing demand for affordable sweet treats, even in challenging economic times,” said an industry analyst.