Mixue: the BYD of fast food chains

Over a billion lemons – that’s how many Mixue buys every year, in addition to what it already grows, largely to be squeezed into its famed ￥4 (55c) lemon water.

Pair that with ￥2 (28c) ice cream cones and ￥6 (83c) bubble tea, and you’ve got yourself a pretty affordable outing.

This formula has attracted both customers and franchisees, fuelling Mixue’s rapid expansion to 47,679 stores worldwide – more than McDonald’s, Starbucks, or any other fast food chain on the planet.

Beyond its budget-friendly treats, Mixue has won over consumers by forging an emotional connection through marketing centred around its simple yet endearing Snow King mascot – aptly described as the love child of Frosty the Snowman and the Michelin Man. With collectibles, animated series, and omnipresent branding, Mixue has made Snow King instantly recognizable at every touchpoint.

More Than Just a Low-Cost Brand

Despite its affordability, Mixue isn’t just another Chinese company relying on a race-to-the-bottom price war. A look under the hood reveals a business model that echoes the success of many globally expanding Chinese companies.

Mixue controls its entire supply chain – growing, harvesting, transporting, and manufacturing much of what it sells. This vertical integration enables massive economies of scale and ultra-efficient production, allowing the company to deliver products at remarkably low costs.

The Franchise Model That Fuels Expansion

While keeping costs low, 97% of Mixue’s revenue comes from selling raw materials and equipment to franchisees, rather than charging hefty franchise fees or taking a cut of store profits. This creates an exceptionally low barrier to entry for franchisees, explaining why Mixue has surpassed every other fast food brand in store count.

Although many Mixue outlets are small kiosks rather than McDonald’s-style brick-and-mortar restaurants, they ensure that Mixue remains a ubiquitous presence and accessibility in its markets.

The Power of Vertical Integration

Mixue’s heavy in-house production and supply chain control is its secret sauce, defying the Western outsourcing model that has dominated global business for decades.

This efficiency is not just about lower wages – it’s about China’s mastery of manufacturing and logistics, honed over the past few decades. The country’s sophisticated, interconnected, and cost-efficient infrastructure has created a production ecosystem that is difficult to replicate anywhere else in the world.

A Model Followed by China’s Rising Giants

Other Chinese brands are following a similar playbook, most notably BYD, which vertically integrates its supply chain to produce cars 15% cheaper than Tesla's Shanghai Gigafactory.

Companies like Mixue and BYD are proving that price advantages aren’t just about labour costs – they come from a deep structural efficiency that leverages China’s infrastructure, manufacturing prowess, and supply chain dominance.

For foreign brands operating in China and competing against rising Chinese brands abroad, this presents a growing challenge. Competing on price alone is a losing battle. Instead, smarter marketing, stronger value propositions and differentiation, and superior storytelling are key to standing out in an increasingly competitive global market.

As Chinese brands like Mixue continue to spread their wings globally, Western brands would be wise to adapt, innovate, and rethink their strategies if they hope to keep up. China Skinny is a good place to start for assistance with that.