Nearly two decades ago, "Mixue" was just a small restaurant in of one of China’s poorest provinces found unexpected success by selling soft serve ice cream for just 1 yuan per cone.

Today, that small stall had expanded and grown to surpass McDonald's and Starbucks to become the world's largest food and beverage chain by store count. As of last September, Mixue boasted over 45,000 outlets worldwide, cementing its dominance in the budget-friendly drinks market.

Mixue made the headlines today by making a strong debut on the Hong Kong stock exchange as their stocks were met with overwhelming demand, with shares surging at around 43% on the first day of trading after raising $444 million in its IPO.

Shares were last seen trading up 43% at 290 Hong Kong dollars per share, compared to the IPO offer price of $202.5 Hong Kong dollars per share. When the stock had initially opened trade, it was selling its shares at $267 Hong Kong Dollars per share.

One person's motto

Initially known for its affordable soft serve. Mixue’s journey started in 1997 in Zhengzhou, Henan province, when Zhang Hongchao, then a struggling college student from a farming family, built a shaved ice machine and launched a small business called Coldsnap.

His first venture failed, but he pivoted to opening a restaurant, later adding a snack counter that sold 1-yuan ice cream cones. The affordable treat became an instant hit, allowing him to scale the business to 20 outlets.

When bubble tea’s popularity surged across China, Mixue expanded its offerings to include boba drinks. Later in 2017, Mixue introduced its coffee brand, Lucky Cup. The success of Mixue was based on the motto Mixue's founder Zhang HongChao held:

"Let people around the world eat well and drink well for just two American dollars."

Based on this motto, Mixue has since priced all of its drinks between 2 to 8 yuan (around 30 cents to $1.20 USD). Mixue also uses a catchy theme song and snowman mascot-Snowman King, who wears a crown and a red clock-also played a vital role in cultivating a massive fanbase across China.

In a time when China’s economy is facing challenges, Mixue’s low-cost model has resonated with consumers. At a store in Hong Kong’s bustling Causeway Bay, a 42-year-old retail worker, Wang Li, expressed her enthusiasm for the brand, admitting she doesn’t even check prices before making a purchase.

Mixue's rapid expansion also stems from its ingenious plan to operate 99% of its locations as franchises. This is contrary to what other major brands like Starbucks, who only direct 47% of their operations to franchises.

This strategy has proven to work miracles for Mixue, as its net profit jumped 42% to 3.49 billion yuan ($479 million) in the first nine months of 2024, while revenue increased 21% year-over-year to 18.7 billion yuan ($2.6 billion).

A Historic IPO and Fierce Market Competition

Despite its initial success, investors believe that Mixue's is threading a similar path as many other smaller companies such as Guming and Sichuan Baicha Baidao, who also enjoyed an initial fanfare only for their stocks to fall as they crack under the relentless competition and the initial enthusiasm of investors started to wane.

June Zhao, a investor relations manager in Beijing revealed that she would be cautious of being overly optimistic about Mixue stock, citing the underwhelming performance of Hong Kong's milk tea stocks.

Zhao believe Mixue’s future hinges on its global expansion. While it has already entered markets such as Indonesia, Vietnam, and Malaysia, nearly 90% of its stores remain in China.

Investors are betting on Mixue with the broader hope of seeing these Chinese companies succeed abroad, especially given the sluggish domestic demands.