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Havish Gupta
Figuring Out • 5m
From a Small Street Stall to 45,000 Outlets! This is the story of Mixue, a Chinese QSR that became the world’s largest QSR brand in terms of active outlets. So Mixue was started by Zhang Hongchao, an economics student, in 1997. At the time, it was just a street stall in Zhengzhou selling ice gola and cold drinks, funded by a 3,000-yuan loan from his grandmother. But due to a lack of expertise, the stall failed. He tried again, but failed again. And again. And again. Untill 2003, when after six failed attempts, his store in an abandoned aluminum factory finally succeeded—mainly because of a nearby school, which brought in regular customers. By 2006, he introduced ice cream, pricing it as low as 1 yuan (₹12 today). This brought many customers. The next year, they started franchising, and in 2018, they opened their first international outlet in Vietnam. By 2020, Mixue had 10,000 outlets. Their rapid expansion was driven by the ultra-low cost of setting up a franchise and their low-cost products, which attracted massive volumes of small transactions. Since 2020, they’ve been opening 20 new stores daily—almost one every 70 minutes! This recently made them the world's largest QSR in terms of outlets. But here’s the catch. Despite having 45,000+ outlets, Mixue’s revenue is just $2.6 billion. For comparison, McDonald's made $25.9 billion in revenue and $8.2 billion in net income in the same period. So financially, Mixue doesn’t even come close. Anyways, Just a few days ago, they IPOed on the Hong Kong Stock Exchange, raising $444 million at a $9.8 billion valuation. Their stock surged 44% on the listing day itself. What are the challenges of a high-volume, low-cost business model?
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