Summary of Key Points
Mixue Ice City’s 2026 mid-year report shows poor performance: revenue barely increased (a meager 2.3% year-on-year), profits decreased by 14.7%, and the gross margin fell by 1.3 percentage points, falling short of market expectations. The pace of opening new stores has significantly slowed down (2,400 fewer stores opened compared to last year), and its sub-brands, Lucky Cafe and Fresh Beer Fulu Jia, have failed to replicate the success of the main brand. The stock price has also returned to its initial level since the company went public. The core issue is that the company has reached the limits of its franchise expansion, the profitability of individual stores has declined, the old growth strategies are no longer effective, and investors are no longer convinced by new business models.
Detailed Analysis
1. Slowing Revenue Growth: Subsidy Cuts Are a Cover, but Franchise Expansion Slows Are the Real Reason
Management claims that “last year,外卖 subsidies inflated the base number, and this year, the reduction in subsidies has led to slower growth.” However, this is a decoy—compared to peers like Gu Ming and Cha Ba Dao, Mixue’s growth rate is actually slower, even compared to Neixie, which is not performing exceptionally well. The real problem is that fewer stores were opened: 4,166 new stores were opened in the first half of this year, compared to 6,534 in the same period last year, a decrease of nearly 2,400. Why? Mixue’s stores in second- and third-tier cities are already saturated, so it has to expand into third-tier cities or its sub-brand, Lucky Cafe. However, the expansion of Lucky Cafe also relies on existing franchisees, and any tightening of incentives slows down its growth.
Moreover, Mixue’s gross margin has decreased (from 31.7% last year to 30.4%). In contrast, peers like Gu Ming and Hu Shang A Yi saw their gross margins increase after the reduction in外卖 subsidies, indicating that Mixue’s problems are not industry-wide but stem from its own flawed expansion strategy.
2. Declining Profitability per Store + Rising Expenses: Financial Strains
Mixue’s revenue per store (money earned from selling raw materials and equipment) was 239,000 yuan in the first half of this year, 47,000 yuan less than last year—equivalent to a nearly 50,000 yuan decrease per store per half-year. The reasons include the diversion of resources due to more stores opening (although the number of new stores is lower this year, the impact is worse), and the depletion of its supply chain advantages, which prevents it from further reducing costs to boost per-store revenue.
At the same time, expenses have increased: sales expenses (such as IP marketing and store support) rose from 6.1% last year to 7.4%, and management expenses (centralized operations and personnel costs) increased from 3% to 4%. Management describes these as “long-term investments,” but without growth, they are simply wasting money.
3. Sub-brand Lucky Cafe: Attempting to Replicate Mixue’s Model, but the Coffee Market Is Highly Competitive
Mixue hopes to create a “low-cost coffee version” of itself with Lucky Cafe, but this path is challenging:
- Dependent on Existing Franchisees: Most of Lucky Cafe’s franchisees are former Mixue store owners who were attracted by lower franchise fees (about 30,000 yuan less than Mixue’s). However, any reduction in incentives slows down expansion, as seen in the increase in franchise fees this year (by 28,000 yuan per store).
- Intense Coffee Market Competition: Brands like Luckin and Kudi have already dominated the low-cost coffee market, and Lucky Cafe’s price advantage is not significant (for example, both offer coffee for 9.9 yuan per cup). As a result, Lucky Cafe struggles to attract customers despite opening many stores and lacks the brand strength of Mixue.
4. Expansion Hits a Wall: Overseas Expansion Fails, and New Stories Fail to Convince Investors
Mixue’s overseas store growth decreased by 7.5% year-on-year in the first half of this year (with relocations and integrations in Southeast Asia), indicating that its domestic model is not transferable internationally. The company later acquired Fresh Beer Fulu Jia in an attempt to replicate its success in the beer market, but the beer industry is also highly competitive, and the capital market was unimpressed—the stock price has plummeted since the initial public offering and has now returned to its starting point.
Management claims it is “abandoning growth in quantity in favor of high-quality operations,” but this is a last resort due to limited expansion options. Many companies (such as Procter & Gamble and joint-venture automakers) have used this strategy after facing expansion constraints, but few have successfully regained growth.
5. Repeating the Same Story: Investors Are Tired
Mixue’s core strategy has always been “franchise expansion and cost reduction through the supply chain.” However, this approach has reached its limits: stores are saturated, per-store revenue is declining, sub-brands are failing, and overseas efforts have failed. Investors have heard this same story for over a year and a half, and the stock price returning to its initial level is a clear sign of their disinterest. Mixue must either find a new growth strategy or rely on its existing assets, but these are not sufficient for sustained success.
Conclusion
Mixue Ice City’s current difficulties are a direct result of reaching the ceiling of its scale expansion. The profits once generated through rapid store openings and cost-effective supply chains are now harder to achieve, and its sub-brands have failed to open new markets. Without a new growth narrative, the company’s future prospects are bleak. After all, both consumers and investors prefer fresh and innovative approaches; repeating the same old stories will only lead to further disappointment.