Summary of Key Points
Mixue Ice City has attempted to replicate its successful model of "franchiseing + supply chain + low prices" with its secondary brands, Xianpi Fulu Jia and Lucky Cafe, but it has faced various challenges including category limitations, regional imbalances, internal competition, and pressure from franchisees. Although Fulu Jia has opened stores rapidly, the low-frequency consumption of fresh beer makes it difficult to be profitable. Lucky Cafe has reached a scale of tens of thousands of stores, but its distribution is mainly in lower-tier areas, and increasing quality and prices is being tested by consumer acceptance. The addition of a coffee business under the Mixue main brand has created internal competition with Lucky Cafe, and franchisees are under pressure due to increased store density and longer payback periods. Mixue's growth model has hit a ceiling in an era of existing market competition, making it difficult to replicate its past success.
1. Fulu Jia's Fresh Beer: A Light Model Struggling to Overcome Low-Frequency Consumption
The franchise threshold for Fulu Jia is very low—initial investment for a single store is around 150,000 yuan (including equipment and decoration), with no franchise fee required, and it can be operated in a small space of 15 square meters (by simply connecting to a beer supply). This has allowed the number of stores to double to 3,000 within half a year. However, fresh beer as a category is inherently unsuitable for Mixue's model:
- Concentrated Consumption: Fresh beer is mainly sold in the evening and during summer; there is little business outside peak hours. For example, a franchisee in Anhui, Sun Ming, experiences busy times only during the late evening rush hour but almost no sales during the day, resulting in low turnover efficiency.
- Low Profit Margin and Difficulty in Increasing Volume: With prices ranging from 5.9 to 9.9 yuan per 500 ml, the profit per cup is small, and if sales volume does not increase, rent and labor costs become unaffordable.
- Incompatible Marketing: The endorsement by Lu Han only increased popularity for three days, and there was excess inventory because Lu Han's fan base does not overlap significantly with the target customer group (mainly community residents and late-night snack consumers).
- Numerous Competing Alternatives: It is more convenient to drink canned beer at home or order alcoholic drinks from takeout services, giving fresh beer no clear competitive advantage.
While the light model allows for rapid store expansion, the low-frequency nature of the product makes it hard to achieve high profits through frequent sales, as with Mixue's milk tea business.
2. Lucky Cafe's Ten-Thousand-Store Scale: The Dilemma of Improving Quality While Maintaining Low Prices
Lucky Cafe grew from 5,000 to 10,000 stores in just 10 months, accounting for 40% of Mixue's store growth last year. However, this growth is not uniform:
- Regional Imbalance: GeoQ data shows that as of May 2026, there were only over 8,100 operating Lucky Cafe stores, with Henan accounting for more than one-fifth of the total. The majority are in second- and third-tier cities, making it more of a regional brand rather than a national one, unlike Luckin or Kudi which target higher-tier markets.
- Declining Low-Price Advantage: The strategy of relying on delivery subsidies to attract customers has faded; in the fourth quarter of 2025, Luckin's same-store growth was only 1.2%, and Kudi faced increased costs due to lost sales volume and material waste. Lucky Cafe has had to raise prices by using fresh beans, milk, and fruits, with some stores in Shandong raising the price of lattes to 13 yuan (3 yuan more than in Beijing), which may drive away customers.
- Intensifying Internal Competition: Mixue has started using freshly ground coffee machines, and 90% of Lucky Cafe stores in Zhengzhou overlap with Mixue's main brand stores. Franchisees complain that Mixue's coffee business is taking away their business.
After reaching a large scale, Lucky Cafe is shifting from focusing on volume to improving quality, but balancing prices with consumer acceptance remains a challenge.
3. Mixue's Multi-Brand Matrix: Internal Competition Putting Pressure on Franchisees
Mixue's expansion through multiple brands (Mixue Ice City, Lucky Cafe, Fulu Jia) has led to increased competition among franchisees:
- Overlapping Stores: Nearly 90% of Lucky Cafe stores in Zhengzhou are located in the same areas as Mixue's main brand stores. A franchisee in Beijing saw their profit turn from positive to neutral after a second Lucky Cafe store opened in the vicinity, and opening a third one resulted in losses.
- Franchisees Hesitant to Expand: The number of Mixue franchisees increased from 21,000 in 2024 to 27,000 in 2025, but the average number of stores per franchisee decreased from 2.22 to 2.18. Existing franchisees are reluctant to open new stores, and most new ones are operated by newcomers.
- Lengthened Payback Period: Franchise contracts typically last for two years, with rent agreements renewed every two to three years. New stores opened in the fourth quarter of 2025 face a 18-month payback period for cash flow and a 36-month period to achieve stability in profitability. Many franchisees are considering selling their stores to recover their investment.
Mixue's multi-brand strategy has intensified internal competition, putting greater pressure on individual franchisees.
4. The Limits of Mixue's Model: Replicating Success in an Era of Existing Market Competition
Mixue's success was based on tapping into a niche in the milk tea market—using an efficient supply chain to drive prices down to convenience store levels and occupying the market through frequent sales and dense store distribution. However, all markets are now in a period of existing competition:
- Coffee Market: Luckin and Kudi have already pushed low prices to their extreme, making Lucky Cafe's "5.9 yuan Americano" offer less attractive.
- Fresh Beer Market: Other businesses such as beer bars and premium wine shops have started competing for customers, diminishing Fulu Jia's price advantage.
- Difficulty in Replicating the Model: Other brands are also adopting Mixue's strategies of franchiseing, supply chain management, and low pricing. The window of opportunity to replicate Mixue's success has closed because other players have entered the market.
Mixue's attempt to "recreate its success" is facing challenges due to changes in the competitive landscape.
Conclusion
Mixue's growth story has shifted from rapid expansion to a test of its business model. Fulu Jia's fresh beer brand is struggling with low-frequency consumption, Lucky Cafe's large-scale expansion is encountering difficulties in improving quality and prices, and the pressure on franchisees highlights the sustainability of Mixue's model. The success of Mixue's multi-brand strategy depends on whether franchisees are willing to continue investing. If more and more franchisees choose to exit, the dream of "recreating Mixue" may become unattainable.