REAL CASE 032

With Nearly 64,000 Stores, Why Could Mixue's Biggest Risk Be Opening One More?

Does a franchise chain face the same strategic problem when it grows from 1,000 stores to 10,000 stores and then from 10,000 to nearly 64,000? No. When the network is small, the main challenge is usually expanding coverage. When the network becomes enormous, the challenge increasingly becomes protecting network productivity. Mixue Group is a strong example of this transition. Seeing nearly 64,000 stores, it is easy to assume that Mixue operates an enormous company-owned beverage chain. Its actual model is different. Franchisees fund and operate most terminal stores. They bear rent, fit-out, employees, and daily operating costs. Headquarters manages the brand and upstream supply chain and sells ingredients, packaging, equipment, and related services into the franchise network. Headquarters and franchisees therefore participate in the same system, but their short-term economics are not identical. Suppose a market has 10 healthy Mixue stores and still contains substantial unmet demand. Opening the 11th or 12th store may genuinely expand the market. Consumers gain convenience, new franchisees gain incremental business, existing stores face limited cannibalization, and headquarters receives additional supply-chain demand. That is a high-quality opening. But if the area is already saturated, opening the 15th or 20th store can produce a very different result. Headquarters may still see more stores and more supply nodes, while total consumer demand does not increase at the same rate. Transactions that previously supported fewer stores are now divided among more franchisees. Franchisees may experience lower store sales, longer payback periods, and weaker profitability. This creates one of the most important tensions in a franchise model: **Growth at headquarters does not automatically mean better economics for franchisees.** Yet headquarters ultimately depends on franchisees. If franchisees cannot earn reasonable returns for an extended period, new investors become more cautious and existing operators may leave. Supply nodes added in the short term can eventually create a less stable network. So when Mixue approaches 64,000 stores, the correct question is no longer simply: How many more can we open? It becomes: **How much incremental system value does the next store actually create?** Mixue generated approximately RMB33.6 billion of revenue in 2025. In 1H 2026, revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported network reached 63,987 stores. These figures should not be interpreted simply as growth failure. A network approaching 64,000 stores first demonstrates extraordinary replication capability. But revenue growth of roughly 2.3% also suggests that a mature network cannot automatically reproduce earlier high growth simply by adding more locations. Management priorities therefore need to shift from opening speed toward franchisee unit economics, regional density, store productivity, supply-chain efficiency, and returns on new-store investment. A mature franchise system must even develop the ability to reject openings. If a prospective franchisee is willing to invest but the proposed location would materially cannibalize several nearby stores, approving the application may increase short-term store count while reducing long-term regional value. One of the most important capabilities of a mature franchise network is therefore not "How many new stores can we approve?" but "Which stores should not be opened?" This is the shift from land grab to productivity management. The low-price strategy must also rest on the right economic foundation. Mixue cannot sustainably maintain low prices simply by compressing franchisee profits. Durable mass-market pricing should come from supply-chain efficiency: procurement scale, standardized manufacturing, warehousing, logistics, and product design. If supply-chain efficiency improves, Mixue has a better chance of protecting both consumer prices and franchisee returns. If low prices depend mainly on franchisees accepting progressively weaker economics, the system eventually damages itself. The most important asset is therefore not the number 63,987. It is the economic cycle behind the network: consumers perceive value and convenience and continue buying; stores generate sufficient transactions; franchisees earn reasonable returns; headquarters receives stable supply-chain demand; greater scale lowers unit costs; and those lower costs continue supporting mass-market pricing. The same discipline applies overseas. China's high-density model cannot be copied mechanically into every country. Rent, labor, logistics, consumption frequency, and supply-chain conditions differ. If unit economics do not work in a particular market, pruning weak locations can create more value than maintaining a larger international store count. The Outcome of Case 032 therefore remains Success. But this is a different type of Success from the early stage. Early-stage Success meant proving that stores could be opened rapidly. Mature-stage Success means proving that management knows where to open—and where not to open.

ChinaFood / Freshly Made Beverages / Tea Drinks / Ice Cream / Franchise Chain / Food Supply ChainSuccessWhen Mixue Group's franchise network approaches 64,000 stores, why is "How many more stores can we open?" no longer the most important question, while "Does the next store improve total system economics?" becomes increasingly important?This case focuses on Mixue's supply-chain-plus-franchise model and explains why headquarters revenue, total store count, and franchisee unit economics must be evaluated together. Mixue generated approximately RMB33.6 billion of revenue in 2025. In 1H 2026, revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported network reached 63,987 stores. The network is moving from a land-grab phase toward a productivity-management phase.

BEFORE

Mixue initially operated in a market well suited to rapid franchise replication. Mass-market freshly made beverages combine high purchase frequency, price sensitivity, and broad consumption occasions. Mixue used low prices, standardized ingredients, and franchising to expand coverage quickly.The model did not depend on earning extremely high profit from every drink. Instead, large sales volume created scale economics. More franchise stores increased demand for ingredients, packaging, and equipment, while larger procurement, manufacturing, and logistics volumes created opportunities to reduce unit costs and support low prices.When the network was smaller, new stores were more likely to create incremental demand. Opening in an area that previously had little or no Mixue coverage could create a new consumer touchpoint, give a franchisee access to new local demand, and add a new supply-chain customer for headquarters.Rapid network expansion therefore had a clear economic logic in the early stage.Number

AFTER

By 2025–2026, Mixue no longer needed to prove that its franchise model could scale. A network approaching 64,000 stores had already answered that question.Mixue generated approximately RMB33.6 billion of revenue in 2025. In 1H 2026, revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported store network reached 63,987 locations. The network remained enormous, but revenue growth was significantly slower than during the earlier expansion phase.The measurement standard therefore needs to change. Previously, new store count was a central indicator. Now the company must pay greater attention to whether new stores create incremental demand, whether mature franchisees are being cannibalized, whether franchisee investment returns remain reasonable, and whether further supply-chain scale continues to reduce unit costs.The After remains Success, but the definition of success has evolved. The question is no longer "Can Mixue open more stores?" It is "Can a network approaching 64,000 stores continue operating with healthy economics?"Number

OUTCOME

SuccessCase Result

MODEL

Mixue Group is fundamentally an "upstream supply chain + franchise network" system rather than a company directly operating nearly 64,000 beverage stores.Franchisees bear the store-level risks of site selection, rent, fit-out, employees, and daily operations. Headquarters manages the brand, products, procurement, manufacturing, warehousing, logistics, equipment, and network systems, generating revenue by supplying ingredients, packaging, equipment, and related services to franchisees.This structure allows Mixue to expand with much lower corporate store-level capital intensity than a fully self-operated chain. A new franchised store does not require headquarters to fund the entire store investment, but it creates another potential node for supply-chain sales.The risk does not disappear; it is redistributed. Headquarters carries manufacturing, supply-chain, inventory, brand, and food-safety risks, while franchisees carry more direct store investment and operating risk.Mixue therefore depends on an economic cycle: consumers continue buying → stores generate sufficient transactions → franchisees earn reasonable returns → franchisees remain in the system → headquarters receives stable supply-chain demand → greater scale lowers unit costs → lower costs support mass-market pricing.If franchisee returns weaken for too long, the entire cycle eventually becomes less durable.Business Model

Read the Case

# [SECTION

background] Before 2020: Low Prices Were Built on Supply-Chain Economics

One of Mixue's defining characteristics was mass-market pricing. Low prices expanded the addressable consumer base and made tea drinks and ice cream easier to purchase frequently.

But durable low prices cannot depend simply on franchisees earning less. The economic foundation is scale across standardized products, centralized procurement, manufacturing, warehousing, logistics, and a large franchise network.

Franchisees fund terminal stores while headquarters concentrates investment upstream. As the network grows, demand for ingredients, packaging, and equipment increases, while larger supply-chain volumes can reduce unit costs.

Mixue is therefore not simply selling franchise rights. It is operating an industrialized supply system capable of serving tens of thousands of stores.

# [SECTION

timeline] 2020-2026: From Rapid Land Grab to Network Productivity

After 2020, Mixue continued expanding rapidly through franchising. Mass-market pricing, standardized products, and supply-chain capabilities allowed the brand to enter many cities and different market tiers.

As store count increased, brand scale and supply-chain scale reinforced each other. More franchise stores increased headquarters supply demand, while larger supply-chain volumes supported lower costs and faster replication.

Mixue later listed in Hong Kong and continued expanding. By 2025, Group revenue reached approximately RMB33.6 billion and the business model had achieved enormous scale.

A new signal appeared in 1H 2026: revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported network had reached 63,987 stores.

This does not mean the franchise model stopped working. It means the network entered a more mature stage. At nearly 64,000 stores, "add more locations" is no longer a complete growth strategy.

# [SECTION

problem_opportunity] Problem and Opportunity: Headquarters Cannot Grow by Making Franchisees Less Profitable

Headquarters and franchisees share long-term interests, but their short-term metrics are not identical.

Headquarters benefits from a larger network because more stores generally create demand for ingredients, packaging, equipment, and services. Franchisees care most about whether their individual stores generate sufficient sales and profit to recover their investment within a reasonable period.

In a low-density market, new stores can benefit both sides. In a high-density market, however, a new location may mainly shift consumers away from nearby existing stores. Headquarters can add a supply node while franchisee unit economics deteriorate.

If this continues for too long, the damage eventually returns to headquarters through weaker franchise demand, closures, and a less stable network.

The opportunity at nearly 64,000 stores is therefore to move from maximizing store count toward maximizing the long-term productivity of the entire franchise system.

# [SECTION

business_model] Business Model: Franchisees Operate Stores; Headquarters Operates the Supply Network

Mixue's business model can be understood as two interdependent layers.

The first layer is the franchisee. Franchisees invest in stores, employ workers, serve consumers, and carry store-level operating risk.

The second layer is headquarters. Headquarters manages the brand, products, procurement, manufacturing, warehousing, logistics, equipment, and network systems, earning revenue by providing goods and services to the franchise network.

Franchisees are therefore not economically irrelevant third parties. Their ability to operate healthy stores directly affects the durability of headquarters' supply-chain revenue.

Healthy franchisees create a stable long-term network. If large numbers of franchisees become unprofitable, headquarters may still earn short-term revenue from new openings and supply sales, but the long-term system weakens.

Mixue must therefore manage headquarters economics and franchisee economics together.

# [SECTION

execution] Execution: Keep the Low-Price Position, but Move From Fast Openings to Precise Openings

Mixue has no reason to abandon its mass-market pricing simply because the network is enormous. Low prices remain central to brand positioning, purchase frequency, and market reach.

What must change is opening discipline. New locations need to be evaluated against regional demand, existing store density, consumer coverage, and franchisee investment returns—not simply whether another investor is willing to open a store.

At the same time, headquarters must continue improving supply-chain efficiency. Procurement, manufacturing, warehousing, and logistics must keep reducing unit costs if low prices and healthy franchisee economics are to coexist.

Overseas expansion requires the same discipline. If rent, logistics, consumption frequency, or local density cannot support healthy unit economics, optimizing or exiting weak locations may create more value than preserving headline store count.

Execution therefore shifts from "replicate more stores" toward "improve the quality of every incremental location."

# [SECTION

turning_points] Turning Point: From Land Grab to Network Productivity

Mixue's first major Turning Point was proving that a low-price franchise model could be replicated rapidly and at enormous scale.

The second Turning Point came when supply-chain scale itself became a competitive advantage. More stores supported greater procurement, manufacturing, and logistics volume, while lower unit costs reinforced the mass-market price position.

The third and most important Turning Point in Case 032 is density.

At nearly 64,000 stores, opening another location is no longer the difficult part. The difficult part is determining whether that location should exist.

A new store entering genuine white space can increase total system value. A new store that mainly cannibalizes nearby franchisees can increase headline scale while reducing network productivity.

The strategic priority must therefore shift from capturing more locations toward protecting franchisee unit economics and improving total network productivity.

This also requires management to accept opportunity costs. Rejecting a low-quality location, slowing openings in an already dense market, or pruning weak overseas stores can reduce short-term store growth.

But if those decisions protect franchisee returns and durable supply-chain demand, they can increase long-term system value.

When Mixue approaches 64,000 stores, the scarce resource is no longer people willing to open franchises. It is high-quality locations that still create incremental value. Every mature franchise network eventually moves from a land-grab problem to a productivity problem. Headquarters should protect not the store-count headline, but the economic cycle in which consumers keep buying, franchisees earn enough to stay, and the supply chain continues gaining sustainable scale.

YouTube · English

Image / Ad

GoGoUpGoGoUp House Ad

DECISION

What would you do?

When Mixue Group's franchise network is approaching 64,000 stores, which option represents the highest-quality next decision for a mature franchise system?

AMaximize new store openings and approve locations whenever an investor is willing to franchise, without considering nearby Mixue stores or overlapping regional demand.BProtect franchisee unit economics and become more selective about new locations, using regional demand, existing store density, investment returns, and supply-chain efficiency to determine whether another store should open.CBuy back large numbers of franchised stores and gradually convert the network to company ownership, making headquarters responsible for most store rent, fit-out, labor, and daily operations.DRaise product prices sharply, abandon the mass-market position, and use higher profit per drink to solve the growth challenge of a mature network.

Full Analysis

Mixue's first Turning Point was proving that mass-market beverages could be replicated rapidly through franchising. Franchisees funded terminal stores while headquarters concentrated on brand and supply-chain capabilities, allowing the network to grow faster than a fully company-owned model. The second Turning Point came when network scale began reinforcing the supply chain. More stores created greater demand for ingredients, packaging, and equipment. Larger procurement, manufacturing, warehousing, and logistics volumes could then reduce unit costs and help sustain low prices. The third Turning Point is density. At nearly 64,000 stores, the scarce resource is no longer simply investors willing to open franchises. It is locations that can still generate genuine incremental demand. Management must therefore change how it defines growth. Approving another store is no longer automatically a positive outcome. In some cases, rejecting a location that would heavily cannibalize existing franchisees may protect more long-term value than approving it. The same logic applies overseas. If a city or country cannot support healthy unit economics because of logistics, rent, consumption frequency, or local density, pruning weak locations may be more valuable than maximizing international store count. The real Turning Point is the shift from land grab to density management and network productivity.

Turning Point

Before vs After

BEFORE

Before 2020, Mixue Group already had a recognizable operating model. An upstream supply-and-franchise model: sell ingredients, packaging and equipment to franchisees, collect related fees, and scale through store count rather than corporate ownership. That starting point matters because the pandemic did not create the economics of the company; it exposed them. Businesses with high fixed cost, inventory exposure or long contractual obligations reacted differently from marketplace, franchise or fee models. A good baseline asks three questions. First, who pays the company and for what unit? Second, which costs arrive before revenue is certain? Third, how much capital is required to add the next unit of growth? Those questions make later strategic choices comparable across years rather than treating every management presentation as a new story. The six-year sequence is the spine of the case. Mixue expanded through a dense franchise network and listed in Hong Kong. Growth remained very fast through 2025, but 1H 2026 showed a much slower revenue rate despite a network approaching 64,000 stores. The period should not be read as a smooth trend. 2020 changed customer behavior and capital markets; 2021 rewarded growth; 2022 exposed inflation, rates or operating stress; 2023–2024 forced many companies to choose between retrenchment and renewed expansion; 2025–2026 show which changes became durable. For Mixue Group, the decisive point is not the calendar year itself but the moment management could no longer rely on the old growth assumption.

AFTER

The evidence through the cutoff is: 2025 revenue was about RMB33.6 billion. 1H 2026 revenue was about RMB15.2 billion, up roughly 2.3%, with 63,987 stores reported in the period. These figures must be interpreted in context. A high growth rate can come from acquisitions or a depressed comparison; a low growth rate can still be attractive if margins, cash flow or partner economics improve. The most useful comparison is therefore between the operating model before the strategic change and the economics after it. The result type for this case is **success**. That label is descriptive, not moral. It summarizes the state of the strategy at the cutoff and should not be read as a prediction of what will happen after September 2026. The major risks are: Franchisee returns, same-city cannibalization, food safety, supply-chain concentration, overseas execution and the temptation to treat store count as a substitute for unit economics. There is also a measurement risk. Public disclosures differ by accounting standard, geography and business model. Some companies publish rich quarterly operating metrics; private or post-bankruptcy companies publish far less. Missing data should not be filled with invented precision. Finally, this case has a hard information cutoff of 12 September 2026. Events after that date may change the conclusion, but they are outside this case and should not be smuggled backward into the analysis.

GoGoUp Five Powers

Discover

5/5

★★★★★

Analyze

5/5

★★★★★

Execute

5/5

★★★★★

Decide

5/5

★★★★★

Create

5/5

★★★★★

Discover5/5

Mixue initially discovered a large mass-market demand for affordable, frequently purchased freshly made beverages and that standardized products could be replicated rapidly through franchising. The second discovery was that the franchise network itself could create supply-chain scale advantages. More stores increased procurement and production volume, while lower unit costs helped reinforce the low-price position. The third mature-stage discovery is that a franchise network has a density limit. Consumer demand does not automatically increase simply because headquarters approves another store. Too many stores in the same area can redistribute existing demand instead of creating new demand. This progression—from consumer demand, to supply-chain scale, to network-density constraints—supports a Discover score of 5.

Analyze5/5

Mixue cannot be analyzed only through Group revenue and total store count because those figures do not directly answer whether franchisees are earning acceptable returns. A mature franchise system needs to consider several layers together: headquarters revenue and supply-chain volume, store count and regional density, franchisee store economics and investment returns, store survival quality, and whether incremental locations create genuine new demand. Mixue generated approximately RMB33.6 billion of revenue in 2025. In 1H 2026, revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported network reached 63,987 stores. These figures demonstrate enormous scale, but they do not prove that every additional store improves system economics. A particularly important distinction is between "adding another supply node for headquarters" and "creating another unit of consumer demand for the system." If a new store mainly cannibalizes existing stores, headquarters may gain some short-term supply activity while franchisee economics deteriorate. Therefore, Analyze receives 5.

Execute5/5

Mixue's execution capability is first demonstrated by its ability to support tens of thousands of franchised stores. A network of this size requires procurement, manufacturing, warehousing, logistics, equipment, product standards, and food-safety systems that can operate consistently at enormous scale. At the mature stage, execution must shift from opening fast to opening precisely. Site selection needs to consider regional density, consumer coverage, existing-store economics, and franchisee returns rather than simply the number of franchise applications. Headquarters must also continue deepening supply-chain efficiency because the ability to maintain both low consumer prices and acceptable franchisee returns depends heavily on reducing unit costs through scale and operations. Overseas markets require the same discipline. If local unit economics remain weak, pruning or optimizing locations may be more valuable than preserving headline international scale. Therefore, Execute receives 5.

Decide5/5

Mixue's most difficult mature-stage decision is not whether it can approve more stores. It is whether management is willing to give up some short-term growth in order to protect long-term network economics. If headquarters focuses only on total store count, it can continue approving franchise applications. If it focuses on the health of the entire system, it must sometimes restrict openings in dense areas or reject investors who are willing to provide capital. That decision has a clear opportunity cost. One fewer store can mean one fewer short-term supply node and less immediate demand for equipment, ingredients, and packaging. But if rejecting that store protects the returns of several existing franchisees, the long-term result may be stronger renewals, a more stable network, and more durable supply-chain revenue. The mature decision standard must therefore evolve from "Can this store open?" to "Should this store open?" Therefore, Decide receives 5.

Create5/5

Mixue's most important creation is not one specific tea drink or ice cream product. It is a system capable of supporting mass-market pricing at enormous scale. Franchisees provide store-level capital and local operations. Headquarters provides the brand, products, procurement, manufacturing, warehousing, logistics, equipment, and standardization. The enormous franchise network then reinforces supply-chain scale, helping the low-price position remain sustainable. The key creation is the connection between low prices, scale, supply-chain efficiency, and franchise capital. At the mature stage, Mixue must create a second capability: density management. Headquarters needs to use regional data, store performance, and franchisee economics to identify where genuine consumer white space remains and where the network is already close to saturation. If Mixue can evolve from replicating stores to optimizing the entire network, the durability of the system becomes stronger. Therefore, Create receives 5.

Key Takeaway
Mixue Group shows that every franchise network eventually moves from a land-grab problem to a productivity problem. When the network is small, more stores usually mean greater consumer coverage. When the network approaches 64,000 stores, it can no longer be assumed that another store creates new demand. Mixue generated approximately RMB33.6 billion of revenue in 2025. In 1H 2026, revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported network reached 63,987 stores. These figures show that Mixue has already achieved massive replication and has entered a stage where growth quality matters more. The most transferable rule is: **Headquarters cannot sustainably grow by making franchisees progressively less profitable.** A healthy franchise system must create long-term value for consumers, franchisees, and headquarters simultaneously. Consumers receive affordability and convenience; franchisees receive reasonable investment returns; headquarters receives durable supply-chain demand. The second rule is: **One of the most important capabilities of a mature franchise network is knowing where not to open another store.** Rejecting a low-quality location can reduce short-term store growth while protecting regional franchisee returns and long-term supply-chain value. The third rule is that low prices must come from efficiency. Sustainable mass-market pricing should be supported by procurement, manufacturing, warehousing, logistics, and standardization—not by endlessly compressing franchisee profits. As of September 12, 2026, Mixue's franchise and supply-chain model had been validated at extraordinary scale, so the Outcome is Success. But the next stage of Success is no longer primarily about store count. It is about franchisee economics, regional density, and total network productivity.

Evidence / Sources

Public Evidence 1: Source / Author: Mixue Group Material: 2025 annual results and annual disclosures Facts supported: Mixue generated approximately RMB33.6 billion of revenue in 2025. This figure supports the conclusion that Mixue has built a large-scale franchise and supply-chain business system. Public Evidence 2: Source / Author: Mixue Group Material: 2026 interim results and company disclosures available through the research cutoff Facts supported: 1H 2026 revenue was approximately RMB15.2 billion, up roughly 2.3%, while the reported store network reached 63,987 locations. These figures support the conclusion that the network had reached enormous scale while revenue growth had slowed materially. Public Evidence 3: Source / Author: Mixue Group Material: Listing documents, annual reports, interim disclosures, and investor materials available through September 12, 2026 Facts supported: Mixue primarily expands through franchising. Headquarters provides the brand and upstream supply chain, including ingredients, packaging, equipment, and related services, rather than directly operating the overwhelming majority of terminal stores. These materials support the analysis that franchisees provide store-level capital while headquarters operates the broader supply network. Internal Verification Notes: Research cutoff date: September 12, 2026. 2025 Group revenue: approximately RMB33.6 billion. 1H 2026 revenue: approximately RMB15.2 billion, up roughly 2.3%. Reported store network: 63,987 locations. Do not describe all 63,987 stores as company-operated locations. Mixue's core expansion model is franchising. Do not interpret growth in total store count as direct evidence that franchisee store-level profit increased. Headquarters economics and franchisee unit economics must be analyzed separately. Do not classify the business as Failure solely because 1H 2026 revenue growth was approximately 2.3%. The network had already reached extraordinary scale, and growth rate and network health are different questions. Do not claim that severe cannibalization has already occurred in every high-density market unless specific regional data supports that statement. The case analyzes cannibalization as a structural risk that a mature franchise network must manage. Do not claim that low prices require low franchisee profitability. GoGoUp's analysis is that sustainable low prices should increasingly come from supply-chain scale and operating efficiency. Do not interpret selective store openings as stopping expansion. The strategic change is to improve the quality of incremental locations. Success in this case means Mixue has built and validated a large-scale franchise and supply-chain business model while maintaining an enormous network. At the mature stage, however, management must shift from maximizing store count toward protecting franchisee economics and improving network productivity. Statements such as "headquarters growth does not automatically mean better franchisee economics," "a mature franchise network must know where not to open," and "a franchise network eventually moves from land grab to productivity" are GoGoUp educational analysis. The Discover, Analyze, Execute, Decide, and Create scores and commentary are GoGoUp educational assessments, not official Mixue Group ratings. This case is intended for business and entrepreneurship education and does not constitute investment advice.