After years of rapid expansion, Mixue Bingcheng has deliberately slowed its pace.

On August 27, MIXUE GROUP disclosed its unaudited interim results for 2026. In the first half of the year, the company's revenue reached RMB 15.216 billion, a year-on-year increase of 2.3%; however, profit for the period fell to RMB 2.319 billion, down 14.7% year-on-year.

During the same period, its global store count grew to 63,987, a 20.7% increase year-on-year.

Stores are still being added, but they are no longer driving revenue and profit growth in tandem as they did in the past.

At the subsequent results conference, Zhang Yuan, CEO of MIXUE GROUP, acknowledged that both the group's overall average sales per store and the average sales per store for the Mixue Bingcheng main brand saw double-digit declines in the first half of the year.

The delivery war last year inflated store revenues to abnormally high levels, creating a higher comparison base. Additionally, the blurring category boundaries between tea drinks and coffee have intensified industry competition, further diverting store traffic.

In response to these changes, Mixue has begun to adjust its growth priorities. Management has clearly stated that store count will no longer be the primary target. Instead, greater emphasis will be placed on average store efficiency, franchisee profitability, and the quality of store operations.

To this end, Mixue has initiated a new round of investment. On one hand, the company is pursuing a "fresh, genuine, and pure" direction, upgrading raw materials, cold-chain warehousing and distribution, and store equipment. On the other hand, it is attempting to expand consumption scenarios and reasons to visit stores through freshly ground coffee and the Snow King IP.

However, these investments have already impacted profit before delivering returns. Supply chain upgrades, equipment deployment, and brand IP development are increasing capital expenditure and operating costs, while improvements in average store performance still need time to be verified.

Shifting from betting on store quantity to betting on single-store demand, Mixue is simultaneously transforming both the supply side and demand side of its growth. Whether these two rounds of investment can jointly drive the recovery of average store performance will determine the success of this strategic pivot.

Strategic Shift

Mixue's turn has not happened abruptly.

At the annual results conference in March 2026, Mixue explicitly proposed, for the first time, to proactively slow down new store development in China and allocate more resources to enhancing the operation and efficiency of existing stores.

As of the end of June this year, Mixue operated over 59,000 stores in mainland China, with stores in third-tier and below cities accounting for 58%.

Looking at its own pace, Mixue has indeed slowed down. In the first half of the year, the group added 4,166 net new franchise stores, a reduction of approximately 30% year-on-year.

However, on a horizontal comparison, given the growth inertia of tens of thousands of stores, this increase still exceeds the combined total of three listed leading brands during the same period: Guming, Shanghai Auntie, and Chagee.

Considering that Lucky Cup's disclosures have become more conservative after surpassing 10,000 stores, and the base for Fresh Beer Fuliujia is still small, the vast majority of new stores are likely still contributed by the main brand, Mixue Bingcheng.

The overseas market is in an adjustment phase. After a net decrease of 428 stores in 2025, overseas stores saw a further net decrease of 89 stores in the first half of this year, falling to 4,378, primarily due to the cleanup of existing locations in the Indonesian and Vietnamese markets.

Management had previously proposed to achieve net growth in overseas stores in 2026, but this had not yet been realized as of the first half of the year.

The proactive slowdown in domestic expansion and continued store closures overseas imply that Mixue's past growth path, driven by increasing store numbers to boost raw material procurement, equipment sales, and franchise service revenue, is weakening.

In the first half of the year, the company's equipment sales revenue decreased by 18.2% year-on-year; both the group's overall average store revenue and the average store revenue for the Mixue Bingcheng main brand saw double-digit declines.

How to make existing stores sell more products and generate more procurement demand has become a more urgent issue than continuing to expand the number of stores.

Mixue's answer is "fresh, genuine, pure."

Coffee bean shelf life has been shortened from 12 months to 60 days, some products have begun using fresh milk with a 19-day shelf life, and ingredients like fruits and coconut milk are gradually shifting from ambient temperature to frozen, cold-fresh, or short-shelf-life systems.

On the product side, Mixue has upgraded classic products like Bang Da Xian Cheng, changed the preparation method for some coffees from "fresh brew" to "freshly ground," and launched new products such as honeydew ice cream and mint, banana, and big orange series.

These changes, when applied across 60,000 stores, mean that production lines, multi-temperature warehousing and distribution, and store equipment all need to be re-adapted.

Deployment of front-end equipment has already accelerated. By the end of June, freshly ground coffee machines had covered more than 3,000 Mixue stores; by the time of the August 27 results conference, coverage had exceeded 6,000 stores, roughly doubling in about two months.

The company plans to deploy them to approximately 14,000 stores within the year and achieve nationwide coverage by 2028. According to management's disclosure, based on pilot data, stores with installed coffee machines are performing better than the overall average.

Meanwhile, fresh milk and short-shelf-life coffee beans have already covered over 6,000 Mixue stores; upgrades to ingredients like passion fruit, jasmine green tea, and coconut milk have also been progressively rolled out since July. Over 30 warehouses nationwide are being renovated into multi-temperature zone systems that accommodate ambient, chilled, and frozen storage.

To alleviate the inventory pressure caused by short-shelf-life ingredients, Mixue has also lowered the minimum single-order threshold for stores from approximately RMB 9,500 to RMB 6,000, hoping to improve inventory turnover through smaller, more frequent deliveries.

Mixue has explicitly stated that it will not pass on the costs of strategic investments to consumers and franchisees. Instead, it plans to absorb them internally through supply chain efficiency, economies of scale, and digital capabilities.

In the first half of the year, Mixue's gross margin fell from 31.6% to 30.4%, and its net margin decreased by 3 percentage points year-on-year.

Management acknowledged that as ingredient upgrades, three-temperature delivery, and doorstep delivery continue to expand, gross and net margins may remain under pressure temporarily. The long-term gross margin target remains around 30%.

Ma Junwei, CEO of Mixue Bingcheng China Region, also stated that "fresh, genuine, pure" and freshly ground coffee were only finalized as strategic directions between late 2025 and early 2026. In the first half of the year, consumers had not yet fully perceived the product upgrades, and there remains a time lag before actual effects become visible.

Calculating Investment Returns

Mixue may not necessarily need fresh milk and fresh fruits to break through its price band upwards. A more realistic goal is to improve quality while keeping prices essentially unchanged, thereby reducing consumers' reasons to switch to other brands.

From this perspective, "fresh, genuine, pure" is first and foremost a defensive investment: preventing Mixue's low-price advantage from gradually turning into a quality disadvantage.

Ambient-temperature raw materials, centralized production, and scaled distribution are easy to standardize, but also easy for other affordable brands to imitate.

If Mixue can deliver fresh milk, short-shelf-life coffee beans, and frozen juice to 60,000 stores at a low cost, its moat will evolve from "providing cheap ingredients at scale" to "providing higher-quality short-shelf-life ingredients at scale and low cost."

Mixue's scale indeed gives it a better chance than most competitors to amortize the costs of this system. But strategic necessity does not guarantee financial effectiveness.

In 2026, Mixue plans main investments of approximately RMB 1.6 billion for the "fresh, genuine, pure" related supply chain upgrades, with about RMB 1.4 billion allocated for domestic supply chain deep transformation and about RMB 200 million for overseas production bases.

The group's overall capital expenditure for the year is expected to be RMB 1.8 billion to RMB 2.0 billion, covering not only the above projects but also Fresh Beer Fuliujia capacity, digitalization, cold-chain warehousing and distribution, and other infrastructure.

If all plans are executed, 2026 could become the year with the highest capital expenditure in Mixue's history.

This is not Mixue's first large-scale supply chain transformation.

Cai Weimiao, Executive Director and Chief Supply Officer of MIXUE GROUP, stated at the results conference that the previous major supply chain upgrade occurred between 2020 and 2023, also lasting about three years, with a core task being the upgrade of more fruit-based ambient-temperature raw materials to frozen freshness-locking ingredients.

When that round of investment started, Mixue had approximately 10,000 domestic stores. Subsequently, by 2024, the company's store network expanded to over 46,000 stores, with revenue and annual profit growing by approximately 1.4 times and 1.3 times, respectively.

At that time, more stores generated more procurement demand, and scale expansion further reduced unit costs, which in turn translated into lower procurement prices and faster store openings.

This round of upgrades is also expected to take about three years, but the scope of coverage and implementation difficulty are already different.

On one hand, the scope of transformation has expanded from roughly 10,000 stores in the previous round to over 60,000 today. At the same time, the industry's total store count continues to rise, and Mixue faces competitors spanning both the tea drink and coffee categories, making the competitive density incomparable to before.

On the other hand, the upgrade scope has extended from some fruit-based raw materials to fresh milk, short-shelf-life coffee beans, cold-fresh and frozen juice, multi-temperature warehousing and distribution, and store equipment, significantly increasing the complexity of the supply chain.

A supply chain upgrade can lead to a richer product portfolio, but it does not necessarily mean more consumption. The key structural opportunity Mixue is currently focusing on capturing is coffee.

Currently, many Mixue Bingcheng stores' mini-programs already mark "freshly ground coffee." Mixue hopes to enter the breakfast and mid-morning consumption periods through this, allowing the same store to cover more scenarios. Lucky Cup, meanwhile, attempts differentiation through products like fruit coffee.

However, the price bands of the two brands are relatively close, making internal competition difficult to completely avoid. If it simply redistributes low-price coffee demand within the group, the new stores and equipment might primarily lead to revenue transfer rather than genuine incremental demand.

Mixue previously tried a "breakfast milk + pre-packaged bread" combo, but it did not eventually scale widely. 全天候科技 (AllWeatherTech) has found that some Mixue stores are now starting 24-hour operations.

Until the entire upgrade cycle is complete and generates stable returns, the pressure from upfront investment and operational adjustment will persist.

The Snow King in Development

For Mixue, one card that has not been fully utilized may be the "Snow King."

In the tea drink industry, co-branding and IP marketing are common. Their primary purpose is to create novelty, providing consumers with a short-term reason to visit a store amidst highly homogeneous products.

What sets Snow King apart is that it is not a temporary external IP rented by Mixue, but a self-owned brand asset that can be reused repeatedly and across product cycles.

From spreading through streets and alleys with its catchy theme song to becoming a widely recognized brand symbol, Snow King has completed its transformation from a mascot to a "super symbol." Today, Mixue is accelerating the content development and scenario expansion of this IP.

In June this year, the company released a three-volume comic series, "Snow King Loves China." On August 21, a new animation, "Snow King is Here!", was launched. Alongside the animation content, Mixue simultaneously launched themed packaging and connected the IP content with store consumption through offline tours, themed events, co-branding, and flagship stores.

Snow King is also moving from small screens to the big screen. The animated film "Make a Wish! Snow King" has passed the script filing and project registration with the film authorities.

A Snow King theme park is also in preparation. Located at the group's headquarters in Zhengzhou, it is planned as a small indoor park that will synergize with the headquarters flagship store and exhibition hall, with an estimated investment of less than RMB 100 million.

At the same time, Mixue has begun converting IP value through cultural and creative merchandise.

From January to July this year, the turnover of Mixue Bingcheng cultural and creative peripheral products increased by nearly 200% year-on-year, with related products entering the Southeast Asian and American markets. Management has explicitly stated its hope that the IP business will gradually become one of the group's important long-term growth drivers.

Especially in large flagship stores, cultural and creative products are no longer just an additional sale to beverages; they are becoming the purpose of consumption itself.

The flagship store at the Zhengzhou headquarters attracted over 5.7 million visits, processed more than 2.4 million orders, and achieved a turnover exceeding RMB 98 million in 2025, with peripheral products accounting for over 80% of that. Located adjacent to Zhengzhou East Railway Station, it has become a popular local check-in spot.

In May this year, the Mixue Bingcheng Nanjing flagship store, covering an area of about 2,000 square meters, opened, setting a new record for the brand's flagship store area.

As of the end of June, Mixue Bingcheng had 27 flagship stores. These stores not only sell beverages and peripherals but also serve as tangible regional advertising billboards.

The food and beverage industry already presents two reference paths for IP commercialization.

Starbucks has long extended its brand from coffee to lifestyle retail through cups, limited editions, and co-branded merchandise. During its recent collaboration with Jay Chou, Starbucks launched themed beverages alongside lyric cups, themed bags, and vinyl transparent cards, distributed across its over 8,000 stores nationwide.

McDonald's excels at using collectibles to drive food and beverage consumption. The "McDonald's Walkie-Talkies" launched in 2024, requiring consumers to place an order and pay an additional fee for the exchange, sold out quickly upon release. The limited-edition Black Gold Gundam in 2023, with only 113,000 units, was also snapped up shortly after reservations opened.

The former proves that brand symbols can be continuously commercialized through the store network, while the latter demonstrates that peripherals can be embedded into restaurant transactions, creating reasons for visits and repeat purchases.

As Pop Mart also begins to integrate dessert modules into its retail format, the combination of IP with high-frequency dining is showing more possibilities.

Mixue is increasing its investment in this area.

In the first half of the year, the company's selling and distribution expenses increased from RMB 914 million to RMB 1.123 billion, a year-on-year increase of 22.9%; as a proportion of revenue, it rose from 6.1% to 7.4%, an increase of 1.3 percentage points.

The company explained that the growth mainly came from increased marketing expenditure and labor costs associated with brand IP development and high-quality store operations support.

In the past, Mixue leveraged its over 60,000 stores to amplify supply chain efficiency; in the future, the same network could also serve as an amplifier for the value of Snow King's content and merchandise.

Ultimately, what Snow King needs to prove is whether it can drive consumers to visit Mixue more frequently and enable each store to generate more demand.