Mixue's U.S. Debut: A Historical Test of the $1 Bubble Tea Model

Mixue's entry into the United States is a high-stakes test of a proven global model. The company operates over 53,000 stores worldwide, making it the world's largest food and beverage chain by sheer footprint. Its 2024 results show the engine is still powerful: revenue surged 22% to $3.4 billion with profits jumping 40%. The central investor question is straightforward: can this low-cost, high-volume formula translate from crowded Chinese cities to the saturated, premium-driven U.S. market?

The model is built on extreme vertical integration. Mixue doesn't just franchise; it supplies the core ingredients, equipment, and packaging to its stores. This gives it control over costs and quality, a key to its success in lower-tier Chinese cities where nearly 60% of its stores are located. The company's Hong Kong IPO debut, where its stock jumped more than 40% on its first day, signaled strong investor belief in this supply-chain-driven growth engine.

Now, the company is applying that same playbook in Los Angeles. Its first U.S. store, which opened on December 19, 2025, features a menu priced between $1.19 and $4.99. This is the classic value proposition: aggressively low prices for freshly made drinks. The opening was marked by promotional excitement, a clear signal that Mixue is betting on volume and brand recognition to cut through the noise.

Historical parallels offer a cautionary lens. The model that worked in China's frugal, rapidly urbanizing market may face friction in the U.S., where consumer loyalty is often tied to brand experience and premium positioning. The real test isn't just the price point, but whether the operational discipline and supply chain efficiency that powered its global scale can overcome the higher costs and competitive intensity of a mature market. For now, the setup is complete. The question is whether the execution can match the scale.

The expansion of Chinese bubble tea chains into the U.S. is a high-stakes test of a proven model against a far more complex reality. The numbers show a market ripe for growth, but the execution is proving to be a different story. The U.S. bubble tea market is projected to grow at a CAGR of 10.3% to reach $3.46 billion by 2033. For a company like Mixue, which has become the world's largest food and beverage chain by store count, this represents a massive potential prize. Yet, the path to capturing it is fraught with friction that the Chinese model was not built to handle.

The core challenge is operational speed and cost. In China, a store can be up and running in 20 days of signing a contract. In the U.S., the same process takes seven months. This isn't just a delay; it's a fundamental shift in the business calculus. The capital tied up in that extended build-out period, coupled with higher real estate and permitting costs, directly pressures margins. It forces a pivot from the hyper-scalable, low-friction franchise model that powered Mixue's dominance in lower-tier Chinese cities. There, nearly 60% of stores are in cities categorised as "third-tier or below". Replicating that density in the U.S. requires navigating a vastly different landscape of consumer expectations, regulatory hurdles, and competitive intensity.

This friction is a classic case of a model tested against a new environment. The historical parallel is instructive. When Starbucks entered China, it didn't just open stores; it spent years educating a market on coffee culture. Similarly, U.S. brands like Chagee are launching "evening tea service" and public campaigns to establish tea as a new category. This suggests that the Chinese model, which relies on a consumer already familiar with the product, must be adapted. It becomes less about rapid replication and more about market creation, a slower, more expensive process.

The bottom line is a bifurcation between potential and execution. The market size is compelling, and the initial moves by giants like Mixue with its ten-year New York lease signal serious intent. But the mechanics of opening a store in seven months versus 20 days, and the need to navigate higher costs and cultural differences, introduce significant constraints. For now, the model's viability in the U.S. hinges on a company's ability to absorb these frictions, manage capital efficiently, and adapt its supply chain and franchise support to a slower, more complex growth path. The prize is large, but the cost of entry is proving to be much higher than anticipated.

Risks & Guardrails: Where the $1 Bet Could Go Wrong

The expansion thesis for a $1 tea brand like Mixue is built on a simple, powerful formula: low price, high volume, and a scalable franchise model. But history shows that scaling a consumer brand across cultures is a minefield of execution risk. The primary failure mode is not competition, but cultural friction. As seen with Haidilao's localized hot pot broths, adapting to a new market requires more than just translating a menu. It demands a fundamental re-education of the consumer. The Reuters report notes that culture and brand awareness are the biggest challenges for Chinese tea brands. This isn't a minor adjustment; it's a multi-year investment in building trust and changing habits, a process that took Starbucks decades to achieve in China.

The U.S. market is already a battleground for this very demographic. Mixue is entering a crowded field where brands like Heytea, Chagee, and Luckin Coffee are already vying for the same young, trend-conscious consumers. This isn't a greenfield opportunity but a saturated one. The competitive dynamic is further complicated by the fact that many of these brands are fighting a losing battle at home, where China's food service industry is suffering from severe oversupply. The profit-killing race to the bottom that forced them to seek new markets is a direct threat to their U.S. expansion capital.

The most vulnerable aspect of the Mixue model is its core profitability engine. Its success is predicated on a low-cost franchise model and efficient supply chain that keeps costs down. This model is a classic high-volume, low-margin play. In the U.S., where labor and real estate costs are significantly higher than in China, this margin structure is immediately threatened. Any rise in supply chain costs or wage pressures will squeeze the thin profits that make the model work. The brand's vertical integration, while a strength in China, becomes a fixed-cost burden in a new, more expensive environment.

The bottom line is that the $1 bet is a bet on flawless execution across three fronts: cultural adaptation, competitive differentiation, and cost control. The historical parallel is clear: successful global expansion requires more than a good product. It requires patience, deep localization, and a war chest to fund the long, painful process of building a new brand. For Mixue, the guardrails are simple but hard to maintain: watch the unit economics closely, monitor local competition's moves, and never underestimate the time it takes to change a consumer's taste.

Valuation & Catalysts: What Moves the Stock

The valuation story for Mixue hinges on a simple question: can its proven, hyper-efficient model translate from a saturated Chinese market to the complex, taste-sensitive U.S. landscape? The Hong Kong IPO performance provides a clear signal of high growth expectations. The stock jumped more than 40 per cent on its Mar 3 debut, trading at around double its offer price. This re-rating reflects investor confidence in the company's scale and supply chain dominance, not just its current results. The challenge now is to validate that this model can drive similar expansion and profitability in a new market.

The primary near-term catalyst is the operational success of its initial U.S. stores in Los Angeles and New York. This debut is a critical test of the company's ability to adapt its value-focused menu to American palates and navigate a slower, more regulated business environment. As other Chinese brands have found, doing business here is quite different from what we imagined, with expansion timelines stretching from weeks to months. The pace and profitability of these first locations will signal whether the model is viable or if significant, costly localization is required. A strong debut could trigger a new wave of investor enthusiasm, while a stumble would immediately raise questions about the global expansion thesis.

A key risk, however, is executional distraction. Mixue's core strength lies in its vertically integrated supply chain, which supplies ingredients and equipment to its vast franchise network. The company is focused on cultivating the South-east Asia market and has already built a presence in 13 countries. Diverting capital and management focus to the capital-intensive U.S. rollout could slow momentum in these high-growth, adjacent markets where the company still holds a dominant position. The history of international expansion is littered with brands that overextended themselves in one market while neglecting their home base.

The bottom line is a classic growth-at-any-price scenario. The stock's valuation is built on the assumption that Mixue can replicate its Chinese success. The U.S. test is the first real stress test. Investors will be watching for more than just foot traffic; they will be looking for evidence that the company can maintain its razor-thin pricing and operational efficiency while building brand trust from scratch. The catalysts are clear, but the path is fraught with the same cultural and logistical hurdles that have tripped up previous entrants.