In the scorching summer of 1997, armed with a modest capital of RMB 3,000 (USD 460), Zhang Hongchao embarked on a transformative journey that culminated in the establishment of Mixue Bingcheng. Initially a humble roadside ice cream stall in Zhengzhou, a bustling city housing 10 million inhabitants, the visionary Zhang, together with his younger brother Zhang Hongfu, navigated their trajectory, elevating the brand to a global chain with an impressive footprint of over 18,000 stores sprawled across China and Southeast Asia.
The Early Trials and Strategic Expansion of Mixue Bingcheng
During the late 90s, Zhang Hongchao transitioned from a string of unsuccessful entrepreneurial ventures to reinvigorate his cold drink enterprise, Mixue Bingcheng, in the burgeoning landscape of Zhengzhou. He adeptly tailored the business to meet burgeoning urban demands, curating a diverse menu that resonated profoundly with the local populace, thereby securing Mixue Bingcheng’s pivotal standing in the city’s vibrant food and beverage arena.
A Turning Point and Innovative Ventures
The pivotal year of 1999 saw Zhang’s brother, Zhang Hongfu, join the venture. By introducing an affordable menu and strategically situating outlets in lesser-represented third- and fourth-tier cities, the Zhang brothers successfully tapped into a crucial customer segment—college students and young adults. Zhang Hongfu’s innovative menu additions furthered the brand’s appeal, positioning Mixue Bingcheng as the ultimate destination for a delightful fusion of sweet and savory cravings.
The Triumph of Low Prices and Strategic Calculations
The crux of Mixue Bingcheng’s strategy lay in its commitment to affordable pricing. With meticulous cost calculations and a slim profit margin, the brothers managed to turn a profit despite the remarkably low prices. Notably, a savvy move in 2006 led to the introduction of an ice cream priced at just RMB 1, in stark contrast to a prevalent RMB 18 variant in the market. This affordable yet delectable ice cream swiftly garnered immense popularity, attracting hordes of customers and selling up to a staggering 5,000 units per day.
Transformative Business Structure and Rapid Expansion
Transitioning from a sole proprietorship, the brothers restructured Mixue Bingcheng into a partnership in 2008, introducing professional managers and unveiling a revamped company logo. By 2010, their collaboration with the Ministry of Commerce enabled Mixue Bingcheng to pave the way for rapid store expansion, surpassing initial franchising benchmarks.
The Road to Financial Success and Impending Public Debut
In a significant milestone, Mixue Bingcheng secured its sole round of financing in 2021, raising over RMB 2 billion (USD 278.82 million) led by Meituan’s DragonBall Capital and Hillhouse Capital, consequently catapulting its valuation to RMB 20 billion. Rumors of an impending stock market listing emerged, underscoring Mixue Bingcheng’s trajectory toward a public debut.
The Blueprint for Public Listing: Expansion and Financial Ingenuity
Mixue Bingcheng’s distinctive business approach, anchored in maintaining an affordable product lineup—primarily priced below RMB 10—continues to resonate strongly with consumers, particularly among the youth and denizens of third and fourth-tier cities. The brand’s expansive franchise operation, driven by its low-price strategy, has led to an extensive nationwide presence, strategically establishing a dense network of stores.
Moreover, the brand’s large-scale operations have effectively minimized raw material costs, with direct deliveries to franchise stores from the company’s myriad factories and warehouses. Notably, apart from franchise fees, Mixue Bingcheng also generates substantial revenue by charging franchises for these raw materials. Speculations suggest that the company’s revenue, estimated at RMB 6 billion (USD 836.5 million) in 2019 with a net profit of approximately RMB 800 million, may have breached the RMB 10 billion mark.
Unwavering Innovation and Global Expansion Drive
Continuing its innovation streak, Mixue Bingcheng recently unveiled its first “Snow King Castle Experience Store” in Zhengzhou, coinciding with the IPO filing. This flagship store not only introduced a range of novel beverages but expanded its menu to encompass diverse items like deep-fried skewers, coconut milk stewed noodles, do-it-yourself cakes, coffee, and bakery items. The brand even ventured into a unique ice cream featuring baked buns, paying homage to Henan’s local culinary heritage.
In a bold move last year, Mixue Bingcheng’s CEO, Zhang Hongfu, revealed plans to foray into the budget-friendly coffee sector, announcing the development of a new brand named “Lucky Coffee.” In a testament to their ambition, Zhang pledged to replicate Mixue Bingcheng’s success within a span of five years.
The saga of Mixue Bingcheng serves as an inspiring testament to the entrepreneurial zeal of the Zhang brothers, who transformed a modest roadside stall into a global franchising powerhouse, reaching millions of customers worldwide.
