Mixue sells soft-serve cones for as little as 45 cents. It also has more locations than McDonald’s. The Chinese chain now runs more than 47,000 stores worldwide, according to the Wall Street Journal. Brothers Zhang Hongchao and Zhang Hongfu built it using the same playbook Dollar General used to outmaneuver Walmart: go where the big guys won’t, keep everything bare-bones and sell cheap.
Zhang Hongchao opened his first shaved-ice stall in 1997 in Henan, a Chinese province he compares to Ohio, for just $950. Instead of chasing middle-class shoppers in Shanghai, the brothers planted stands in workers’ dorms, village markets and university towns. Today, three-quarters of Mixue’s China locations sit in second- and third-tier cities where there’s less competition.
The brothers learned the hard way what happens when you stray from the formula. In 2009, envious of a nearby Dairy Queen’s upscale customers, Zhang Hongfu opened a premium version of the store with better decor and fresh ingredients. It generated just $900 in profit over two and a half years before he shut it down.
Mixue’s stock has gone public in Hong Kong and, despite fierce price competition at home, the company is worth about $10 billion, far behind both McDonald’s $180 billion valuation and Dollar General’s roughly $26 billion. But in sheer store count, it’s already ahead of both.