I Love You, You Love Me—Will North America Love Mixue Ice Cream & Tea?

Apr 30

The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.

A Cold Drink in a Hot Market

From Hollywood Boulevard to the heart of Manhattan’s Chinatown, Mixue Ice Cream & Tea is paving its ambitious North American expansion. Boasting ultra-low prices and a high-throughput model, it has driven massive scale in China and Southeast Asia. At the same time, the global bubble tea market is projected to reach ~US$4.37 billion by 2030, up from US$2.72 billion in 2025, with North America being one of the fastest-growing segments. North America is a high-opportunity but high-risk market for Mixue: prices are higher, but so are costs, regulations, and competition. Mixue’s signature low prices, enabled by a tightly controlled supply chain and low cost of labour in Asia, does not reflect the North American market reality. What does it take for a cost-led Asian beverage giant to succeed in a market defined by premium drinks, and how can Mixue execute this ambitious expansion?

Brewing for Scale

Founded in 1997 in Zhengzhou, China, Mixue Ice Cream & Tea started as a humble shaved ice shop opened by Zhang Hongchao. Today, Mixue has grown into the world’s largest food and beverage chain by store count, with over 53,000 stores globally. Known for its whimsical snowman mascot, Snow King, and theme song, “I love you, you love me,” Mixue has found success through its extreme affordability, prioritizing a volume-driven, low-margin model with signature products priced as low as USD $1–2. Its vertically integrated supply chain reduces costs to ~30% of revenue (vs. 45–55% industry), supported by five large-scale production bases (1.65M tons capacity, 60+ intelligent lines) that drive input cost efficiency. Although many see the brand as a beverage retailer, it operates more similarly to a raw-material supplier. The majority of its revenue is generated through the sale of ingredients, merchandise, and equipment to franchisees who are contractually required to procure supplies directly from Mixue. Mixue’s iron grip over its supply chain underpins a model that is difficult to replicate outside of Asia.

More than a Sip: What Luckin’s U.S. Entry Signals for the Market

Mixue is not alone in this wave of expansion. Fellow Chinese beverage heavyweight Luckin Coffee is also brewing its own strategy for entering international markets. Despite positioning itself as the fast, grab-and-go coffee option for urban professionals and students, the chain is increasingly competing with bubble tea brands in the low-cost beverage market. Predating Mixue, Luckin opened in New York in June 2025. Utilizing a cashier-less design, Luckin directs customers to its app, allowing for lower costs all while bringing customers into their digital ecosystem. According to its third-quarter 2025 financial results, Luckin has achieved a ~50% YoY net revenue increase along with rapid store expansion and ~40% YoY growth in its active customer base. However, this rapid expansion has also come with profitability trade-offs. Despite strong revenue growth and store expansions, Luckin has experienced periods of margin compression. Rising delivery costs, promotional pricing, and rapid store openings have driven an increase in operating expenses. While the U.S. stores have yet to generate a significant revenue stream for Luckin, these openings serve as a stress test of Luckin’s core value proposition: high quality, low prices, and digital convenience in a structurally higher-cost and competitive market.

Luckin’s early U.S. expansion offers both a forward-looking blueprint and a cautionary signal for Mixue. It demonstrates that Chinese beverage brands should treat the U.S. as a learning laboratory, not an immediate growth market. Luckin’s ability to fund this expansion using China-generated cash highlights the importance of entering North America only once core businesses can subsidize prolonged margin pressure. For Mixue, whose advantage lies in extreme affordability and supply-chain efficiency, Luckin Coffee’s experience implies that success can be found in a disciplined expansion strategy, rather than the high-density franchising model it pursued across China and Southeast Asia. Additionally, Luckin’s focus on platform monetization and partnership stores suggests that Mixue’s success will depend less on store count and more on replicating upstream cost advantages. After testing the market and building customer awareness, Mixue can treat the region as a long-term strategic opportunity, rather than a short-term profit engine.

A Partnership-Led Market Entry Strategy

Taking a page from Luckin’s playbook, Mixue must find a capital-light approach to leverage its core strength of extreme affordability. A grocery-anchored expansion strategy will allow Mixue to attract its target market of cost-conscious Asian consumers while simultaneously using its culture-led brand voice to reframe low cost as value. By opening stores adjacent to international grocery chains, Mixue can tap into routine foot traffic and cultural familiarity to drive high-frequency demand while embedding itself into everyday consumption. This opportunity is emphasized by the fact that international and specialty grocery stores generate approximately US$58.9 billion in annual revenue across 16,000 stores across North America, with Chinese grocery stores leading the ethnic segment, amassing over one-third of market share in 2024. A partnership-led entry through Asian and specialty grocers could serve as a capital-efficient strategy, allowing Mixue to build brand awareness, test localized demand, and refine operations before pursuing broader, standalone expansion for long-term market penetration.

Mixue marked its North American entry back in December 2025 with its first store in Los Angeles. Subsequent openings in New York City, including locations in Manhattan, suggest a strategy of first entering dense urban neighborhoods with established Asian consumer bases rather than pursuing strictly high-profile flagship destinations. This phased approach indicates a measured market-entry strategy focused on community familiarity and operational testing prior to broad regional scaling. Partnering with major Asian grocery chains serves as a natural extension to this measured entry which Mixue is already deploying.

Case Study: Starbucks and Target’s Store-within-a-Store Model

The proposed Mixue–grocery pairing is not a novel play; in fact, the store-within-a-store model is famously exemplified by the long-standing partnership between Starbucks and Target. The Target–Starbucks partnership, which began in 1999, represents one of the most enduring examples of this model in U.S. retail, with over 1,700 Starbucks stores inside of Targets to date. This collaboration is both a cross-selling and customer experience enhancement model: Target benefits from increased shopper dwell time and incremental purchases, while Starbucks gains additional distribution and brand exposure without costly standalone real estate investments. More recently, to garner appeal from younger generations who are switching to mobile ordering, both players have extended this model into omnichannel opportunities. Target’s “Drive Up with Starbucks” service lets customers add Starbucks orders to their curbside pickup through the Target app, further demonstrating the strategic depth of the partnership in the age of digitalized ordering. This long-standing partnership between the two transforms grocery visits into a treat-based occasion.

From Target to T&T

A collaborative partnership between Mixue and T&T Supermarket (T&T) could drive similar returns. In Asia, Mixue’s capital-efficient operating model prioritizes system-wide profitability through franchising and upstream supply chain control rather than heavy investment in corporate-owned retail locations. For their North American expansion, however, Mixue will first need to establish a foothold through corporate-owned stores, as these are better suited for the brand to exert control before expanding into franchising. While prime urban centers such as Manhattan or Hollywood provide initial visibility, they also embody intense competition at high rental costs. It is logical for Mixue, then, to prioritize major Asian grocery stores operating in both dense city centers and secondary suburban markets where standalone beverage stores may face demand uncertainty. T&T’s North American footprint provides this solution, offering access to geographically dispersed consumers in lower-risk and already demand-proven environments. By partnering with T&T, Mixue benefits from access to widespread and high-frequency foot traffic locations; even better, just like Starbucks within Target, Mixue would gain all this without incurring the full costs of a standalone storefront expansion.

T&T, on the other hand, would also achieve their long-standing goal of bringing Asian flavours and brands to North America. T&T currently offers bottled, ready-to-drink coffee and milk tea alongside freshly made specialty drinks through its T&T Kitchen. However, these arrangements lack standardized branding, category variety, and strategic integration. A formalized partnership with Mixue would allow T&T to introduce a made-to-order beverage without investing in equipment development, recipe formulation, staff training, or brand building. Given the saturation of the North American bubble tea market, launching a new concept would require significant marketing efforts to compete with established players. As taste diversification continues to shape North American food retail , partnering with Mixue gives T&T an already loved drink in Asia that enhances the in-store experience, increases dwell time, and reinforces its role as a cultural curator.

Importantly, Mixue operates under a cost-leadership model that aligns closely with T&T’s value-oriented positioning. As CEO Lee has emphasized, T&T’s strategy centers on enhancing its “ability to offer restaurant-quality food at competitive supermarket pricing.” A partnership with Mixue would reinforce this by introducing an affordable, made-to-order beverage product that complements T&T’s commitment to accessible quality. This alignment reduces brand friction and strengthens demographic targeting, particularly among price-sensitive students and immigrant households who frequent T&T locations.

Although T&T may be wary of cannibalization of their existing beverage sales, the partnership could mitigate this risk by emphasizing consumption occasion differentiation. T&T’s bottled drinks serve planned, at-home consumption, whereas Mixue’s made-to-order beverages cater to immediate indulgence. Structured as a licensing or revenue-sharing model, similar to Starbucks within Target, the arrangement would align incentives and ensure that incremental beverage sales translate into shared value creation rather than internal competition.

Moreover, the partnership can even extend beyond retail and into omnichannel integration. Just like how Starbucks and Target have expanded their collaboration through “Drive Up with Starbucks,” T&T’s recent nationwide grocery delivery partnership with Uber Eats creates a similar opportunity for digital cross-brand integration. With T&T already on Uber Eats, a collaboration with Mixue could enable co-branded limited-time beverages, such as seasonal or culturally themed drinks marketed jointly and available only through T&T locations or Uber Eats bundles. This would allow mutual exposure within the app ecosystem: T&T shoppers browsing groceries could be prompted to add a Mixue beverage, while Mixue customers could simultaneously discover T&T grocery offerings. Such digital cross-listings enhance basket sizes while further strengthening brand interdependence, extending the store-within-a-store logic into a platform-based ecosystem where physical co-location and digital distribution reinforce one another.

Adapted thoughtfully to the North American Asian grocery context, this model could serve as a capital-efficient proof of concept for Mixue’s broader expansion strategy. By embedding itself in trusted retail environments, Mixue can transfer brand credibility, reduce standalone risk, and test localized demand before pursuing denser clusters of independent stores. In this way, the store-within-a-store approach becomes not merely a retail tactic, but a strategic bridge between community-based entry and long-term market penetration.

Stirring up a New Market

Mixue is the latest entrant in a growing wave of Asian beverage brands expanding overseas, seeking to capture opportunities in a North American market with significant untapped demand. An anecdotal scan of Reddit reviews for the New York and Los Angeles Mixue stores show that primary drivers for customer visits either arise through an existing brand awareness or curiosity due to low prices and onsite marketing. While Mixue can rely on its brand power to drive initial buzz, it must also distinguish and make a name for itself while selling customers on a core low-cost value proposition. From a marketing standpoint, it can build market entry momentum by making a play with its beloved Snow King mascot to generate Duolingo-esque buzz. From a logistical perspective, a strategic partnership with grocery chains will allow Mixue to quickly target its ideal demographic, while simultaneously driving positive gains for the partner grocery store.

At a time when shoppers are feeling the strain on their wallets and cutting back on luxuries to focus instead on demand-resilient goods, Mixue can step in as an appealing, lower-cost alternative. By blending strategic partnerships that extend and meet their target customers where they already shop, Mixue can brew more than just bubble tea; it can craft a scalable, sustainable North American expansion.

Editor(s): Owen Hu & Asima Hudani

Researcher(s): George Xie & Ava Testa