Mixue Group: Lucky Coffee's comeback, is Snow King bottoming out?

On March 24, Beijing time, Mixue Group (2097.HK) released its H2 2025 performance. Overall, Mixue’s performance in the second half of the year was average, although revenue exceeded market expectations, the final core operating profit slightly fell short of market expectations due to a decline in gross margin and an increase in management expenses. $Mixue Group (02097.HK)
The key points are as follows:
1. Revenue maintains rapid growth. In H2 2025, Mixue achieved revenue of 18.7 billion yuan, a year-on-year increase of 32%. Although the weakened takeaway subsidies in the second half of the year had some impact on same-store growth, the overall growth of the company was still not low, with a slight decline compared to the growth rate in the first half of the year (39% growth in the first half).
2. Luckin Coffee surges against the trend. In terms of store openings, the second half of the year saw a net increase of 7,075 stores in China, accelerating compared to the first half. Among them, after strategic adjustments, Luckin Coffee achieved “lightning-like” expansion in the second half, with research information indicating that it contributed at least 4,000 new stores. Looking at the regions of the new stores, the growth mainly relied on second-tier, third-tier, and lower-tier sinking markets.

Overseas, 266 stores were reduced compared to the first half of the year. Dolphin Jun speculates that this is mainly because Mixue was still cleaning up poorly performing stores in Southeast Asia with overlapping locations and compliance issues during the second half of the year. In addition, in December, Mixue officially entered the North American market by opening stores simultaneously on the east and west coasts in Los Angeles and New York.
3. Same-store revenue growth slows slightly. Although the company did not disclose specific operational data for its stores, combined with research information, due to the reduced subsidy efforts in the second half of the year, Dolphin Jun estimates that Mixue’s same-store revenue growth in the second half was in the low single digits, mainly relying on the increase in cup volume, with the price per cup expected to remain stable or decline slightly.
4. Gross margin continues to decline. From a cost perspective, the prices of raw materials such as lemons and coffee beans unexpectedly rose in the second half of the year due to extreme weather conditions. On the other hand, the increase in the proportion of takeaway channels resulted in a slight overall decline in gross margin of 2.2 percentage points, reaching 30.7%.
5. Profit slightly below market expectations. In terms of sales expenses, benefiting from the maturity of the Snow King IP, low-cost social traffic replaced traditional advertising, leading to a sales expense ratio decline of 0.7 percentage points to 6%. Management expenses were temporarily elevated due to one-time integration costs incurred from the acquisition of “Fresh Beer Fulu Family” in October, resulting in Mixue achieving a net profit of 3.21 billion yuan, a year-on-year increase of 25%, slightly below market expectations.
6. Overview of financial information:
Dolphin Jun’s overall view:
Overall, in the second half of the year, Mixue’s main brand faced a slowdown in store openings and a decline in same-store growth, relying on the explosive store openings of Luckin Coffee’s “second curve” to still maintain a relatively high growth rate in revenue.
First, for Mixue’s main brand, according to Dolphin Jun’s calculations, excluding Luckin Coffee, the actual growth of the main brand’s store openings was only about 20%, which inevitably led to a slowdown, as expected. However, the same-store growth of around 2%-3% is not performing well compared to the industry’s 5%-7% growth.
Considering that Mixue’s online revenue accounts for about 30%, lower than other tea brands, the impact of the weakened takeaway subsidies on Mixue’s same-store performance was relatively small. In Dolphin Jun’s view, the real driving force behind this is that Mixue’s product offerings lagged during the winter:

For Mixue, which relies on quickly serving beverages from stores and places great importance on turnover, the business model heavily depends on a standardized, long shelf-life, and easily deliverable product system. However, in winter, consumer habits tend to favor freshly brewed, hot beverages, which is not friendly for Mixue.
Now let’s talk about the truly unexpected Luckin Coffee. In the second half of the year, Luckin Coffee not only achieved its strategic goal of “10,000 store attack,” becoming the third coffee brand in China to enter the “10,000 store club” after Luckin and Kudi, but also achieved a strategic upgrade from sinking markets to first- and second-tier cities. In Dolphin Jun’s view, aside from the beta of the ready-to-drink coffee industry, there are two major supporting factors:

1. In response to the previous weak product capabilities, Luckin Coffee restructured its 400-person marketing team to directly connect with the R&D department and shared the R&D team with Mixue’s main brand, achieving rapid conversion from demand to product. Furthermore, in terms of new product development ideas, Luckin Coffee avoided the milk coffee that Luckin and Kudi focused on and differentiated itself by entering the fruit coffee market, filling the gap in the affordable fruit coffee market and attracting a large number of consumers.
2. Additionally, regarding the franchise policy, Mixue increased its support for Luckin Coffee in the second half of the year, shifting from universal subsidies to precise incentives, covering both new and old franchisees, as well as first-tier cities and key regions.
   The following is a detailed interpretation of the financial report:
   1. Revenue slightly exceeds market expectations
   In H2 2025, Mixue achieved revenue of 18.7 billion yuan, a year-on-year increase of 32%. Although the weakened takeaway subsidies in the second half of the year had some impact on same-store growth, the overall growth of the company was still not low, with a slight decline compared to the growth rate in the first half of the year (39% growth in the first half).
   From the revenue structure, the proportion of franchise-related services declined by 0.4 percentage points to 2.2%. Dolphin Jun speculates that this is mainly due to increased subsidies in the second half of the year to attract Luckin Coffee franchisees.
   2. Luckin Coffee drives “surge” in store openings
   In terms of store openings, the second half of the year saw a net increase of 7,075 stores in China, accelerating compared to the first half. Among them, after strategic adjustments, Luckin Coffee achieved “lightning-like” expansion in the second half, with research information indicating that it contributed at least 4,000 new stores. Looking at the regions of the new stores, the growth mainly relied on second-tier, third-tier, and lower-tier sinking markets.
   Combining the previous analysis, Dolphin Jun estimates that the main brand opened 3,000 new stores in the second half of the year, a year-on-year increase of 20%, which is significantly slower compared to previous years. In fact, Dolphin Jun has already analyzed in Mixue Ice City: Luckin Coffee “unlucky”, will Mixue bet on “the fields”? that the high-speed expansion dividend period in high-tier cities has come to an end, and the future main battlefield will be in sinking markets, hence the slowdown in the main brand’s store openings is within expectations.
   Additionally, it is worth noting that in October, Mixue invested nearly 300 million yuan to acquire 53% of Fulu Family, formally entering the fresh beer business. By the end of last year, Fulu Family had around 1,800 stores.
   From the underlying intention, Mixue aims to create a 24-hour consumption closed loop of “morning coffee (Luckin Coffee) - afternoon tea (Mixue Ice City) - evening beer (Fresh Beer Fulu Family)” and further expand its customer base through scene extensions.
   However, in Dolphin Jun’s view, fresh beer contains active yeast, and the fermentation process is greatly affected by temperature, time, and environment, which means that the fresh beer supply chain cannot simply reuse Mixue’s existing tea and coffee systems, and it will require significant investment to build new cold chain and production capabilities. Therefore, while the vision is beautiful, Dolphin Jun believes that the specific operations cannot be too optimistic, and continuous tracking will be needed.
   Overseas, 266 stores were reduced compared to the first half of the year. Dolphin Jun speculates that this is mainly because Mixue was still cleaning up poorly performing stores in Southeast Asia (Indonesia, Vietnam) with overlapping locations and compliance issues during the second half of the year.
   In addition, in December, Mixue officially entered the North American market by opening stores simultaneously on the east and west coasts in Los Angeles and New York.
   3. Cup volume is the core driver of same-store revenue growth
   Although the company did not disclose specific operational data for its stores, combined with research information, due to the reduced subsidy efforts in the second half of the year, Dolphin Jun estimates that Mixue’s same-store revenue growth in the second half was in the low single digits, mainly relying on the increase in cup volume, with the price per cup expected to remain stable or decline slightly.
   4. Gross margin continues to decline
   On the one hand, from the perspective of raw materials, the main lemon production areas in Sichuan Anyue and Yunnan have continuously encountered extreme weather, including late spring cold, spring frost, and summer drought, leading to a significant decrease in the fruiting rate, with a national production drop of 30%–50% year-on-year; the five major global lemon production areas (the U.S., South Africa, Turkey, etc.) were also affected, further pushing up domestic prices, with the price of lemons in Sichuan Anyue doubling compared to the same period in 2024.

On the other hand, from the channel structure, the continuous growth of high proportion, low margin takeaway orders has also lowered the overall gross margin of the group, resulting in a slight overall decline in gross margin of 2.2 percentage points, reaching 30.7%.
5. Profit slightly below market expectations
In terms of sales expenses, benefiting from the maturity of the Snow King IP, low-cost social traffic replaced traditional advertising, leading to a sales expense ratio decline of 0.7 percentage points to 6%. Management expenses were temporarily elevated due to one-time integration costs incurred from the acquisition of “Fresh Beer Fulu Family” in October, resulting in Mixue achieving a net profit of 3.21 billion yuan, a year-on-year increase of 25%, slightly below market expectations.