TLDR: Able to generate sales and retain customers in a downturn mainly due to its low price point and franchise model as well as it's supply chain.
Mixue has rapid expansion and several competitive advantages in Asia. That can be attributed to a combination of strategic factors, primarily centered around its:
* Low-Price Strategy:
Mixue's most significant competitive edge is its remarkably affordable pricing. This strategy appeals to a broad consumer base, especially in price-sensitive markets within Asia. By focusing on high-volume sales and efficient supply chain management, Mixue can maintain low prices without compromising product quality.
* Targeting Secondary Markets:
Initially, Mixue achieved significant growth by focusing on third and fourth-tier cities in China, where competition was less intense. This strategy allowed them to establish a strong foothold before expanding into more competitive urban areas. This strategy of moving into areas that are less saturated with competitors, has been very successful in its asian expansion.
* Effective Franchise Model:
Mixue's franchise model has facilitated its rapid expansion. By empowering franchisees with standardized operating procedures and supply chain support, Mixue has been able to scale its operations quickly.
* Strong Brand Recognition and Marketing:
Mixue has cultivated a fun and approachable brand image, often utilizing catchy jingles and memorable mascots. It also has its own animation. This has contributed to strong brand recognition, particularly among younger consumers.
* Supply Chain Control:
Mixue has control over much of its supply chain, which allows them to keep costs down, and ensure consistent product quality. One example is its lemonade business where they control the quality of lemons produced through a selective method of farming and having good logistics to transport said lemons.
In conclusion, Mixue's success stems from its ability to provide high-quality, affordable treats to a wide audience, coupled with a well-executed expansion strategy. However, more importantly, it's PE multiple may expand due to a possible bull market in China and in Asia. The only bear case is that they might lose their following if consumer tastes change. However, that is unlikely as people tend to be creatures of habit.
How well do narratives help inform your perspective?