A March 25, 2026 note from BofA Global Research takes a colder look at Mixue Group just as the market narrative still clings to “China’s biggest freshly made drinks platform.” The timing matters: after a broadly in-line 2025 result and a powerful post-IPO rally, BofA is reiterating an Underperform rating with a HK$353 price objective versus HK$341.80 last price—hardly a screaming short, but a clear warning that the easy growth story is ending and the margin story is beginning.

What makes the report worth reading is not the headline rating. It’s the diagnosis: Mixue’s unit economics have started to crack right when the company is trying to pivot away from the very online delivery subsidies that helped inflate volumes.

The Trigger: Delivery Subsidies Fade, Sales Slow

BofA says the inflection became visible in late 2025, when major online platforms reduced delivery subsidy intensity:

“At the earnings call, Mixue confirmed slowing sales and weakening store-level unit economics (UE) since online platforms scaled back delivery subsidy intensity in 4Q25.”

This matters because Mixue is not a typical “same-store sales” consumer story; its franchise-heavy model is extremely sensitive to store-level economics. When subsidies disappear, the true demand curve shows up. BofA adds that its own channel checks line up:

“Channel checks… suggest largely flattish revenue per store in 4Q25, vs. double-digit growth in 2Q/3Q25.”

That’s the uncomfortable part for investors who priced Mixue like a perpetual compounding machine: store productivity is no longer reliably rising. And once productivity flattens, aggressive expansion stops looking like growth and starts looking like dilution.

2026: “Low Visibility,” Not Necessarily an Earnings Collapse

BofA’s framing is unusually blunt: 2026 is a “transitional year with low visibility.” The firm is not forecasting an outright EPS decline, but it is flagging that the path to upside is getting narrower:

“It also foresees continued pressure on unit sales and profitability in 2026.”

Despite that, BofA “largely maintain[s]” estimates. For context, it models 2026E revenue of RMB 37,835 million (about US$5.3 billion) and 2026E adjusted net income of RMB 6,343 million, with EPS of RMB 16.71. The issue isn’t the base case; it’s that management itself is guiding for weaker margin structure.

Margins: The Company Is Now Selling a Lower Ceiling

Mixue’s 2025 gross margin was 31.1%, down from 32.5% in 2024. BofA says management is preparing the market for more compression:

“Management also guides for gross margin and net margin to trend down in 2026, and view 30% GP margin as more sustainable (vs. 31.1% in 2025).”

BofA’s model reflects that reset: it forecasts 2026E gross margin of 30.1% and net margin of 16.8% (versus 17.5% in 2025). That may sound modest, but for a consumer franchise network where marginal stores are opened on thin economics, small margin moves can trigger large behavioral changes—franchisees may halt expansion, demand better terms, or both.

Strategy Pivot: “Quality Over Expansion” (Because It Has To)

BofA highlights management’s three priorities for 2026: product/supply-chain upgrades, digitalization, and branding—essentially, a pivot from growth-by-footprint to growth-by-control.

“Mixue will focus on product and supply-chain upgrade & innovation… digitalization (to reduce reliance on 3rd-party online platforms and enhance efficiency) and branding.”

The most telling line is the expansion guidance. After net store openings of >13,000 in 2025, BofA says:

“Mixue plans to moderate expansion in 2026 to prioritize store level UE.”

This is what a mature network looks like. Protecting unit economics implicitly admits expansion is no longer automatically value-accretive.

Overseas, Coffee, Beer: More Moving Parts, Not More Certainty

BofA also points to complexity outside the core tea network. Southeast Asia is described as still in “turnaround,” with a target to return to net store growth in 2026 after net closures in 2025. Coffee and beer are framed as discipline problems, not growth engines:

“Its standalone coffee brand, Lucky Cup, will also prioritize sales per store over expansion… As for its newly acquired beer chain, the focus in 2026 will be on balancing scale expansion with quality improvement.”

In other words: more execution risk, not less.

Governance and the Lockup Overhang

Add a leadership shift—“its co-founder has relinquished his role as CEO and has been appointed Co-Chair”—and BofA’s “transitional” label starts to read like a euphemism for internal restructuring.

Then comes the mechanical risk markets often ignore:

“Lockup expiry in early March… pre-IPO private equity investors hold 9.5%, vs. a public float of 5.2% at its IPO.”

If the stock has been trading on scarcity and momentum, incremental supply can create pressure even if fundamentals are steady.

Bottom Line

BofA’s conclusion is straightforward: it still calls Mixue “China’s largest and best freshly-made drinks company,” but argues valuation has run ahead of near-term reality. In 2026, the company is effectively asking investors to wait while it rebuilds unit economics in a less-subsidized world. The market can accept that—just not at any price.

Related Coverage:

Mixue Aggressively Expands US Footprint with Ultra-Low Pricing and Localized Menus

Mixue Opens First US Store in Los Angeles as Global Expansion Accelerates