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Inside China’s Billion Dollar Brands That Just Opened in America
The Rise of Chinese Fast Food Chains: Can They Overtake Global Giants?
Ark
June 03, 2025
Introduction
In a surprising turn of events, McDonald’s is no longer the world’s largest fast food chain by the number of locations. That title now belongs to a Chinese ice cream and tea chain called Mixue, with over 45,000 stores worldwide. Alongside Mixue, other Chinese chains like Luckin Coffee and Chagee are making waves, expanding rapidly and even entering the U.S. market. These brands are challenging global giants like Starbucks with innovative strategies, digital-first approaches, and unbeatable prices. This article explores the rise of these lesser-known chains, their unique approaches, and their potential to reshape the global fast food and beverage landscape.
Luckin Coffee: The Starbucks Challenger
Walking into a bustling mall in China, you might spot a McDonald’s or a Subway, but it’s Luckin Coffee that’s stealing the spotlight. Often dubbed the “Starbucks killer,” Luckin is the world’s third-largest coffee chain, trailing only Starbucks and Dunkin’. With a focus on speed, convenience, and affordability, Luckin is redefining the coffee experience in China and beyond.
A Rocky Start
Luckin burst onto the scene in 2019 with a $645 million IPO on NASDAQ, positioning itself as China’s answer to Starbucks. Its digital-first model, where most orders are placed via mobile apps, made it a hit among tech-savvy Chinese consumers. However, in 2020, the company faced a major scandal when it was revealed that Luckin had fabricated over $300 million in sales. The fallout was swift: the stock plummeted, the CEO was fired, and Luckin was delisted from NASDAQ. Many thought this was the end for the coffee chain.
A Remarkable Comeback
Against all odds, Luckin restructured and thrived in China. With a streamlined menu—70% coffee, 20-30% teas and snacks—and a focus on efficiency, Luckin has become a staple in Chinese cities. Its stores vary from grab-and-go counters with no seating to larger locations, but all emphasize speed and low prices. For example, two drinks at Luckin can cost as little as 35 yuan (about $5), significantly cheaper than Starbucks’ $4-$7 per coffee in Shanghai.
Luckin’s digital ecosystem is a key differentiator. Customers order and pay via apps like Alipay, often bypassing cashiers entirely. In one instance, a foreign visitor paid a barista directly via Alipay, highlighting the chain’s reliance on mobile payments. This digital efficiency, coupled with innovations like designated pickup lanes for mobile orders, allows Luckin to handle high volumes quietly and efficiently.
U.S. Expansion
In a bold move, Luckin opened its first U.S. location in New York, signaling its ambition to take on Starbucks on its home turf. While Starbucks emphasizes a premium, sit-down experience, Luckin targets consumers seeking quick, affordable coffee. The chain’s coconut latte, a popular item in China, exemplifies its knack for trendy, localized flavors. However, its small menu and takeout-focused model contrast sharply with Starbucks’ lounging areas and extensive offerings, positioning the two brands in different market segments.
Chagee: Bringing Tea Culture to the World
Tea culture is booming in China, and Chagee, a rapidly growing tea chain, is at the forefront. Founded in 2017, Chagee now boasts over 6,500 locations, primarily in China but also in Southeast Asia. The chain recently listed its stock on NASDAQ and opened its first U.S. location in Los Angeles, aiming to introduce tea culture to American consumers.
A Familiar Yet Unique Brand
Chagee’s branding draws parallels to Starbucks, with a logo featuring a woman in a red circle, reminiscent of Starbucks’ green mermaid. However, Chagee is all about tea—no coffee here. Its menu offers 15-20 options, including milk teas, fruit teas, and fresh teas, with milk tea being the crowd favorite. Prices are competitive, with a large milk tea costing around $2.75.
In China, Chagee’s stores are quieter than competitors like Hey Tea, where long waits and packed seating are common. Many customers opt for mobile orders and delivery, with delivery workers frequently picking up large orders. This suggests a business model geared toward convenience and takeout, similar to Luckin.
Challenges in the U.S.
Chagee’s U.S. debut in Los Angeles generated buzz, but the customer base was predominantly Asian, raising questions about its broader appeal. In the U.S., tea is often seen as a wellness drink or coffee alternative, not a cultural staple. However, the growing popularity of matcha and tea lattes offers hope. Chagee’s tea latte, with its foamed milk and smooth 208 mg caffeine kick, impressed even non-tea drinkers. Still, for Chagee to succeed, it must attract a diverse customer base beyond Asian Americans.
Investor confidence is another hurdle. After Luckin’s accounting scandal, some skepticism surrounds Chinese consumer companies. Chagee’s ability to maintain transparency and build trust will be critical to its stock performance and U.S. expansion.
Mixue: The New King of Fast Food
The biggest surprise in the fast food world is Mixue, a Chinese ice cream and tea chain that has surpassed McDonald’s and Starbucks with over 45,000 stores worldwide. Founded in China, Mixue operates 95% of its locations domestically but is expanding rapidly in markets like Indonesia and Vietnam.
Unbeatable Prices
Mixue’s defining feature is its rock-bottom prices. Bubble teas and ice cream cones start at just 15 cents, with most items under 10 yuan ($1.30). In Shanghai, where a Starbucks coffee costs $4-$7, Mixue’s $1.60 combo of a drink and ice cream cone is a game-changer. This affordability stems from Mixue’s tightly controlled supply chain, which sells ingredients and equipment directly to franchises, ensuring consistent quality without high costs.
A Digital-First, Local Approach
Like Luckin, Mixue is fully digital, with customers placing orders via apps and picking up at counters. Its menu is exclusively in Chinese, reflecting a focus on local markets rather than Western appeal. The chain’s mascot, the Snow King, has become a beloved symbol among younger consumers, boosting brand recognition.
Mixue’s recent IPO in Hong Kong valued the company at over $23 billion, and it has ambitious plans to enter the U.S. market. However, its hyper-localized approach may need adaptation to resonate with American consumers accustomed to Western-style fast food.
Can These Chains Go Global?
Luckin, Chagee, and Mixue represent a new wave of Chinese fast food chains challenging the dominance of Western giants. Their strategies—digital efficiency, low prices, and localized offerings—have fueled explosive growth in China and Southeast Asia. But can they replicate this success globally?
Opportunities
Affordability: Mixue’s 15-cent bubble teas and Luckin’s $2.50 drinks appeal to price-sensitive consumers, especially in markets where Starbucks’ prices feel out of reach.
Digital Innovation: The seamless integration of mobile apps and QR code payments gives these chains an edge in efficiency and scalability.
Cultural Trends: The rising popularity of tea-based drinks like matcha in the U.S. could pave the way for Chagee, while Luckin’s trendy flavors resonate with younger audiences.
Challenges
Brand Recognition: Unlike Starbucks or McDonald’s, these brands are virtually unknown outside Asia. Building awareness will require significant marketing investment.
Cultural Fit: Tea chains like Chagee face an uphill battle in coffee-dominated markets like the U.S., where tea is not a daily staple.
Trust Issues: Luckin’s scandal has left some investors wary of Chinese consumer brands, which could impact funding and expansion.
Conclusion
The rise of Luckin Coffee, Chagee, and Mixue signals a shift in the global fast food landscape. These chains are not just competing with Western giants—they’re redefining what fast food and beverage chains can be. Luckin’s digital-first coffee shops, Chagee’s tea-focused innovation, and Mixue’s unbeatable prices show that Chinese brands are ready to take on the world. Whether they can overtake Starbucks or McDonald’s remains uncertain, but their rapid growth and bold U.S. expansions suggest they’re here to stay. As consumer preferences evolve, these chains may just change the way we think about fast food. What do you think—can they go global? Let us know in the comments!
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