In a medium saucepan, combine 2 cups of whole milk and 1 cup of heavy cream. Set over medium-high heat and stir occasionally until the mixture begins to boil gently, about 5 minutes.

Once boiling, reduce the heat to medium-low. Stir in ⅓ cup of sugar and 1 cup of white chocolate chips. Whisk continuously for about 2-3 minutes until the chocolate is fully melted and the mixture is smooth.

Remove the saucepan from heat and add 1 teaspoon of vanilla extract and 1 tablespoon of red food coloring. Stir until the color is evenly incorporated.

Ladle the hot chocolate into mugs and top with whipped cream, marshmallows, or crushed peppermints as desired.