With the national expansion of bulk snack stores, domestic snack venture companies continue to emerge. From January to May 2024, there were more than 8100 newly registered related companies. In terms of regional distribution, hunan ranks first with more than 14,000 companies. In terms of establishment time, 50% were established within 1-5 years, and 21.2% were established within 1 year.
On June 18th, Cailian Press (Reporter Xu Cihao) reported: "How come so many snack stores suddenly opened in our small town?" On social platforms, many users from third- and fourth-tier cities have had similar discussions. Snack brands such as busy snacks, Zhao Yiming snacks, Haoxiangni, Three Squirrels, and my wife have made significant progress, and many franchisees have entered the race.
Recently, the merged Busy Snacks and Zhao Yiming Snacks announced that the total number of stores nationwide has exceeded 10,000. At the same time, the snacks have merged to form the Busy Snacks Group, which officially renamed as Mingming Busy Group. With the national expansion of bulk snack stores, domestic snack startups have emerged continuously, which is also bullish for supply chain companies. Snack suppliers such as "Little Cat Busy", chocolate retailers such as "Zebra and Chocolate," and processed goose products such as "Only Goose Pickled Slices" have all received investment of thousands of yuan.
Currently, including Haoxiangni and Youming Snacks, they are planning their respective "ten thousand stores" plan. With the bulk snack channel becoming so hot, is it still a good business for franchisees to enter the snack bulk industry now?
Snack Brands Impacting on "Ten Thousand Stores" Plan.
According to Tianyancha data, as of now, there are more than 103,000 existing enterprises related to snacks. Among them, more than 8,100 new registered related enterprises from January to May 2024; in terms of regional distribution, Hunan ranked first with more than 14,000, followed by Guangdong, which has more than 12,000, and Shandong, which has more than 9,200. In terms of time of establishment, those established within 1 to 5 years account for 50%, and those established within 1 year account for 21.2%.
Taking Huangshi County in Hubei Province as an example, Cailian Press reporters found 25 Busy snack stores within a 40-kilometer range on the map. When visiting a village in the county, Cailian Press reporters noticed that there were two bulk snack stores within 500 meters on one street, namely Busy Snacks and Sunday Snacks.
"On normal business days, the turnover is around 10,000 to 15,000 yuan. The specific business situation varies depending on the location and size of the store. All Busy snack stores need a 6-12 month incubation period from opening to fully entering the market. This is a necessary phase for new stores to penetrate the surrounding consumer groups," answered a customer service representative in charge of franchising for Busy snacks.
According to He Yu of Black Ant Capital, whether it can become a sinking chain brand with ten thousand stores depends on several factors. Firstly, the product category, the audience of the product should be wide and varied, and the consumption frequency should be high enough. Secondly, the supply chain, including standardized forms of logistics, equipment, and products, requires high economies of scale, and can provide value for large-scale businesses. Thirdly, the store model should be suitable for franchisees, have the digital foundation as an expansion support, be simple and easy to operate, and enable franchisees to quickly start. Lastly, the return cycle for franchisees should allow them to make profits. For the current stage, everyone hopes that the payback period can be controlled within 12-18 months. The last point is the result of the first three points.
Prices for some popular products in Busy snack stores are lower than those in surrounding supermarkets. For example, Yi Bao mineral water is 1.2 yuan per bottle, while it is sold for 1.5 yuan per bottle at the nearby supermarket, while bottled cola is 1.8 yuan per bottle, while the supermarket sells it for 2.5 yuan.
Cailian Press reporters asked Busy snacks concerning franchising consultations. Their customer service revealed that it would cost about 550,000 yuan for someone to invest in Busy Snacks, excluding store rentals and transfer fees, which included a franchise fee of 50,000 yuan, a deposit of 30,000 yuan, a 140,000 yuan uniformly designed decoration cost, shelf, cashier and other equipment of 130,000 yuan, and a pre-distribution cost of about 200,000 yuan.
"On normal business days, the turnover is around 10,000 to 15,000 yuan. The specific business situation varies depending on the location and size of the store. All Busy snack stores need a 6-12 month incubation period from opening to fully entering the market. This is a necessary phase for new stores to penetrate the surrounding consumer groups," answered a customer service representative in charge of franchising for Busy snacks.
In the eyes of He Yu from Black Ant Capital, there are two main reasons why the Busy snack collection store can quickly exceed ten thousand stores: firstly, Busy snack collection stores have achieved more efficient distribution methods, and the circulation link has been greatly reduced; secondly, the standardization degree of Busy snack collection stores is easy to replicate. It does not rely too much on the franchisee's ability, only requires strict location selection, and has relatively low requirements for business capabilities. Therefore, the secondary store rate (number of stores opened by franchisees is more than two on average) of Busy snack collection stores is relatively high, which is relatively rare among rapidly growing brands.
As Mingming Busy Group has already reached the "ten thousand stores" target, Haoxiangni, as an important carrier of Wan Chen Group's snack retail sector, plans to exceed ten thousand stores in 2025. According to their official website, as of May 2024, Wan Chen Group's snack retail sector has exceeded a total of 6,000 stores nationwide. In addition, it was disclosed that there are currently about 500 new stores opened each month, with a successful opening rate of 92%.
Furthermore, last year's startup venture Youming Snacks, which was invested by Shengwang Fund and Jiayu Capital under New Hope's grassroots knowledge base, is also rapidly expanding. According to their official website, this bulk snack store, which established in 2019, currently has over 2,500 stores nationwide, and plans to exceed 16,000 stores by 2026.
Even though the snack channel is hot, franchising still needs to be cautious.
"Without a good location for foot traffic, don't hastily join a snack shop." A Caixin reporter talked with the staff of Busy Snacks about joining the company. According to the staff, the current Busy Snacks is invested by four bosses with a total of 600,000 yuan, as for business aspects, the Dragon Boat Festival and the Children's Day foot traffic are still good, can achieve five to six thousand yuan, usually business is average.
"Currently, we have fixed costs of 3 stock clerks, 2 cashiers, rent, and utilities, which costs more than 200,000 yuan a year," said the staff of Busy Snacks to reporters.
"Many people still don't know us after just opening, so business might be better after six months," said the above-mentioned employee to reporters. After all, things like water, milk, and drinks here are still cheaper than supermarkets, although they don't make money, they'll bring in some traffic. The overall profit margin is about 20%."
"As long as the snack product prices are low, I think it doesn't matter which brand to join," said snack franchisee Xiao Longxing (pseudonym) to reporters. Last year, he saw that the snack track was very popular, and he chose Sunday Snacks because he didn't charge a fee or deposit.
"When it opened in October last year, it did pretty good thanks to promotions, and it was the only snack store on this street," said Xiao Longxing. With the opening of Busy Snacks across the street in March this year, business has become increasingly difficult. On weekdays, the sales in his store are only about one or two hundred yuan, which can't cover the rent and utilities.
Previously, the business manager promised that the snack profit margin could reach 30% to 40%, but after Xiao Longxing opened his store, he found that there was almost no profit in the big-name snacks in the store.
Xiao Longxing told reporters that these well-known products basically don't make money, and they are mainly used for flow. The biscuits and other snacks of white-label brands have good profit margins.
(Picture: Sunday Snacks in a village in Hubei is for sale)
"The customers here buy snacks worth 60-70 yuan at a time, maybe once or twice a month," said Xiao Longxing. There aren't many people who come in to buy snacks in the village, only some young parents will buy some snacks for their children when they return home during the holidays. Snack businesses require a large amount of inventory, and there are many types of products, so the purchase cost of joining one’s own brand is very high. However, the goods that sell well and have high turnover are actually very limited, so the overall profit is about 10%.
According to Xiao Longxing, he has estimated a loss of over 100,000 yuan from opening to now. In April of this year, he tried to transfer the store, but no one has taken it over yet.
In fact, Xiao Longxing's situation is not unique. Caixin reporters have seen many complaints from snack franchisees on social platforms such as Little Red Book, such as "Opened 110 square meters for 3 months and lost 350,000 yuan" "Snack shop opened for three months, all snacks sold at low prices, and went bankrupt"....
A franchisee of a squirrel partner brand snack on Little Red Book told reporters that she opened her store on May 28th and now plans to sell it.
"Daily sales are okay, about five or six thousand yuan, and the profit for a month is only seven to eight thousand yuan, because I am watching the store myself. This doesn't include labor costs. As a couple store, it's okay, but hiring one or two people won't make any money," said the above-mentioned squirrel partner brand snack franchisee.
In fact, the snack market is not an easy business. Taking volume-sale snack concept stock, Wan Cheng Group, as an example, its full-year volume-sale snack business revenue was about 8.759 billion yuan in 2023, achieving a net loss of 82.93 million yuan attributable to shareholders, a year-on-year decrease of 273.72%. This is also the first time Wan Cheng Group has suffered losses in its ten-year history.
In addition, Wan Cheng's 2023 financial report also disclosed that the gross profit margin of last year's volume-sale snack business was 9.52%, a decrease of 4.88 percentage points from the previous year.
In the view of Zhu Danpeng, a Chinese food industry analyst, although the development trend of snack stores is strong, blind expansion may cause the industry to fall into an increasingly vicious circle, and price wars will intensify. Instead, there isn't much of a good boost for improving the industrial structure of the snack industry, improving product quality, upgrading the service system, and enhancing customer stickiness.
"The fundamental logic of business is to let franchisees make money," said Zhu Danpeng to reporters.