Text | City Phenomenon, author | Gu Er, editor | Yang Zhou
“Last year, the entire industry was suffocated. This year, everyone is struggling to stay at the poker table,” a person familiar with the matter told “Market Trends.”
On the one hand, there is the sense of suffocation brought about by store encryption. Last year, many brands began to abandon the location protection policy in actual implementation, because if you don’t open it, competitors will open it. As long as there is space, stores can be encrypted unlimitedly.
One practitioner revealed: “Nowadays, almost no one looks at the protective distance. They all look at the turnover. 600,000 is a threshold.As long as there is a store near the location you are looking at that can make 600,000 yuan in sales per month, then you can open another one, and everyone can still make some money after diversion. “
On the other hand, price wars are becoming more and more suffocating. In the past, opening discounts ranged from 8.2% off to 6.6% off and 4.8% off. Now the basic discounts for opening are 66% off and 48% off. There is no step-by-step discount intensity, it is all one stick to the end.
Under the suffocating pace of full-scale firepower, a franchisee in Shandong revealed to “City News”: “In the off-season in the second half of last year, Zhao Yiming’s store performance basically fell by 20-30%, and now it has not recovered to the level of two years ago during the New Year Festival peak season. business level.”
As a beneficiary of capital integration, Zhao Yiming merged with Snack Busy two years ago to form Mingming Busy. The latter quickly reached the milestone of 10,000 stores half a year later, and there were many reports of preparations for listing, but they were officially denied.
At the moment, Mingming is very busy as to when it will be listed on the market, it has even begun to become a matter of concern to the entire industry.Some small and medium-sized brand franchisees believe: “Mingming is very busy going public so that it can solve the suffocating competitive pressure in the current industry.”
After all, no matter how ferocious the firepower is, it is always for a result. No matter how difficult the battle is, there will always be an end. Mingming’s busy listing may be becoming the outcome that the mass-selling snack industry wants to reach in 2025.
01 I won’t be able to survive if I don’t go public again.
“When will they (Mingming is very busy) go on the market? If they don’t go on the market, we won’t be able to survive.”
A snack terminal franchisee in Jiangsu said: “I heard that they will be preparing to go public this year. After the listing, the speed of staking out land should be slower. Otherwise, the competition for the first store will be like this, and the industry will be too miserable. “
This should be the schedule that many small and medium-sized brand franchisees want to know this year. Soochow Securities data shows that market concentration will further increase in 2024. Among the top ten brands, the market share of the two leading brands increased from 59% in March last year to 70% in November.
This means that although the entire mass-selling snack industry is still in the stage of accelerating expansion, the entire industry has begun to show a trend of differentiation. The two largest Wandian groups in the first echelon have opened up a significant gap with the second and third echelons.
Due to the position difference, the price war becomes more and more fierce. Take Zhao Yiming of Mingming Busy Group as an example. According to the announcement when BESTORE sold its equity, Zhao Yiming’s net interest rate was 3.2% and 2.7% in the first half of 2022-2023, showing a continuous downward trend.
Lower discount prices and more stores bring greater market share. With a strategy of focusing only on growth and not on profits, two major Wandian brands were developed in just two years.
Under the shadow of the two superpowers, for many small and medium-sized brand operators at the tail end, exiting with less losses is the best outcome.
However, there are also small and medium-sized franchisees who want to endure it for a while longer. In Zhang Hao’s view, their momentum is unsustainable.After surviving this wave of radical expansion before the listing, there may be an internal reshuffle of franchisees after the listing, and at that time, it may actually have a chance of survival.
This kind of speculative luck comes from the radical play style that he doesn’t understand.
“Did you know? My store has been open at the intersection for three years. This year, Zhao Yiming first opened one, then Haoxianglai opened another one opposite it, and then Zhao Yiming opened another store opposite Haoxianglai.”
He said angrily: “If we can’t do business with each other, it depends on who can defeat the opponent first. If they go public successfully this year, the pressure on franchisees to expand stores will be reduced, and the competitive pressure I face will not be so great.”
It is not easy to wait for the listing with a fluke mentality. A market source revealed: “The listing does not mean the end. Mingming has been very busy in the past year and has been making organizational adjustments internally, but I have not heard of a specific timetable.”
However, it is worth noting that after New Year’s Day this year, Mingming was very busy and news changes in the capital market began to become more frequent.
First, on January 3, the merger of Mingming Busy’s predecessor, Snacks Busy, and Zhao Yiming ushered in the regulatory implementation. The Municipal Supervision Bureau released information saying that it did not constitute a market monopoly, but it failed to declare a fine in accordance with the law and was fined 1.75 million.
Then some media discovered that Mingming was very busy and had information about shareholder changes at the end of December last year. Among them, Hunan Yanjin Puzi Holdings Co., Ltd. withdrew from its shareholders and was replaced by “Hunan Xiaomang Enterprise Management Co., Ltd.”
A consultant familiar with the listing process said: “Some market sensitivities before companies go public need to be properly handled. The announcement of these news also means that Mingming Busy is taking a step further in terms of compliance.”
02 Strike into the opponent’s heartland
It is not only the franchisees of the tail brands who want to survive the darkness before Mingming Busy’s listing and see the end of the industry. Even for leading brands, facing Zhao Yiming’s style of play is often a struggle.
“As long as there is a Haoxianlai place, within half a month, Zhao Yiming will come over and start decoration.” A Haoxianlai franchisee in Shandong complained: “Their headquarters provides subsidies, and they start a price war when they open, and it depends on who can survive first.” Don’t live.”
Shandong is Haoxianlai’s advantageous area. According to data from Kaiyuan Securities, it will be open until October 2024. Haoxianglai has 1,100 stores in Shandong, while Zhao Yiming has only 250.
Regarding the price war launched by Zhao Yiming in the brand hinterland, Haoxianglai seems not to be prepared to take the initiative. Some franchisees revealed that they asked for subsidy policies from regional supervisors, but currently the headquarters has not provided a more favorable price subsidy.
It is worth noting that this may be directly related to the pursuit of profits by the Wanchen Department to which Haoxianglai belongs.
Financial report data shows that in the first half of this year, Wanchen Group, whose mass-market snack business accounted for more than 90% of revenue, has turned positive. However, the non-net profit that better reflects the company’s profitability has not yet turned a loss, which was -3.0812 million. Yuan.
After selling over 10 billion snacks, Wanchen Group, to which Haoxianglai belongs, is still unable to make a profit. High operating costs are an important factor affecting profits. In the first half of the year, Wanchen’s operating costs reached 9.767 billion yuan, a year-on-year increase of 384.8%, which increased significantly with the increase in mass-selling snacks business.
It really takes a lot of hard work, and Zhao Yiming is not easy either. A franchisee of Zhao Yiming in Shandong said frankly: “2022-2023 is still a relatively good year for the industry. Although profits are low, the sales volume is large. If you work hard, you can still make a lot of money.
Nowadays, a single store basically does not make any money, and they all rely on the scale of multiple stores to make money equally. Although the headquarters has a price subsidy policy, it is added to the payment for goods, which is equivalent to selling the goods before you can get the subsidy. Otherwise, the backlog of goods will be lost. “
In this fierce competition in some areas, one difference between the two brands is that currently Zhao Yiming does not implement a return policy. If the goods ordered by Zhao Yiming cannot be sold at the headquarters, returns can be processed later. This is also a factor why many Haoxianlai franchisees still persist in struggling.
Some fast-moving consumer goods practitioners believe: “After all, it’s goods, not cash. What the entire mass-selling snack industry does is short-selling in the supply chain.The production capacity in the supply chain is already abundant or even excessive. What is lacking is the channel capacity to digest these goods.“
What supports the digestion capacity of the upstream supply chain is the consumption power of the region where franchisees are located. For example, in the Henan region, relevant sources revealed that Zhao Yiming’s first store opened in Kaifeng in 2023 achieved a performance of 2 million yuan, and then fully promoted the local promotion work in the Henan region. However, by the end of 2023, the entire investment promotion and development team evacuated.
The main reason is that the local consumption power is insufficient, the store density has not been increased, and the “store insertion” strategy of relying on price subsidies to promote franchisees to open new stores has failed to work. As of October last year, there were 800 “Haoxianlai” stores and 200 Zhao Yiming stores in Henan.
The so-called “store insertion” means that when you see that your peers are doing good business, you open a larger and better-decorated store nearby to divert the other party’s flow of people and turnover. However, if the turnover of the original store is not high, it will be difficult for latecomers to seize market share.
03 Who is Mingming’s busy talker?
Relying on the cost advantage of the headquarters, Zhao Yiming is not only aggressive in opening stores externally, but even the growth rate of internal store expansion is higher than that of snacks belonging to the same group.
The Mingming Busy Group after the merger in 2023 will have a total of 6,500 stores. At that time, Snacks was busy with 4,000 stores, which means that Zhao Yiming has 2,500 stores.
According to official data, as of June 2024, Mingming Busy Group reached the milestone of 10,000 stores. In the same month, Zhao Yiming announced that the number of stores exceeded 5,000.This means that in terms of store growth, Zhao Yiming is running faster than Snack Busy, and has already tied it in less than a year after the merger.
Not only does he run fast, Zhao Yiming also focuses on expanding stores in other places outside his base camp. Kaiyuan Securities data shows that as of October last year, Zhao Yiming had opened more than 900 stores in his base Jiangxi market and a total of more than 4,000 in other markets.
As a comparison, Snacks Busy has opened more than 2,000 stores in its base camp of Hunan, and more than 2,000 stores in other markets in total. The ability to expand stores beyond the base camp may mean that the brand has a harder store expansion style.
It can also be seen from the success rate of opening a store. Data shows that Zhao Yiming’s success rate of 95% is higher than the 90% success rate of Snack Busy. Public market reports show that although the two major brands will maintain independent operations after the merger, Yan Zhou, the founder of Snack Busy, is the talker of Mingming Busy.
At that time, snacks were very busy and had larger stores, and they were favored by capital. But now with the increase in the number of stores, it is difficult to say whether Zhao Yiming’s voice will be improved.
Regarding this merger, Yan Zhou said at last year’s All Things Growth Conference, “I remember that we have talked about cooperation 4 times in history. The most in-depth talk was 3 years ago. Even the table was set and we were just preparing to hold a press conference. “After many twists and turns, it was finally launched in 2023.
Before this merger transaction took place, the money-burning subsidy war between Zhao Yiming and Snacks was very busy, and the fight had been fierce in Guangdong and Guangxi.
“The only commercial street in the county has five snack shops. The snacks are very busy. The yellow sign is next to Zhao Yiming’s red sign. The shouts of ‘cheap’ come and go from both sides.” After the merger, both sides turned their guns to the outside world. Wan Chen was in good hands. I want to be my biggest opponent.
A franchisee said: “South is very busy, while Bei Yiming is very busy. After the merger, the first thing both parties decided to do was to provide a 1 billion subsidy to go north, so Zhao Yiming’s store expansion speed and price subsidies were even greater in the past year.”
Snacks have been very busy in the past year, mainly looking for spokespersons, establishing brands, and cultivating consumers’ minds. For example, various brand image stores have been launched such as “Snacks are big” and “Snacks are spicy”. Zhao Yiming’s focus is to go north to penetrate the sinking market and gain more market share.
Franchisees don’t care who is the boss, they only care about when they can get through to the end. Taking Henan as an example, a person familiar with the matter said: “Two to three months after opening, the sales of most stores will drop or even be cut in half.”
After 1 billion subsidies went northward and the battle of thousands of stores was completed, Mingming quickly won the first place in the industry. Franchisees who want to make money may still have to endure it.
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