In November 2025, Hema's budget community supermarket Super Hema NB announced its first batch of franchising, with initial cities locked to Shanghai, Hangzhou, Jiaxing, and Huzhou. The cumulative investment for a 600-square-meter standard store is approximately 2.65 million yuan. As soon as the news broke, the retail industry widely interpreted it as a positive signal—Hema has finally found a lever to scale up. This view deserves deep scrutiny. In retail, franchising has always been a double-edged sword: Used well, it can extend the brand to places direct operations cannot reach in a short time; used poorly, it means using others' money to replicate mistakes on a large scale, ultimately collapsing the entire brand chain system. Super Hema NB's franchising is not just a lever for scale; it is a gamble with ten times the risk leverage—because this unique model of "high fresh food ratio + private label dominance + rapid franchise expansion" has yet to find a fully successful case in global retail history. Super Hema NB Has Not Yet Truly Proven Its Model To judge whether a franchise model is a risk or an opportunity, you must first understand its true current situation. Super Hema NB's predecessor was Hema NB, which started in 2022 and was officially renamed in August 2025. Behind the brand separation is Hema's attempt to separate two formats with completely different positioning—Hema Fresh focuses on mid-to-high-end quality fresh food, while Super Hema NB focuses on extreme cost-effectiveness community discounts. The renaming is to prevent the two from dragging each other down when sharing a brand endorsement. As of the end of 2025, Super Hema NB has over 350 stores, mainly in Jiangsu, Zhejiang, and Shanghai, with a few in Central and South China. Stores range from 600 to 800 square meters, with about 1,500 SKUs, fresh food accounting for over 60%, private label sales accounting for about 60%, and average transaction value maintained between 35 and 50 yuan. Hema Group's publicly announced "first full-year profitability" refers to the overall adjusted EBITA profit for fiscal year 2025 (April 2024 to March 2025)—this is the combined group figure of Hema Fresh and Super Hema NB. But whether Super Hema NB itself is profitable has never been separately disclosed by Hema. This deliberate silence is itself information. The current state of Super Hema NB can be summarized in four points: stores are rapidly expanding, independent profitability is unverified, the brand is accelerating its independence, and the franchise system has officially launched. Profitability Dilemma and the Real Motives Behind Franchising On the surface, 350 stores is a considerable scale for a format that is only three years old. Compared to ALDI—also a hard discount brand deeply rooted in China, which took over 6 years to open fewer than 100 stores—Super Hema NB's expansion speed is nearly four times that of ALDI. But scale does not equal profitability. The profitability dilemma of the hard discount fresh food format is a structural problem that cannot be automatically solved by opening more stores. The gross margin ceiling for hard discount is extremely low, with industry best practices around 12% to 15%. Under this ceiling, Super Hema NB must also cover: store rent, labor costs, cold chain logistics and shrinkage, private label R&D, and headquarters operating expenses. Fresh food is the most ferocious cost consumer. Super Hema NB's fresh food ratio exceeds 60%, which is the core traffic driver attracting consumers, but also the category with the highest shrinkage rate and the most demanding cold chain requirements. For a direct-operated store, if a batch of fresh produce has quality issues or the cold chain is interrupted, shrinkage can rise from 3% to 10%, enough to wipe out the entire month's thin profit. Hema Fresh once disclosed a set of numbers that illustrate the problem: its online order gross margin is about 30%, but for a 49-yuan order, delivery costs alone are nearly 10 yuan, and after picking costs, it actually loses money on each order. Super Hema NB's average transaction value is only 35 to 50 yuan, and it is mainly offline, making this economic model even more fragile. Furthermore, rapid expansion itself continuously consumes profits. Each new store has a 3 to 6 month loss-making incubation period, and a significant portion of the 350 stores are still within this window. Using continuous losses from new stores to drag down overall profits is an unavoidable cost for companies in expansion. This is the structural reason why Super Hema NB's 350 direct-operated stores still find it difficult to declare independent profitability: it's not that the business model is wrong, but that the model's demands on operational efficiency are far more stringent than anyone imagines. Since the profitability of the direct-operated model is still in the verification period, why rush to open franchising now? The official statement is: the single-store profit model has basically been proven, and franchising is to accelerate expansion and form scale effects. But if you break it down, there are at least four coexisting real motives behind Super Hema NB's franchising, and their priority order is not entirely consistent with the official statement. Motive 1: The point war—the time window is closing 2025 is the most competitive year in China's hard discount track. Meituan's Kuailehou opened its first store in Hangzhou, JD Discount Supermarket opened five stores simultaneously in Suqian and Zhuozhou, Wumart's Chaozhi opened in Beijing, and ALDI officially expanded out of Shanghai into Jiangsu and Zhejiang. High-quality community locations are non-renewable resources; once occupied by competitors, they are almost impossible to reclaim. With only direct operations, Super Hema NB's store opening speed can never keep up with the rate of location consumption. Only by leveraging franchisees' capital and resources can it claim territory faster. Motive 2: Fighting with external funds to reduce its own capital risk After opening franchising, the 2.65 million yuan store investment is borne by franchisees. If a store in a certain city loses money due to poor site selection, intense regional competition, or food safety incidents, the losses are the franchisee's principal and will not directly reflect on Hema's financial statements. This is a systematic risk transfer, not just capital leverage. Motive 3: Speed pressure from the 100-billion target Hema CEO Yan Xiaolei publicly stated that GMV will exceed 100 billion yuan within three years. With only direct operations, to have Super Hema NB exceed 50 billion yuan within three years, the number of stores would need to expand from 350 to nearly 2,000. This speed is impossible with direct operations; franchising is the only viable shortcut. Motive 4: The critical point logic of supply chain scale effects The core economics of the hard discount format are: the more stores, the larger the procurement volume, the stronger the bargaining power, the lower the unit cost, and the better the price advantage and profitability. Theoretically, after store count exceeds a certain critical point, supply chain efficiency will see a qualitative leap. Franchising is the accelerator to break through this critical point. These four motives all sound reasonable, but they all share a common premise—that single-store profitability and quality control can improve in tandem with scale, rather than spiral out of control. And that is precisely where Super Hema NB's biggest challenge lies. Fresh Food + Private Label + Franchising No Successful Reference Case In global retail history, is there a successful case of a hard discount supermarket with fresh food as the main category, a high proportion of private label as a moat, and franchising as the main expansion model? The answer is: currently, no. Let's first look at how the top global supermarket chains do it. ALDI: The Textbook of Global Hard Discount, Insisting on Direct Operations German ALDI is the most successful enterprise in the global hard discount format, with over 13,000 stores in 18 countries, private label accounting for over 90%, and SKUs curated to 1,600. Since its founding in 1913, ALDI has never opened franchising, insisting on 100% direct operations. The reason is clear: the quality standards of private label are ALDI's core competitive barrier. Once delegated to franchisees, the quality control chain will inevitably have breakpoints, and brand trust will suffer irreparable damage. Lidl and Trader Joe's expansion strategies are exactly the same as ALDI—no franchising, no decentralization, all direct operations. Trader Joe's has over 500 stores in the U.S., yet has never had a franchise store. 7-ELEVEN: The Ceiling of Franchise Systems, But It Doesn't Sell Fresh Food 7-ELEVEN is the most mature retail franchise system globally, and its OFC (Operation Field Consultant) system has been studied for decades. But the reason 7-ELEVEN's franchising works has a core premise: its core products are standard goods. "Fresh-like" items like bento boxes and oden exist, but their proportion is far lower than Super Hema NB's 60%. Quality control for standard goods can be achieved through unified central factories and unified distribution; quality control for fresh food is a different level of complexity. SPAR: The Closest Reference, But the Gap Remains Significant Europe's SPAR seems to be the closest reference case to Super Hema NB—a medium-sized community supermarket using a "voluntary chain" franchise model. But SPAR's private label ratio is far lower than Super Hema NB's, and Europe has an extremely comprehensive food safety regulatory system, with high legal costs for franchisees who violate regulations. This is an external constraint mechanism for quality control. China's regulatory environment currently cannot provide the same level of external constraint. Domestic References: All Thousand-Store Models Avoid Fresh Food Whether it's snack discount stores with ten-thousand-store models or community convenience stores like Meiyijia, as long as store counts reach thousands or even tens of thousands, they almost all use franchise expansion. But they all make the same strategic trade-off: focus on standard goods, basically avoid fresh food, and adopt loose management of franchisees. In other words: you almost have to give up the hardest-to-control fresh food category to gain the fastest expansion speed. But Super Hema NB is taking the completely opposite path. Its core competitiveness is precisely fresh food and private label, which are the hardest categories to control in a franchise model. This doesn't mean Super Hema NB's strategy is necessarily wrong, but that it is walking on a road without a map—in global retail history, no one has ever completed this path. Three Thorns to Success or Failure: Thin Profit Arithmetic, Fresh Food Out of Control, and Time Window Thorn 1: The Deadly Arithmetic of Franchising The gross margin ceiling for the hard discount format is 12% to 15%. Within this range, the franchise model requires a profit split between headquarters and franchisees. Whether this split can work depends on a simple but cruel math problem. Assume a 600-square-meter Super Hema NB franchise store has annual sales of about 8 million yuan. At a 15% gross margin, gross profit is about 1.2 million yuan. After deducting store rent (about 400,000 yuan), labor costs (about 480,000 yuan), shrinkage (conservatively at 3%, about 240,000 yuan), and then deducting headquarters' system usage fees, brand licensing fees, and supply chain service fees, the franchisee's actual profit is approximately 50,000 to 150,000 yuan—corresponding to an initial investment of 2.65 million yuan, with a payback period of 15 to 50 years. These numbers are, of course, estimates; actual conditions depend on location, foot traffic, and shrinkage control. But they reveal a structural problem: milk tea franchising attracts many investors because gross margins are over 60%, with a clear payback period of 2 to 3 years. Super Hema NB's gross margin is only a quarter of milk tea's, but the risk is far higher—fresh food shrinkage, food safety, and industry competition; any accident could significantly extend the payback period. This means that those willing to franchise Super Hema NB are either regional retailers with deep understanding of the business (who have their own property and supply chain foundations, with different cost structures) or individual investors attracted by brand halo and opening dividends (whose risks are often severely underestimated). The former are Super Hema NB's ideal franchisees; the latter are the most fragile link in the entire franchise system. Thorn 2: The Domino Effect of Fresh Food Out of Control Fresh food naturally resists franchising, for three layers of reasons, each a real threat. Layer 1: Non-standardization. The same product can vary greatly in quality by origin, season, and batch. Direct-operated stores' procurement teams can achieve batch-level quality control through big data systems and stable direct sourcing relationships. When franchisees purchase goods, do they strictly enforce headquarters' quality standards, or do they occasionally go to local wholesale markets? This is not a problem that can be solved by contracts; it is an operational detail that happens every day. Layer 2: Timeliness and the franchisee's rational calculation. Every evening, a Super Hema NB store manager must decide: should unsold vegetables be discounted according to regulations, or sold again tomorrow? Direct-operated store managers know that Hema's KPIs include shrinkage rate, and discounting does not affect their assessment. Franchise investors are different—every item of fresh food delayed is extra profit, and every item discounted is a direct loss. This micro-decision happens daily and ultimately leaves a mark on quality. Layer 3: Brand collateral damage. Super Hema NB's promise is "real value, enough peace of mind"—"peace of mind" comes after "value," and is the brand's most important credit endorsement. Once a food safety incident occurs at a franchise store, consumers will not distinguish between "this is a franchise store problem" and "this is a Super Hema NB problem." In the age of social media, it takes only a few hours from a food safety incident to public opinion explosion. The conflict of interest between franchisees and headquarters is masked by the community of interest when business runs normally, but once cracks appear, the information held by franchisees often becomes the sharpest weapon. Thorn 3: The Double Squeeze of the Time Window Super Hema NB faces time pressure from two directions simultaneously, and these two directions have completely opposite requirements for model maturity. On one hand, competitors don't give time. Kuailehou's model was proven in 2025 and will accelerate in 2026; JD Discount Supermarket is advancing south from North China; after ALDI leaves Shanghai, it puts direct pressure on Super Hema NB's core Jiangsu-Zhejiang market. High-quality community locations are being consumed rapidly in competition, and Super Hema NB must complete its location positioning before competitors complete their national layout. Time demands Super Hema NB to be fast. On the other hand, supply chain maturity takes time. Super Hema NB's independent supply chain system, spun off from Hema Fresh and operated independently, has only been around for just over two years. ALDI took nearly a century to build a global procurement network and only opened 80 stores in China after 6 years of deep cultivation. Super Hema NB's private label, from development, testing, iteration to building stable consumer trust, needs at least 3 to 5 years of market磨合. Quality demands Super Hema NB to be slow. If the contradiction between "fast" and "slow" is not resolved, the scale brought by rapid expansion will not be a moat but an amplifier of risk. Will Super Hema NB Succeed or Fail? This is the hardest question to answer, and also the one most worth answering head-on. Will Super Hema NB succeed? It will likely partially succeed—the direction is right, hard discount community supermarkets are a real and huge market in China, Hema's digital capabilities and Alibaba's ecosystem support are real competitive advantages, and the first-mover layout of 350 stores is a real moat. But Super Hema NB's franchise model will likely experience severe growing pains: Not because the strategic direction is wrong, but because it is trying to rapidly replicate a business model that demands extreme operational precision, using a product mix that demands extremely high quality control, under conditions where supply chain maturity is insufficient and there is no global precedent. The combination of these three factors means it would be a miracle if problems didn't arise. The most likely future trajectory is: Within 1 to 2 years, as the franchise scale expands, there will be quality complaints, some franchisees exiting due to profitability below expectations, and food safety incidents impacting brand trust. At that point, Super Hema NB will face two paths: large-scale acquisition of struggling franchise stores to convert to direct operations (requiring huge capital), or tightening franchise standards and slowing expansion (meaning giving up locations to competitors). Either path means paying a higher price than expected. The real question is not whether Super Hema NB can succeed, but whether it can build its supply chain system and quality control standards to a depth sufficient to support the franchise scale before the painful period arrives. ALDI took nearly a century to achieve this; Super Hema NB may only have a 2 to 3 year window. History tells us that there is never a shortage of explorers with the right direction, but between the right direction and final victory lie countless overlooked processes and details, sometimes even luck. Super Hema NB's franchise gamble has just begun.