校申 丨勾勾 排版 | 张雨薇 "Now in northern counties, snack stores are doing very well, with daily revenue between 20,000-30,000 yuan, and a store can earn 60,000-80,000 yuan a month, with the best reaching 100,000-150,000 yuan." Hearing these numbers, I was astonished! What kind of market offers such generous returns? Isn't everyone saying that snack stores are just a way to fleece franchisees? "Now is the dividend period," Mr. He told me. His first store opened at the end of May or early June, taking about a month. In just three months, he already has seven or eight stores. He and his team plan to open one or two new stores each week, so their main focus is on finding locations. Who exactly is frantically opening stores? What are the real investments and returns? And what hidden risks are there? I had many questions. So, I arranged an in-depth conversation with He Haifeng, founder of Dianhejia. Mr. He has been involved in supply chain and retail entrepreneurship for many years. As a super franchisee of snack stores, he candidly shared what he does and his deep thoughts on the industry. There are many reports about snack discount stores now, but most are simple lists of information, with very little first-hand content from industry practitioners based on practical experience. This article shares the key points of our conversation in written form.
Investment and Return Ren Wenqing: Mr. He, you've opened seven or eight stores in just three months and are increasing investment. What opportunity led you to snack stores? He Haifeng: It was actually because of my partner. I was previously doing incubation and accompaniment for group buying stores, and my partner had been operating snack stores in the south for over two years. He originally came to learn private domain operations from me. Seeing his store's operating data, I realized the snack discount store model is excellent. I had previously started a B2B platform and community group buying, and in 2019 I opened 18 community discount stores in Beijing. They didn't do well, so I sold them and went into group buying stores. So I have a feel for store operations. In the first half of the year, the main system just started entering the northern market, and Hebei was basically blank. We saw this as an opportunity and partnered up. Ren Wenqing: How long did it take from decision to opening the store? He Haifeng: Around the end of May or early June, the first store opened, taking about a month in total. Now we have seven or eight stores, with daily revenue of 20,000-30,000 yuan per store. Net profit can reach 80,000 yuan, with poorer stores at 60,000 yuan, and good stores at 100,000-150,000 yuan. The average net profit margin is about 10%. Ren Wenqing: What is the specific investment and return for opening a store? He Haifeng: The total investment for a store is about 800,000 to 1 million yuan. Equipment like shelves and TVs costs 110,000 yuan, franchise fee 30,000 yuan, deposit 20,000 yuan, decoration 150,000 yuan, rent over 10,000 yuan, and some stores need transfer fees or renovation, 50,000-60,000 yuan. That adds up to nearly 400,000 yuan. Plus working capital, selling 30,000-40,000 yuan of goods daily, we usually stock 10 days' worth, which is 350,000-400,000 yuan. Staff wages come to 30,000 yuan per month. So, one-time investment plus working capital, all sorts of expenses, roughly speaking, it takes over a million. Ren Wenqing: Selling 30,000-40,000 yuan a day? Is sales that good? He Haifeng: The snack store business model is inherently profitable. Daily sales of 30,000-40,000 yuan are indeed high, and there are several factors.
First, we are in the northern market, with plenty of blank markets, unlike the south where store density is higher. Second, location is crucial. Snack stores do best in lower-tier markets like county towns because rent is cheap. A good location might cost 500,000-600,000 yuan in the city, but in a county town, 150,000 yuan might suffice. Also, in such markets, your storefront, space, decoration atmosphere, etc., are completely different from traditional stores, making it easy to spread by word of mouth. Third, you must find high-quality locations with guaranteed foot traffic. Fourth, as I said, the decoration and atmosphere of snack stores offer a much better consumer experience than traditional stores, and prices are cheaper, so customers rarely leave empty-handed. Ren Wenqing: What are your plans for opening more stores? He Haifeng: We plan to open one store per week in the future, then increase to two per week. Ren Wenqing: Why are you so optimistic? He Haifeng: First, it's a profitable business. The people efficiency and square footage efficiency are excellent, and the return on investment is good now. Second, in my store, I often encounter consumers asking, "How can you be so cheap?" I say, "Don't worry, we still have profits." Behind this is the hard discount business model. Snack stores are an application of hard discount in the snack category, and it's currently the fastest-growing. We must enter now. I've been in this industry for a long time, always doing retail entrepreneurship. I believe hard discount is excellent in both efficiency and experience, and it is undoubtedly the future direction.
Who Is Enjoying the Dividend? Ren Wenqing: If it's such a good business, isn't everyone rushing to do it? He Haifeng: Franchising a snack store still has high barriers. Capital is a major factor; not many people can come up with hundreds of thousands or even a million at once. An even bigger barrier is cognition—your understanding of the matter. Before meeting my partner, I knew about snack stores but never thought about opening one myself, simply because I felt it had nothing to do with me. But my partner had been doing it for two years, knew it very well, and had real data, so I knew the real franchisee ecosystem. Together, we could move from decision to key actions very quickly. Experience and resources are important. For example, some people preparing to franchise are unfamiliar with the process. They look at 10 locations, 8 fail, and it takes a long time. Good locations are taken by others, and even if they open, business is far worse. In this industry, many people open three to five stores, but super franchisees who can open ten to twenty are rare. Many of them are from early circles, and due to the locations of several leading brands, you'll find many are from Changsha, Jiangxi, or Chengdu. In China, many businesses are circle businesses, where friends and relatives bring each other along. If no one guides you, it's hard to seize opportunities and replicate quickly on your own. Ren Wenqing: You mentioned opening two stores a week in the future. Can you do it that fast? How will your capital and staff keep up? He Haifeng: For capital, we use a co-investment model. In county towns, we partner with local teams, giving them 20-30% of the profits. Staff is not a big issue; we find clerks and train them in 3-5 days. The store manager is key. But we old franchisees have suitable clerks in existing stores who can become managers at new stores. The processes and support from leading chain brands are quite adequate. For us, the core task now is finding good locations. Retail is a regional business, and location is key. There are A, B, C locations. A locations are the best; even if rent is higher, you must take them. Otherwise, your competitor takes them, and you're left with B locations, which is tough. Ren Wenqing: There's a lot of negative information online about franchising snack stores, and in many places competition is fierce, with examples of franchisees losing money. He Haifeng: Those situations certainly exist. Whether you can make money and the payback period depend on many factors. If you invest hundreds of thousands and choose a bad location, selling only a few thousand a day is very painful. You can't sustain it and have to close. There are plenty of such examples. Competitors opening next to each other and engaging in price wars also happens. But overall, they are a minority. People tend to focus on negative reports, making it seem like the whole industry is like that. There are still many lower-tier markets that are blank and have dividends. Of course, I'm only sharing my personal experience and the franchisee ecosystem I've seen.
What Are the Risks of Opening a Store? Ren Wenqing: Mr. He, your experience, cognition, and partner resources have made you a super franchisee quickly, but many people don't have these conditions. For those individual franchisees, what are the risks? He Haifeng: I'm not saying that franchising always makes money. The risks are very high. Anyone considering franchising must research carefully and decide prudently, after all, over a million yuan is at stake. Choosing the right brand and the right location is of utmost importance. Many people don't research deeply or lack experience. They think different brands' stores are similar and support is sufficient, but there are big differences. Also, in physical retail, location is paramount, and there are barriers. Locations that look similar can have vastly different outputs. From my personal experience, starting with experienced franchisees, you accumulate cognition and experience, and then opening independently helps you avoid many pitfalls. Ren Wenqing: Snack stores have affected many distributors' businesses, but many distributors are slow to react. Recently, some distributor friends asked, "Rather than being taken away by others, why not open our own store?" Do you think that's reliable? He Haifeng: Starting your own snack store business requires caution! I've been an entrepreneur before and always wanted to create my own retail brand, but after getting into snack stores, I put all my energy into franchising. The reasons are as I said: the model is excellent, and hard discount is definitely the future direction. If there's an opportunity, you can step in with one foot and secure good locations. Look at how much difference is left between snack stores and supermarkets? Not much. If you occupy good locations and enter this track, you can gradually expand, and there are still big opportunities later. I know a distributor who opened a store 2 months ago and now has 7 stores in operation and 3 under renovation. He's still doing his traditional business, which is a great state. Actually, distributors have a unique advantage to enter this business, as they're in related businesses and have opportunities to understand it. But many distributors' problem is that they're unwilling to study new things and can't open their minds. Ren Wenqing: Your returns are so good now, which is a dividend. But as more people enter and store density increases, profits will inevitably decline. How do you plan to deal with that? He Haifeng: We've actually done internal simulations. It's indeed a dividend period now, so we're opening stores as fast as possible to enjoy more dividends. As you said, when competition intensifies later, we might use tactics like group buying and private domains, which I'm good at, and maybe enjoy another period of dividends. Later, when profits decline, from 60,000-80,000 yuan a month to maybe 40,000-50,000 yuan, or even 30,000-40,000 yuan, that's still acceptable for a retail business.
Final Thoughts Snack stores are indeed hot right now, but it's certain that risks and opportunities coexist. This article, from a franchisee's perspective, helps readers understand the industry from multiple dimensions, without investment guidance tendencies. The main content comes from a live dialogue (for details, you can watch the September 11 New Distribution video account live broadcast). Since 2022, snack hard discount has accelerated rapidly. Some see low-price sales, others see franchisees losing money, but from an industry perspective, its real impact lies in the shock to the upstream and downstream of the industry chain—China's modern food processing industry is undergoing a supply-side reform.
Why are snack discount stores so crazy? Not embracing them is not an option, but embracing them means facing price system shocks and the difficulty of maintaining traditional distribution networks, leaving brands in a dilemma. How are various brands responding? What impact does it have on the industry chain? Where should distributors go? What are the future challenges and opportunities? From October 9-11, 2023, the 5th China FMCG Conference will be held in Shenzhen. On the morning of October 10, we have organized a parallel forum on "Snacks and Discount Stores." At that time, snack/discount store brands, FMCG manufacturer executives, distributor experts, and industry observers will gather to discuss topics related to "hard discount" in depth, exchange ideas, and collide viewpoints. Welcome to join! At the conference, we will release the "2023 China FMCG Snack Hard Discount Development White Paper" . From the perspective of the FMCG industry, New Distribution will interpret the impact of snack hard discount on local commercial systems, helping brands and distributors grasp industry trends objectively, comprehensively, and deeply, meet challenges, and discover growth opportunities.