---
title: "Bianlifeng, known for direct operations, suddenly opens franchising"
description: "From loudly declaring 'all direct-operated, no franchise stores' to quietly opening franchising, has Bianlifeng burned through its $1.5 billion in total financing? Bianlifeng has not received new financing for three years. From $300 million in Series A in February 2017, $256 million in Series B in October 2018, to May 25, 2020, when Bianlifeng first publicly disclosed its financing and store profitability, a spokesperson said: 'Bianlifeng has cumulatively raised $1.5 billion.' Full direct-operated rapid expansion and digital teams require substantial funds, and without financing for three years..."
author: "石头"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2023-09-23"
language: "en"
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# Bianlifeng, known for direct operations, suddenly opens franchising

> From loudly declaring 'all direct-operated, no franchise stores' to quietly opening franchising, has Bianlifeng burned through its $1.5 billion in total financing? Bianlifeng has not received new financing for three years. From $300 million in Series A in February 2017, $256 million in Series B in October 2018, to May 25, 2020, when Bianlifeng first publicly disclosed its financing and store profitability, a spokesperson said: 'Bianlifeng has cumulatively raised $1.5 billion.' Full direct-operated rapid expansion and digital teams require substantial funds, and without financing for three years...

## From loudly declaring 'all direct-operated, no franchise stores' to quietly opening franchising, has Bianlifeng burned through its $1.5 billion in total financing?
Bianlifeng has not received new financing for three years. From $300 million in Series A in February 2017, $256 million in Series B in October 2018, to May 25, 2020, when Bianlifeng first publicly disclosed its financing and store profitability, a spokesperson said: 'Bianlifeng has cumulatively raised $1.5 billion.'
Full direct-operated rapid expansion and digital teams require substantial funds. Without financing for three years, funding issues are inevitable; its model dictates a continuous influx of external capital.
From another perspective, from the end of 2021 to before April this year, Bianlifeng closed nearly 700 stores. Regarding the specific number of closures, the author previously verified with Bianlifeng, and the response was that due to the pandemic, logistics and transportation difficulties forced Bianlifeng to temporarily close a small number of stores, dubbed the 'hibernation plan.' As it turned out, the winter was too cold, and the closed stores did not revive.
It is reported that Bianlifeng is currently opening franchising for nearly 2,000 direct-operated stores in Beijing, Shanghai, Tianjin, and Nanjing. Franchisees only need to invest 210,000 yuan for a five-year franchise period. This condition was clearly not cost-effective for Bianlifeng during its 'heyday,' but for a Bianlifeng currently short on money, people, and confidence, taking a gamble might be worthwhile, after all, Bianlifeng is the house.
**Unable to secure financing**
Since 2020, the pandemic has accelerated the survival-of-the-fittest evolution in the retail industry; amid overall market trend changes, differences among brands due to location, quality, and operational capabilities have widened.
The impact of changes on residents' consumption habits, lifestyles, and values has driven a series of structural trend changes in retail brands from store strategies to sustainable development, collectively significantly affecting the current evolution of retail industry demand and asset operation strategies. Upstream and downstream industry players, investors, and practitioners have begun to re-examine enterprises with blind expansion and unhealthy operational data.
With the rise of community group buying, snack discount stores, soft and hard discount stores, community fresh food stores, and instant retail platforms, and the rapid emergence of many models, **the convenience store format is no longer attractive in the capital market.**
For consumers, Bianlifeng is not much different from other chain brands or mom-and-pop stores; product overlap is very high. Those who prefer in-store shopping do not feel warm service at Bianlifeng, and those who prefer instant retail cannot find the corresponding stores on platforms. Under the impact of diverse shopping channels, **not only Bianlifeng, but local convenience store chains are losing their core value.**
As is well known, the profit cycle for convenience stores is very long, with gross margins typically below 30%. The three cost mountains of rent, labor, and fixed investment make it hard for physical stores to breathe. Those who manage to carve out a path are the head players who find gaps among these three mountains.
Brands that grew rapidly by leveraging capital to expand territory, when faced with market environment changes and financing difficulties, will see a series of problems emerge one by one. Once the capital chain breaks, the enterprise will find it hard to continue, and the outcome is inevitably collapse, as seen with former high-flyers Linjia, Quanshi, and 131, without exception.
Since Zhuang Chenchao entered the convenience store business in 2017, over 20 billion yuan flooded into the industry in just three years, with Bianlifeng alone raising over 10 billion. On one hand, the track suddenly heated up; on the other, Bianlifeng's founding team was sufficiently star-studded.
In six years, Bianlifeng has not delivered the expected returns to the capital market. On one hand, its algorithms have not reached the level of subverting the underlying logic of traditional convenience stores; on the other, Bianlifeng's current strength cannot support the implementation of its algorithms; and third, the large amount of data accumulated over the years became completely invalid after the lifting of restrictions.
Furthermore, the window period for the convenience store track was forcibly activated. Profit-seeking capital either bets on the track or on the enterprise. When both the track and the enterprise are not thriving, capital naturally chooses to exit and then watch silently.
**Not willing to leave the table**
Bianlifeng founder Zhuang Chenchao once said that convenience stores have been proven in other East Asian countries, and over 40 years through wave after wave of technological innovation, it has been proven that convenience stores will not be disrupted by technological waves, which sparked their great interest.
But unfortunately, the main reason the convenience store industry was not disrupted in previous technological waves is that the waves were not strong enough.
In Japan, convenience stores have extended their reach into every aspect of daily life. Open 24 hours, they emphasize time freedom, offer free food heating (for bento sales) doing catering business, ATM withdrawals doing Yu'ebao business, courier services doing Cainiao Station business, utility bill payments doing property management business, photocopying doing print shop business, and laundry services, among others.
Additionally, the services that Japanese convenience stores pride themselves on, such as purchasing tickets for events, flights, trains, concerts, magazine subscriptions, etc., can all be completed on Alipay. Moreover, Japanese convenience stores' private brands and differentiated products are also their biggest operational barrier.
In Japan, convenience stores can basically solve a large part of people's daily life problems, and the convenience level is very high. Today, local convenience stores are just tobacco and alcohol shops plus grocery stores, with extremely low cost-performance ratios, making their position in the current competitive environment very awkward. This is also Zhuang Chenchao's biggest misjudgment of the Chinese convenience store market.
Now, Bianlifeng's sudden shift from direct operations to franchising indicates, on one hand, that the capital market no longer favors Bianlifeng, and on the other hand, that Bianlifeng may be facing funding problems and needs to quickly and effectively raise some funds from the private sector through store franchising (as collateral).
Although Bianlifeng has installed many smart devices, the basic display, hygiene, and equipment maintenance of stores still rely on human labor. According to the areas open for franchising, each store requires three employees per day, with a minimum salary of 5,000 yuan per employee. If half of its total stores were franchised, Bianlifeng would save at least 15 million yuan per month, and the actual savings would be far more than that.
Moreover, franchisees not only provide a one-time cash injection of 210,000 yuan each, but franchising 1,000 stores would bring in 210 million yuan. Not only that, but self-operated franchisees have a greater sense of ownership and can also correct erroneous instructions from headquarters in real time and accurately, helping to improve store sales and service.
If Bianlifeng can successfully continue on the franchising path, this might be the only correct choice for it to stay at the table in the short term.
**Bianlifeng is not wrong**
'At the inception of Bianlifeng, we were thinking about digital applications, that is, the integration of intelligent systems,' said Bianlifeng President Chen Ming. To date, Bianlifeng has integrated the front, middle, and back ends of its operating system, building an intelligent, agile, and flexible supply chain system.
First, in the production process, Bianlifeng continuously increases investment in factory informatization, focusing on food safety assurance, operational revenue assurance, and cost reduction and efficiency improvement.
Second, in logistics and transportation, Bianlifeng has established a full-temperature-zone electronic temperature tracking and alarm system, installing Bluetooth thermometers and GPS on cold-chain vehicles to monitor temperature in real time throughout the process, ensuring quality and hygiene. Once an anomaly occurs, the backend will 'alarm.'
Third, in store operations, Bianlifeng has developed a complete system that integrates product selection, cashier, dynamic promotion, and other systems into a full-scenario intelligent operating system covering the entire business chain.
Bianlifeng President Chen Ming Image source: CCFA
Taking Bianlifeng's self-developed display system as an example, Chen Ming explained in detail: Based on different store structures, Bianlifeng issues weekly adjustments for 150 categories of products per store in the form of store display diagrams to the corresponding stores. By comparing the on-site display with the display diagram, real-time display review and verification can be completed, saving a lot of labor costs.
In digital thinking and practice, Bianlifeng hands over tedious, standardizable, and detailed work to the system, allowing employees to better leverage their initiative to bring warm service to consumers.
To some extent, Bianlifeng has provided the industry with a forward-looking digital 'acceleration' methodology, helping to achieve refined single-item management, user management, and single-store operations.
Digitalization has always been an important feature and characteristic of Bianlifeng. In recent years, Bianlifeng has done a lot of deep thinking and practice in the digital development of convenience stores.
Through years of accumulation, the digitalization of convenience stores should not only be reflected in information systems, apps, or smart hardware devices—the so-called 'device' level; it should go deeper into the essence of retail, using digitalization to understand and reconstruct the convenience store business. Therefore, Bianlifeng has made many innovations and attempts in digitalization.
Over the past decade, the domestic retail industry has undergone earth-shaking changes. New models and scenarios such as online retail, cross-border e-commerce, and instant retail have continuously emerged, completely changing the dominant position of traditional formats like offline hypermarkets and convenience stores. And **the convenience store industry, which emphasizes time, space, product, and service convenience and is mainly characterized by small stores with large chains, has gradually been marginalized.**
The development of the retail industry is not achieved overnight. Stable products, a sound supply chain system, a complete corporate culture, and healthy operational data are the strength of its roots. **Digitalization is like leaves, but plant growth often starts with roots first.** Bianlifeng is not wrong, but upon closer inspection, one can see that every link in its chain is fragmented.


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