---
title: "Busy County Towns: 80% of Franchisees Losing Money?"
description: "Wang Lei returned to his county town in Shandong to start a braised food business, leveraging his experience and catering to young tastes, and is doing well with online orders. In contrast, Li Li's milk tea shop failed within months due to high costs and low sales, while franchisees like Li Yang and Yan Zi also suffered losses, highlighting the risks of county-town entrepreneurship despite the perceived opportunities."
author: "晴山"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-05-06"
language: "en"
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# Busy County Towns: 80% of Franchisees Losing Money?

> Wang Lei returned to his county town in Shandong to start a braised food business, leveraging his experience and catering to young tastes, and is doing well with online orders. In contrast, Li Li's milk tea shop failed within months due to high costs and low sales, while franchisees like Li Yang and Yan Zi also suffered losses, highlighting the risks of county-town entrepreneurship despite the perceived opportunities.

**Returning to County Town to Buy a Shop and Start a Business**
In the second half of last year, Wang Lei ended his nine-year life as a Beijing drifter and returned to his hometown, a county-level city in Shandong.
"I previously worked in development for a braised food chain, then resigned and opened several stores myself. I know this industry well and have relevant work experience. Although there are braised food shops in our small county, none target young people's tastes, so I opened a store more focused on young palates," Wang Lei said.
He said his main reason for returning home was the hardship of living in Beijing in recent years. "I spent my youth there but didn't make much money. I came to Beijing with passion and dreams, but ultimately couldn't escape the shattered reality."
"All those years in Beijing, I was renting and never felt a sense of belonging. Now back home, I have my own house and home. The shop cost me several hundred thousand yuan to buy, and after renovating, I can do business steadily," Wang Lei said with a smile. "Honestly, I don't feel as anxious as I did in Beijing."
Wang Lei mentioned that he had apprenticed under a master specializing in braised food and learned various techniques. He has tried different flavors. "Unlike chain stores with cold finished products displayed in glass cases, I focus on making fresh to order. The aroma attracts customers."
He noted that young people in county towns not only seek good taste but also pay attention to health. For example, sweet-spicy flavors sell less well than numbing-spicy ones, possibly because people think sweets are unhealthy.
According to Wang Lei, **from the start, he launched delivery services and Douyin live streaming. On one hand, this avoided cutthroat competition with offline delis; on the other, it increased store visibility and let people know about the new shop.**
"Business is going well now. Even on bad days, daily revenue is three to four thousand yuan. Although delivery profit margins are slightly lower, most orders come from delivery," Wang Lei said.
"County-level consumption power is indeed not low now, and with many young people returning home in recent years, I've caught the wave of county consumption changes."
He said returning youth are used to ordering delivery via Meituan, Ele.me, etc. As long as he runs his online store well and provides good delivery service, he won't lack traffic.
Like Wang Lei, **many county residents are most willing to try entrepreneurship in the food and beverage sector.** According to Dianping data estimates, in the first three quarters of 2023, the opening rate for F&B stores in county areas was 19.5%, with the top five categories being snacks, fast food, drinks, desserts, barbecue, hotpot, fruits, and fresh produce.
However, with too many similar stores, competition becomes fierce. Despite the apparent boom, it's no longer suitable for ordinary people to enter.
**Losing All Savings in Less Than Half a Year**
At the end of last year, Li Li quit her job in Beijing and returned to her hometown county with nearly 400,000 yuan in savings.
"In Beijing for seven years, although my income was good, the pressure was immense. Every day I faced high housing prices, intense competition, high prices, and pollution. I often felt exhausted. I always dreamed of returning to my hometown county to live a stable and comfortable life."
At the end of last year, Li Li returned home.
"I really like coffee and milk tea, and I thought this business wouldn't be too complicated. For example, making pearl milk tea is relatively simple: boil the pearls, add milk tea powder and warm water, mix and shake well. So I decided to open a milk tea shop," Li Li said.
She said she knew the track was competitive but still had a market. So she found a relatively bustling location on the new district commercial street, rented a storefront, spent nearly 200,000 yuan on renovation and equipment, hired a server, designed a nice sign, and opened after everything was ready.
"Besides coffee and pearl milk tea, the store also featured signature items like lemonade and mango pomelo sago. Lemonade is a refreshing drink, very simple to make: slice and crush lemons, add fruit syrup, water, and ice, and stir well."
"When it opened in June, there were lots of customers, and business was booming. The signature was classic pearl milk tea, with a promotional price of 6 yuan per cup. Delivery orders were also high. Watching the cash register fill up, I felt joy, thinking I had finally found my career and realized my dream," Li Li recalled.
**Although business looked good daily, when calculating profits, I found I wasn't making money but losing it.** So Li Li stopped the promotional offers.
After reducing discounts, she sold only about 40 cups of milk tea a day, and coffee barely sold. On bad weather days, she couldn't even sell 20 cups. **Such business couldn't cover costs.** After several months of losses, with the next quarter's rent due, Li Li chose to close the shop.
"I had to close, return the store to the landlord, and sell the equipment at scrap prices. When it was all over, I felt like a complete failure and didn't know what to do next," Li Li said. She now feels uncertain whether to find a job in her hometown or return to Beijing to work.
Although this entrepreneurial attempt failed, she learned a lesson: **her interests and dreams don't necessarily translate into commercial value and success.**
"Sometimes, we need to view ourselves and our surroundings more rationally and objectively to make the right choices and decisions."
Li Li summarized her experience: "Entrepreneurship is not easy. It requires thorough market research, reasonable cost control, excellent team management, flexible business strategies, and good customer relations."
**Franchisees 'Sweep' County Towns**
In the past two years, county towns have seen a surge in population, especially young people. According to industry research reports, consumption patterns in some county towns are increasingly resembling those in first-tier cities like Beijing, Shanghai, Guangzhou, and Shenzhen. **With population growth, county consumption has begun to 'awaken.'**
The most obvious manifestation is that China's hottest brands have all flocked to small county towns and are rapidly moving toward 10,000-store brands, including Haidilao, Mixue Bingcheng, Wallace, and Tastien. Even international brands like Starbucks and Tim Hortons are joining the county market and accelerating store openings.
For aspiring entrepreneurs, they want to seize these accessible opportunities, exploring more niche tracks or franchising certain brands to realize their dreams. For example, some female entrepreneurs in their 30s choose to open small but exquisitely decorated beauty salons in county core areas, offering services like manicures, eyelash extensions, and basic medical aesthetics to meet local women's beauty needs. Some delivery riders returning from first- and second-tier cities bring back fresh-cut fruit and fruit yogurt shops. Others become live-streaming trainers, teaching hometown students to sell via live commerce.
County towns have become a rising vast market. With the penetration of delivery, community e-commerce, and short videos, ordinary people have more entrepreneurial and employment opportunities. In some eyes, the path to wealth is replicable.
**But looking back at the outcomes, they are not so pretty.**
Li Yang, a designer in a big first-tier city, was tired of the high-pressure life and wanted to open a shop in his hometown. Last year, he met a salesperson from a hotpot ingredient store. After chatting, he felt that opening a store could earn 200,000 yuan a year. Convinced by the salesperson's pitch that franchising was worry-free and profitable, Li Yang chose to franchise that brand in his hometown county.
The annual rent was nearly 60,000 yuan, the franchise fee was 80,000 yuan, and the goods cost 60,000 yuan. The brand sent ingredients in batches.
"I opened on an auspicious day. According to the franchise headquarters, I needed to run promotions initially," Li Yang said. "At first, business was good, with daily sales of two to three thousand yuan. After costs, net profit was about 600 yuan. At that rate, I could easily earn 200,000 yuan a year."
"But before long, sales plummeted to a few hundred yuan a day, completely losing money. I persisted for five months, then couldn't hold on and closed," Li Yang sighed.
Similarly, Yan Zi, who franchised a milk tea brand in a Jiangsu county, also encountered many pitfalls.
"From store decoration design to staff training, and from milk tea equipment to raw materials, everything was handled by the headquarters. The advantage was convenience, but after franchising, I found that the materials supplied by the headquarters were much higher than market prices. Yet I had to buy from them because the headquarters sent supervisors to inspect the store, and any mistake would result in fines," Yan Zi said helplessly.
She lamented that while milk tea profits were decent, there were more and more milk tea brands each year. Milk tea is highly dependent on market trends, requiring various marketing tactics to maintain customer flow.
"The store often needs promotions to attract customers, requiring extra purchases of advertising materials, billboards, and following trends to grab attention and traffic. Many internet-famous stores even hire people to queue, creating a false impression of booming business. They also use gimmicks to attract check-ins," Yan Zi said. "Promotions on various platforms also incur additional promotion costs."
Yan Zi said her franchise store lasted less than a year. Despite much effort, the final tally showed a loss of nearly 200,000 yuan.
"The equipment I bought at high prices was sold at pitifully low prices, almost scrap value. The prettier the franchise proposal, the bigger the pitfall later," Yan Zi sighed.
In recent years, county consumption has become a hot topic, and brands are accelerating their 'sweep' of county towns. To compete for new territories, many brands have broken their 'no franchising' principle and announced opening up to franchising.
Of course, everyone knows that in franchising, some lose money and some make money.
Under fierce competition, a harsh statistic shows that about 80% of franchisees are in a loss-making state. Yet many individuals still choose to franchise, hoping to profit. But for most franchisees, the final outcome is often loss, doing their best, and finally closing the store.
**County Towns Are Busy: Who's Losing Money? Who's Making Money?**
**Recommended Reading**


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