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Source: Danjie Entrepreneurship (ID: manjiechuangye) Introduction: Lately, we've often been asked: "Can you actually make money opening a convenience store, and how do you franchise a 7-11?" To demonstrate our expertise in this field and provide a credible answer, over the past month we interviewed 7 industry practitioners, visited dozens of physical stores, and reviewed hundreds of industry research reports. We've finally uncovered some of the "secrets" of the convenience store industry. Below, we'll answer the following questions:

  1. Do mom-and-pop stores make money? How? Can aspiring entrepreneurs do it? Can they upgrade to JD or Tmall Xiaodian?
  2. Does the convenience store pioneer like 7-11 make money? How much can franchisees earn?
  3. Can those impressive-looking unmanned convenience stores be franchised? Do they make money?
  4. Do capital-backed brands like Bianlifeng, which expand aggressively, make money? How?
  5. If convenience stores don't make money, what are the reasons?
  6. If they do make money, what exactly should you do to succeed? The following content may take 30 minutes of your time, but after 30 minutes, you'll be the expert on the convenience store industry in your circle of friends. 01 Do Mom-and-Pop Stores Make Money? Our generation has a soft spot for mom-and-pop stores because they originated from the familiar corner shops of our childhood—where spicy strips cost 50 cents and ice packs 20 cents. In our youth, the best things were often those we couldn't eat. According to incomplete statistics, there are currently nearly 7 million mom-and-pop stores in China. About 30% are in townships and rural areas, and 46% in third- and fourth-tier cities and county-level cities. They contribute 40% of the total shipment volume of the entire retail channel. It can be said that mom-and-pop stores are the smallest economic cells of the Chinese market. So, do mom-and-pop stores make money today, and is it suitable for us to enter this business? We first visited a convenience store in a new residential community near the Fifth Ring Road in Haidian District, Beijing. The owner is a man born in 1982, with an initial investment of over 100,000 yuan. The store opened in March 2017 and is about 70 square meters. Within a 10-minute walk, his is the only supermarket. The store is well-stocked with breakfast items, snacks, fruits, vegetables, toothbrushes, socks, and more. The store's average monthly revenue is around 150,000 yuan. Monthly expenses include about 70,000 yuan for goods, over 50,000 yuan for cigarettes, about 7,500 yuan for utilities and rent, and 6,000 yuan for labor. Roughly calculated, excluding the couple's own wages, there's about 10,000 yuan in pure profit. To make money, you can't cut corners; you have to source goods from wherever is cheapest. So the owner gets up at 7 a.m. every day to buy fruits and vegetables at the market, then works until after midnight. He's alone and always tired, and the store's product placement and management are somewhat haphazard. He faces two options: either grit his teeth and keep going to save money, or hire someone, which would add a salary. The owner chose a third path: he plans to sell the store and return to his hometown to start a cross-border e-commerce business. Next, let's look at a medium-sized supermarket in Renshou County, Sichuan. The owner is a woman born in the 1990s, who invested over 200,000 yuan. The store opened in December 2015 and is about 200 square meters. Renshou County is near Meishan City, Sichuan Province, and was selected as one of the top 100 counties for investment potential in 2018. From January to September 2018, the per capita disposable income in Renshou was 15,023 yuan, with a growth rate of 16.0%. This store is located at a three-way intersection on the south section of Nantan Road, surrounded by residential areas, making it a gathering place for foot traffic. Monthly revenue is about 240,000-250,000 yuan, with fixed monthly expenses of about 220,000 yuan, including rent, wages for 4 employees, utilities, and goods. Monthly net profit is 20,000-30,000 yuan. The initial investment was recouped within six months, and the supermarket's income has been steadily rising. The owner is proactive and ambitious. Within six months of opening, she adjusted the shelves twice and is learning how to maximize profits through different display methods and product combinations. She also takes time to think about "this and that," mainly because she employs 4 people and labor costs in small counties are low, unlike the Beijing Haidian owner who can't afford to hire anyone. Now, the owner has also started a second-hand phone business. After visiting stores in both big cities and small counties, overall, mom-and-pop stores can make money, but it's hard work. Although most are profitable and can cover daily expenses, most operators lack knowledge about business and retail, and remain confused about how to increase income. Mom-and-pop stores have low investment, a payback period of about six months, relatively stable income, and limited growth. They suit people who don't expect to get rich but want to work steadily for themselves. However, with the acceleration of urbanization, branded convenience stores are expanding aggressively, and some mom-and-pop store owners are hoping to upgrade by franchising Tmall or JD Xiaodian. Next, we'll analyze in detail whether mom-and-pop stores are suitable for upgrading to Tmall or JD Xiaodian. To this end, we also visited several Tmall and JD Xiaodian stores in Tianjin. From our field visits, whether JD convenience stores or Tmall Xiaodian, some are renovated mom-and-pop stores, and some are new stores, so each store we visited was different. Visually, the interior decoration, product selection, product placement, and business module combinations are not standardized; only the storefront signage is uniform. Some stores have messy product displays and dim lighting, with products mainly from traditional offline channel brands; others have brands rarely seen in other convenience stores, like Baiweicao and Three Squirrels; some are bright and tidy with neatly arranged products and many internet-famous or imported brands, such as Belgian Liefmans beer and French Kronenbourg 1664; some have fresh food, steamed buns, and oden; others don't. Franchising Tmall or JD Xiaodian is low-cost: no franchise fee, only a 10,000 yuan deposit, refundable after the one-year contract expires. After joining, the sign must be renovated, installed directly by Tmall or JD, with several styles to choose from, costing under 10,000 yuan. The interior can be renovated or not, entirely at the owner's discretion. Given these reasons, the additional cost for franchisees is low, regardless of which brand they join. Operations also vary widely. Some still operate like traditional offline small stores, while others have introduced internet tactics like limited-time promotions, WeChat-based membership systems, differentiated pricing for members, and delivery services. So, whether JD or Tmall, they don't provide much help with store operations and management; franchisees remain self-operated after joining. The big data and sourcing advantages of JD and Tmall are not fully realized. So if you don't already have a store and hadn't considered convenience stores before, but think you'll make money just because of the JD or Tmall brand and start from scratch, the risk is the same as not joining them—you need to understand retail. Through our visits and analysis, we summarize the advantages of mom-and-pop stores as:

1. Access to lower-cost goods: A phone call brings goods from channel salespeople, with no delivery fees. Mom-and-pop stores don't need invoices, so purchase prices are lower. 2. Lower rent: Many community stores are in residential buildings, with doors cut into the first floor, which is cheaper than commercial rents. Some owners even live on the first floor, paying zero rent. 3. No invoices, no taxes—all profits go straight into their pockets. But to make money, most mom-and-pop owners save by cutting corners. They don't hire employees; the couple works from 6 or 7 a.m. to 11 p.m. or midnight, which is exhausting, and they can't leave the store all year round. Hiring someone immediately raises costs, and some stores might only earn enough to cover wages. Every coin has two sides. The disadvantages of mom-and-pop stores include limited product selection, no fresh food, inconsistent quality, and short service hours. Today's young consumers have diverse needs that mom-and-pop stores struggle to meet. 02 Does Franchising 7-11 Make Money? When it comes to convenience stores, the most representative is 7-11, which most Chinese convenience store practitioners look up to as a model. Currently, 7-11 has over 60,000 stores globally! In 2016, their 8,000+ employees generated nearly 10 billion yuan in profit, with per capita profit close to 1.2 million yuan, rivaling Alibaba. In Japan, people's lives are almost inseparable from 7-11. You can buy daily necessities, meals, shirts, plane tickets, movie tickets, and amusement park tickets; there are free phone translation services, elderly services; parcel delivery and storage, tax and pension insurance payments, laundry services... It's fair to say 7-11 truly achieves convenience. But what's it really like in mainland China? Currently, 7-11 has over 7,000 stores in China, but Taiwan accounts for more than 5,000, leaving only about 2,000 in the mainland! In terms of store count, 7-11 hasn't developed well in China. In 2011, 7-11 ambitiously entered Chengdu, planning to open 250 stores in 5 years. But it only opened 100 before stopping due to heavy losses, and now only about 60 remain. Why has 7-11, which expands aggressively in Japan and Taiwan, changed its approach in China? Danjie Entrepreneurship analyzes three reasons: 1. High rent and labor costs in China 7-11's most profitable stores are in core commercial areas of first- and second-tier cities, but competition is fierce, and rents are extremely high, accounting for over 30% of opening costs. Labor costs are among the highest expenses for almost all companies. In Beijing, for example, convenience store employees earn a basic salary of around 5,000 yuan, plus social insurance, housing fund, and taxes. With 24-hour operations, staffing levels are high. Labor costs typically account for over 20% of total costs. Together, rent and labor costs exceed 50%. 2. China's vast low-end market gives 7-11 little advantage China's largest consumer market is in third- and fourth-tier cities, where consumers are price-sensitive. High-end convenience stores like 7-11 can't compete with the 6 million mom-and-pop stores. For example, a pack of spicy strips from an unknown brand sells for 0.5 yuan in a mom-and-pop store, while a pack of Weilong spicy strips at 7-11 costs 4 yuan. The 0.5 yuan ones sell well; the 4 yuan ones sit on the shelf until they expire. 3. Competition from local brands and disadvantages in government-business relations China is a society of relationships, and government-business relations can also constrain convenience store development. Many local supermarkets have strong government backing, and local protectionism and policy support create resistance to outside brands. Of course, this isn't the most important factor. Even so, 7-11 remains an excellent company. Most domestic convenience stores imitate its retail philosophy, management methods, supply chain capabilities, SKU control, and franchise authorization model. Data shows that 7-11 franchise stores account for 98% of its stores, meaning 7-11's strength relies heavily on a franchising model. In many places, 7-11 forms joint ventures or partnerships, delegating operational rights to other companies. For example, in Thailand, 7-11's operations are run by CP Group. In different regions of China, operational rights belong to different companies. In North China (mainly Beijing and Tianjin), stores are under 7-11 Beijing; in the South, under a Hong Kong company; in East China, under Taiwan's Uni-President Group. Before 2011, 7-11 operated directly; franchising only opened after 2011. But its franchise conditions are stringent. For Beijing and Tianjin, franchise fees range from 350,000 to 700,000 yuan, and there must be two full-time operators (preferably a couple). The high threshold is one thing; more importantly, 7-11 has a slow payback period. It's a long-term investment, which many find unsuitable. We understand 7-11 has two main franchise models: Under this model, it's hard to make quick money as a 7-11 franchisee. In other words, from the moment headquarters opens franchising, it's a career investment, not an opportunity investment. That's why 7-11 has a requirement: the franchise contract must be signed by two people with a kinship relationship; otherwise, franchising isn't granted. Some might wonder why such a requirement exists. There's a story from McDonald's early days that might explain. When McDonald's first opened franchising, its criteria for selecting franchisees were: wealthy people. Founder Ray Kroc believed it was easier to persuade wealthy people to invest than ordinary folks. But it didn't last long. Several wealthy people indeed signed franchise agreements generously, but they were lackadaisical in operations: beef wasn't cooked thoroughly, pickles in burgers were replaced with lettuce, and trash was everywhere. This infuriated Kroc. One day, a young man tried to sell Kroc a Bible. Kroc asked him why a Jew would sell Bibles. The young man said: to survive. Kroc had an epiphany. He realized that the franchisees he needed weren't those with big money, but those with a sincere business attitude. So Kroc signed a franchise agreement with the young man. The young man worked with his wife, giving their full effort every day, meticulously controlling food temperature, serving times, and store cleanliness. McDonald's business gradually improved. From then on, Kroc took back franchise rights from the wealthy and changed his requirements to struggling young couples. 7-11's franchise policy follows the same logic. Moreover, 7-11's profit distribution is more suited to young couples—they can't earn big money, but they can't earn this much elsewhere either, so they'll stay long-term, providing reliable labor for the company. That's the secret to how 7-11's many franchise stores consistently generate high value for headquarters. During our field visits to several 7-11 stores near Zhongguancun, we found that most are franchise stores, and many have been operating for at least 4 years, indicating extremely stable operations. Based on our incomplete statistics, these stores' daily revenue doesn't reach 20,000 yuan. We estimate the final take-home income is around 10,000-20,000 yuan. While not high, it's acceptable for ordinary-income families. So, who is suitable to franchise a 7-11-like convenience store? First, you need a certain amount of startup capital (a prerequisite):

  1. Veterans who have been disconnected from society for a long time and lack other experience.
  2. Ambitious young people from third- and fourth-tier cities who aren't content with local life, want to develop in first-tier cities, but lack the ability to start their own business.
  3. Couples who can only earn money through physical labor. As for whether you'll make money after franchising, it depends on your perspective. If you think earning 100,000 yuan a year is worth it, then it's worth doing; if you think you can earn that through a job, then it's not. 03 Does Franchising an Unmanned Convenience Store Make Money? When shopping at convenience stores or supermarkets, you've probably experienced waiting in line to check out—it's annoying, and you've imagined how great it would be to skip the line. Now, unmanned convenience stores have made that possible. Grab and go, no lines, with the system automatically identifying your purchases and deducting from your account. Under the new retail concept, capital began heavily focusing on unmanned stores in 2017. According to statistics, at least 27 companies in the industry received funding in 2017, totaling 3.1 billion yuan. With capital backing, is the unmanned store a good business? First, we must ask: why have unmanned stores when convenience stores already exist? Is it just to solve the queue problem? Obviously not. The industry promotes an advantage of unmanned stores—cost reduction and efficiency improvement. In first- and second-tier cities, over 50% of a convenience store's costs are rent and labor, yet gross margins are only 20%-35%. High costs and low margins make it hard for convenience stores to profit. Unmanned stores use container-style setups to reduce rent, and leverage mobile payment, IoT, and other technologies for smart checkout, improving efficiency while saving labor costs. That's what the industry calls cost reduction and efficiency improvement. Moreover, smart shopping can collect user data, generating big data with more business possibilities in the future. This is also the essence of new retail: integrating online and offline data. Convenience stores are naturally close to users and have high traffic. Unmanned stores have low costs, facilitating rapid expansion. So when the unmanned retail concept caught fire, capital rushed in to stake claims. Once this segment is filled, the business closed loop from online to offline becomes more complete. This business seems promising. However, we've also found that unmanned stores create new problems, such as theft, competitiveness, and foot traffic. It's hard to judge the prospects. To that end, Danjie Entrepreneurship visited unmanned stores to analyze. Danjie Entrepreneurship visited two different unmanned store brands in Beijing: Xiaomaipu and Bingobox. These two brands are at the forefront of funding: Xiaomaipu raised 120 million yuan in Series A+, and Bingobox raised $80 million in Series B. Both stores are in enclosed communities. Unmanned stores have more flexible site selection than staffed stores; if a location doesn't sell well, they can be moved elsewhere. But they're mainly placed in relatively enclosed environments—communities, campuses, large companies—with three advantages:
  1. These places allow for repeat consumption, making it easy to cultivate stable foot traffic.
  2. The probability of theft is lower.
  3. Staffed stores are far away and can't cover these areas. Xiaomaipu Store interior: Less than 20 square meters, relatively narrow, with three shelves, three freezers, one checkout counter, and aisles only wide enough for one person. There's a water dispenser providing hot water for instant noodles. Products: Mainly beverages, snacks, and simple daily necessities. From nearby residents, we learned that sometimes simple meals and rice balls are sold. Checkout: The checkout counter is simple; customers scan codes to pay themselves. Theft prevention? When mentioning unmanned stores, many people's first impression is whether they'll be stolen from. The editor tried taking a bag of fries out directly—no barriers or alarms, and no payment notification on the phone. Bingobox Store interior: About 20 square meters, with four shelves, two freezers, one checkout counter, and aisles only wide enough for one person. The air conditioning was on, making it warm. Products: Mainly snacks, beverages, and simple daily necessities. Checkout: The checkout counter has a tech feel; no need to scan barcodes—just place items in a designated area for automatic recognition, then scan a QR code with your phone to pay. The editor tried to use the function, placed items, but couldn't check out; the system showed three unpaid items from before. Trying to pay for them, scanning the code led to a page like this. Calling customer service via the wall phone, no one answered after two attempts, and the purchase failed. Theft prevention? The editor directly took a ham sausage out—no obstacles, no alarm (though a wall sign said "Taking items without payment will trigger an alarm"). Of course, we're decent people, so we returned the sausage after walking around outside. Is it worth franchising now? We'll analyze from two aspects: cost and profitability.

1. Are costs high? Taking Beijing as an example, let's compare costs: opening a staffed store costs about 600,000-700,000 yuan a year, while an unmanned store only needs 130,000-150,000 yuan. In terms of labor, unmanned stores don't need staff on duty; one stocker can handle several stores, so labor costs are naturally lower. Of course, theft is also a cost. Danjie Entrepreneurship learned that an unmanned store of less than 20 square meters on Peking University's campus has annual shrinkage (theft or expired goods) of about 18,000 yuan. With annual revenue of 800,000 yuan, the shrinkage rate is 2.25%, not high. But this store is on campus, where people are more educated and theft is lower. In other communities, it might be different. Regarding theft prevention, no brand has mandatory measures; currently, it's mainly supervision and reminders, like cameras and warning signs, relying on consumer self-discipline. Overall, unmanned stores have a cost advantage. 2. Can they make money? Whether a convenience store can make money depends on two things: gross margin and foot traffic. Unmanned stores can only sell standardized products, resulting in low gross margins. In the industry, fresh food typically has the highest profits, but it's difficult for unmanned stores to offer fresh food. There are two main reasons: first, fresh food requires staff on-site; customers can't operate things like cold skewers or oden themselves, which would be a poor experience and unhygienic; second, unmanned stores are scattered, making supply chain costs high even if they did offer fresh food. So most unmanned stores only sell standardized items like beverages, instant noodles, and chips, leading to naturally low gross margins. You might think of selling more at lower margins, but unmanned stores don't have a foot traffic advantage. A convenience store's foot traffic depends on three factors: location, product SKU, and service experience. In terms of location, unmanned stores in enclosed communities have a small user base. The highest-traffic area in a community is the entrance, where staffed stores are usually located. Unmanned stores are often placed in open areas, serving only nearby residents. In terms of service experience, unmanned stores lack staff for guidance, promotion, and timely restocking, which affects shopping experience and sales. The unmanned store at Peking University initially had poor sales; after arranging staff on duty, daily sales rose from 3,000 to 4,500 yuan, a 50% increase. In terms of product SKU, unmanned stores can't match staffed stores: unmanned stores have only 600 SKUs, while staffed stores typically have 3,000. Additionally, in communities, mom-and-pop stores rely on repeat customers with emotional connections, which unmanned stores can't replicate. While unmanned stores have a distance advantage, they sacrifice many other advantages. And in these locations, there's a business model that has existed for years—vending machines. An unmanned store is essentially a larger vending machine; its function can be fully replaced by vending machines, with just two or three needed to meet demand. Moreover, vending machines are more efficient, products aren't messed up by customers, and they're easier to secure. They have lower costs, no heavy equipment investment, smaller footprints, and lower rents. Overall, it's hard for unmanned stores to be profitable. In the past two years, unmanned stores have seen large-scale "deaths." In 2018, 51 Snacks was sold to Xingbianli, Guoxiaomei acquired Fanqie Bianli, and Linjia Convenience Store closed all 168 stores overnight. Few unmanned store startups received funding after 2018. This all indicates that unmanned convenience stores aren't a profitable business. But practitioners are exploring various models, such as Bianlifeng (staffed + self-checkout) and Xiaomaipu (dining + convenience store). In the future, more new models may emerge. So, while unmanned convenience stores solve the high rent and labor costs of traditional stores, they create new problems:

  1. Poor service experience: No staff for guidance, promotion, or timely restocking. The upstream and downstream industry chain isn't mature, and self-checkout and AI recognition systems are unreliable, leading to recognition failures.
  2. Low profit margins: Without staff, they can't sell the most profitable fresh food, only standardized products with low gross margins. Due to these reasons, unmanned stores have poor rental affordability, can't secure prime locations, and have little foot traffic advantage. So currently, unmanned stores struggle to solve profitability issues. We don't recommend franchising now, but it's worth watching. The industry is exploring different business models, and a successful model might emerge in the next two to three years. Of course, if you have resources and the ability to solve the three problems of cost, gross margin, and foot traffic, it could be a profitable business. 04 Does Bianlifeng, Which Opened 700 Stores in Two Years, Make Money? Danjie Entrepreneurship has struggled to survive on Zhongguancun Entrepreneurship Street for 5 years. We've watched the rise and fall of businesses within a 200-meter radius, seeing stores open and close. But in the past year, a store called "Bianlifeng" has truly surprised us. Since its founding in December 2016, it has expanded to cover five regions: Beijing, Nanjing, Shanghai, Tianjin, and Langfang, with about 300 stores in Beijing. By the end of 2018, Bianlifeng had about 700 stores. And on this small street, over a dozen stores have opened; you encounter one at every corner. Here's a screenshot: Red: Number and locations of Bianlifeng stores within 1km of Zhongguancun Bianlifeng started in Zhongguancun, which has 25 large office buildings, an average daily floating population of 87,896 people, 75% aged 19-59, and 80% earning 10,000 yuan/month or more. We visited over a dozen Bianlifeng stores within 1 kilometer of Zhongguancun to see if the capital-pampered look is as beautiful as it seems. First, here are two photos for a visual impression: Bianlifeng's site selection focuses only on location, not store size. 95% are on the ground floors of commercial buildings, in prime spots with convenient transportation. Many stores complement each other, like Tianshi Building Store 1 and Store 2, where the larger store can supply delivery services to the smaller one, saving costs and improving efficiency.

1. Visual impression of store appearance and product placement Upon entering, the first impression is brightness and tidiness. The fruit section is immediately visible, with fruits under its own brand "Fengzhixuan." At the side of the entrance are self-checkout machines and coffee machines. Compared to 7-11's manual checkout and freshly ground coffee, Bianlifeng's unmanned checkout and coffee machines not only reduce labor costs but also greatly enhance the shopping experience. Next to the checkout is the fresh food section, with oden, steamed buns, various meat skewers, and hot lunch dishes, meeting the diverse breakfast and lunch needs of office workers. The core of a convenience store's product structure is fresh food. As a non-standardized product, fresh food best reflects a store's differentiation and has high gross margins (typically at least 40%, while overall convenience store margins are around 30%), boosting profitability. To ensure fresh food supply, Bianlifeng has partnered with Yamiyami, the same factory that supplies 7-11 in Beijing, giving it a supply advantage in fresh food comparable to 7-11. This could become one of Bianlifeng's core barriers in the future. Next are shelves for snacks, with daily necessities, instant noodles, and bread on the back shelves. Many products are Fengzhixuan, showing Bianlifeng is expanding its private brand "Fengzhixuan" to increase margins. In contrast, 7-11 has fewer private-label products. Finally, there are prepared fresh food and refrigerated dairy/juice cabinets. Sandwiches, various set meals, noodles, porridge, sushi, etc., with shelf lives of about one day. Next to these are small amounts of fruit. Products aren't much different, but prices are generally more favorable than 7-11. Next to the fresh food fridge are beverage coolers with sugary and sugar-free teas, various beers, and carbonated drinks. These are similar to 7-11's offerings—standardized products. Each store has a photo printer and shared umbrella area, usually near the entrance. Larger stores also sell more alcohol. Some alcohol is also Fengzhixuan, and App members enjoy significant discounts. 7-11 has no membership, and its alcohol isn't private label. 2. Shopping experience and service attitude When shopping, you scan items at the self-checkout machine, then open the Bianlifeng App to scan and pay. No staff involvement is needed, making the entire shopping experience very convenient. Staff are enthusiastic and occasionally briefly introduce daily specials. When buying fresh food, I noticed every staff member wears gloves, hairnets, nose clips, and masks, giving a very hygienic impression. Every Bianlifeng store has a dining and leisure area, with 2-3 seats in small stores and 20-30 in larger ones, allowing customers to dine comfortably. In contrast, 7-11 only has manual checkout counters, often with long lines, and staff are relatively "cold," without greetings or farewells, and no dining area, lacking warmth and personalization. These are the "surface differences" observed during store visits. Any business must look beyond the surface to the essence, or it's just fooling around. 1. What are the fundamental differences between Bianlifeng and 7-11? First, their purposes differ. 7-11 aims to make each store profitable; Bianlifeng treats each store as a form of traffic acquisition, with plans beyond just convenience stores. Second, their core focuses differ. 7-11's core is high gross margins from fresh food, efficient supply chains, and a developed franchise model; Bianlifeng's core is high gross margins from fresh food and private-label products, efficient supply chains, and self-service shopping and payment smart systems. 2. Why hasn't Bianlifeng opened franchising like 7-11, choosing direct operation instead? Because Bianlifeng lags 7-11 in scale and brand recognition. It can only ensure profitability by opening stores densely in a region, like the 10 stores within 1 kilometer of Zhongguancun. If it opened only 2 stores, it would need to build front warehouses and delivery systems for them, which is too costly. So it must operate directly. Even if it opened franchising now, either products wouldn't be fresh or tasty, or delivery costs would be too high, making franchisees cannon fodder and harming the brand. 3. Why has Bianlifeng grown so rapidly? Because behind "Bianlifeng" is Zhuang Chenchao, founder of Qunar.com, who left to create Zebra Capital, and he initially reserved 1 billion yuan in development funds for Bianlifeng. With ample funds, Bianlifeng moves faster than competitors in site selection, store opening, supply chain and logistics setup, and App development, and is more daring. Besides money, it also has talent. The team, led by Wang Zi, comes from 7-11's former management. After leaving 7-11, this team opened Linjia Convenience Store, gaining rich operational experience, giving Bianlifeng a boost. Bianlifeng defines itself not just as a convenience store, but as a means to acquire more user data and traffic through numerous stores and other projects. For example, Lawson treats its App as a mobile payment tool for stores, while Bianlifeng's offline stores serve the online App. Everything aims to attract more users to the App, purchase memberships, provide more data, and then use that data to extend into new consumption scenarios. So measuring Bianlifeng's profitability shouldn't be like traditional convenience stores, calculating per-store rent, labor, and utilities, but rather looking at its grand strategy. If Bianlifeng continuously opens stores and acquires large amounts of user data and traffic, convenience stores become one of its channel entrances. Like its experiments with shared power banks, shared bikes, and unmanned shelves—beyond harvesting additional experiences from products, it's mainly about attracting traffic. For example, after Meituan established its food and entertainment focus, it developed many consumption scenarios. So Bianlifeng might become a logistics company, advertising company, or supply chain company. Since it earns in segments, we ultimately need to see if the group is profitable and can make money for investors. Of course, such rapid development also brings risks.

  1. Take delivery: unlike 7-11, which partners with Meituan and Ele.me, Bianlifeng has built its own delivery team. But fresh food delivery is challenging because fresh food can't be stored; it's hard to synchronize online and offline inventory.
  2. How to replicate and output excellent store managers, supply chains, and achieve full-region delivery are issues Bianlifeng needs to address.
  3. Rapid expansion and strengthening supply chain and logistics require massive spending, so Bianlifeng's biggest challenge remains solving its capital chain problem. 4. Bianlifeng doesn't currently open franchising. If it did, would it be worth doing? If you insist on franchising, you must consider two points:
  1. Whether the headquarters in your city provides delivery systems, front warehouses, and supply chains.
  2. The company's overall strategy: whether it considers investors more, franchisees more, and whether it offers high-margin products like fresh food and private-label items. If both points are met, there's a premise to proceed; otherwise, don't do it, or you'll likely become cannon fodder 99% of the time. 05 The Big Trends and Small Tricks in Convenience Stores After over a month of visits, research, and analysis, we've summarized several major trends in the convenience store industry:

1. Convenience stores are no longer what they used to be In the past, we thought of convenience stores as places to buy urgent small items nearby, like cola, toothbrushes, or yogurt. But today, convenience stores might sell homemade milk tea, coffee, yogurt, or their own boxed meals and fast food, and can also accept parcel deliveries and sell lottery tickets. You can borrow umbrellas, print selfies, and even find seats to enjoy a cup of instant noodles for a high-calorie lunch. So if you want to open or franchise a convenience store, you must first shift your mindset—you're not opening the convenience store of yesteryear. 2. All convenience stores are trying to boost gross margins through dining The convenience store industry is a low-margin retail sector. The generally accepted gross margin in the Chinese market is 20%-35%, with net margins of 3%-8%, averaging 5%. The main costs are rent and labor, accounting for nearly 50% of costs. With low margins, starting with 7-11, there's been a continuous effort to increase margins through dining. Currently, in Beijing's branded convenience stores, at least one-third of the area is dedicated to oden, boxed meals, rice balls, and bread. 7-11's operating data in China shows that FF (Fast Food) products have become the largest component of sales and gross profit, accounting for 42.9% of sales and 46.6% of gross profit. In a 7-11 survey of Chinese consumer shopping behavior, in-store prepared food, dairy, beverages, oden, and rice balls/sushi ranked as the top five target products. Except for dairy and beverages, which are traditional categories, the rest are all fast food. 3. Data is the lifeline of the convenience store industry In an era of low productivity, retailers sold what they had, and consumers bought what was available. But today, you must work backward from customer needs, integrating what products, logistics, prices, and displays are needed. 7-11 emphasizes "a thousand stores, a thousand faces; a thousand times, a thousand faces." Where is your store? Near a hotel, company, hospital, or residential area? Are the nearby residents older or younger? Is it winter or summer? Different times, dates, and weeks require different product quantities and categories on shelves. Today, a digital supply chain network is the lifeline of convenience store brands. Traditional linear supply chains are evolving into dynamic networked systems. 7-11 can supply different stores 1-3 times a day at different times. Your stores, suppliers, distribution centers, and headquarters must all be connected. What products each store gets, when they're stocked, and what promotions run should be determined by "the store manager and the data in their hands." 4. If you must franchise, look at these three points: First, check for fresh food supply chains and related qualifications. As analyzed earlier, fresh food is an effective way to boost convenience store margins. So when considering franchising, you must assess whether the brand has a reliable fresh food supply chain and food service qualifications, including delivery systems, central kitchens, and fresh food factories. Second, consider the brand's local awareness. Branding is a major trend in convenience stores. A brand means guaranteed products, after-sales support, and complete training and service systems. Finally, and very importantly, check if there's an exit mechanism. Danjie Entrepreneurship consistently emphasizes that entrepreneurship is risky, and success is sometimes a matter of probability. Convenience stores are a low-margin, hard-working industry. Some franchisees may not persist, or the brand's profit structure may be flawed. Some will inevitably exit, so it's crucial whether the brand has designed an exit mechanism. -END-