---
title: "Earning 20 Billion a Year, the Pinduoduo of Snacks Hunts in County Towns"
description: "Following Zhenxin Fried Chicken, Wallace, Juewei Duck Neck, Mixue Ice City, Luckin Coffee, and Guoquan, another brand has announced it is about to reach the 10,000-store milestone. However, this is a snack discount store brand rarely heard of in first-tier cities—Snack Busy. It started in Changsha, Hunan, focusing on county towns, where you can buy Sprite for 1.9 yuan, Xizhilang jelly for 2 yuan, and bulk snacks for a few cents per pack. Franchisees describe it as an 'offline Pinduoduo' or 'snack version of Mixue Ice City'. At the end of last year, Snack Busy merged with another brand, Zhao Yiming Snacks, and the article explores the low-price secrets of this model and whether the industry can produce another 10,000-store company."
author: "定焦团队"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2024-04-08"
language: "en"
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---

# Earning 20 Billion a Year, the Pinduoduo of Snacks Hunts in County Towns

> Following Zhenxin Fried Chicken, Wallace, Juewei Duck Neck, Mixue Ice City, Luckin Coffee, and Guoquan, another brand has announced it is about to reach the 10,000-store milestone. However, this is a snack discount store brand rarely heard of in first-tier cities—Snack Busy. It started in Changsha, Hunan, focusing on county towns, where you can buy Sprite for 1.9 yuan, Xizhilang jelly for 2 yuan, and bulk snacks for a few cents per pack. Franchisees describe it as an 'offline Pinduoduo' or 'snack version of Mixue Ice City'. At the end of last year, Snack Busy merged with another brand, Zhao Yiming Snacks, and the article explores the low-price secrets of this model and whether the industry can produce another 10,000-store company.

Following Zhenxin Fried Chicken, Wallace, Juewei Duck Neck, Mixue Ice City, Luckin Coffee, and Guoquan, another brand has announced it is about to reach the 10,000-store milestone.
However, this is a snack discount store brand rarely heard of in first-tier cities—Snack Busy. It started in Changsha, Hunan, focusing on county towns, where you can buy Sprite for 1.9 yuan, Xizhilang jelly for 2 yuan, and bulk snacks for a few cents per pack. Franchisees describe it as an "offline Pinduoduo" or "snack version of Mixue Ice City".
At the end of last year, Snack Busy merged with another brand, Zhao Yiming Snacks, when the number of stores was 6,500, and it has now increased to over 7,700, mainly through franchising.
Not only Snack Busy, but in the past two years, the snack discount track has also seen the rise of a number of head players such as Haoxianglai and Snack Youming, expanding from regional operations to nationwide, with investment institutions and traditional snack brands behind them.
Seizing the development potential of the county economy, and by providing high cost-performance products to meet customers' needs for speed and savings, these snack discount stores have taken a significant share from Three Squirrels and Lai Yifen, and have also eliminated many mom-and-pop stores.
Against the backdrop of weak offline formats, why have snack discount stores been able to run so fast? This article attempts to dissect the low-price secret of this model and whether the industry can give birth to the next 10,000-store company.
**How did Snack Busy and others surge?**
Many people's first impression of snack discount stores is cheap. Some consumers say that ice cream at snack discount stores costs 2.9 yuan each, and drinks 2.8 yuan per box, while in the supermarket at their university, the same brands cost 6 yuan and 3.5 yuan respectively.
Low prices have won snack discount stores many consumers, so how do they achieve such low prices?
Here we need to first explain the two forms of discount stores in the retail discount track: one is hard discount, which sells regular products and achieves low prices through centralized procurement and reduced operational efficiency; the other is soft discount, which focuses on near-expiry surplus products and sells them at a discount off the original price. Snack discount stores represented by Snack Busy follow the hard discount model.
Zhang Gouzi, a hard discount research expert and host of "Zhang Gouzi", told the author that snack hard discount stores reduce procurement costs by reducing SKUs in a single category, increasing procurement scale, and building vertical supply chains; at the same time, they build their own channels through franchised stores, directly sourcing from brand manufacturers, eliminating intermediate distributor links and reducing circulation costs; finally, through standardized store operations, they reduce labor costs such as salespeople, maintaining a low-price advantage.
Chen Momo, a consumer industry investor and host of the podcast "Food and Drink Are Amazing", said that traditional chain supermarkets, in order to ensure a rich assortment, may not achieve a unified cost advantage in procurement of all products, and their ability to manage the risk of unsold goods is also poor; snack discount stores have a certain cost advantage in flexible product selection, and further control costs through inventory management of bulk food and product updates.
"Essentially, the snack hard discount model systematically improves supply chain and operational efficiency, streamlines circulation links, and controls profits. The saved profits are partly kept for themselves and partly passed on to consumers," Zhang Gouzi said.
This kind of low-price snack collection store is not a new format. As early as around 2010, brands represented by Laoban Daren (Zhejiang) and Tangchao (Fujian) developed, differing from Lai Yifen and Liangpin Shopzi, which only sell their own brand snacks, but these companies were all regional brands.
It was not until 2017 that Snack Busy was established. A group of Hunan entrepreneurs, including Snack Busy, began to imitate the Laoban Daren model, and with the help of capitalization, started from Hunan and gradually expanded into blank markets across the country. After scaling, the hard discount characteristics of the entire format became more prominent.
By 2022, the industry was fully activated and entered a frenzy of mergers and acquisitions. Many investors said that the wave of mergers and acquisitions in this industry came earlier than expected.
In August 2022, Wanchen Group, originally engaged in edible fungus cultivation, established the "Lu Xiaochuan" brand and began large-scale acquisitions. By September 2023, Wanchen merged four snack brands—Laiyoupin, Haoxianglai, Yadiyadi, and Lu Xiaochuan—into a unified brand "Haoxianglai", and also acquired Laoban Daren, with more than 5,000 stores, becoming the industry leader.
Two months later, Snack Busy, which started in Hunan, and Zhao Yiming Snacks, which started in Jiangxi, announced a merger, with a combined store count of over 6,500, and the industry's top spot quickly changed hands.
Why have snack discount stores suddenly become popular in the past two years?
On the one hand, consumers have gradually pursued rational consumption and high cost-performance in recent years, giving the snack discount format more room to survive.
Chen Chong, a franchisee of Haoxianglai, mentioned that Lai Yifen and Three Squirrels are also cutting prices. "Traditional supermarkets have high purchase prices and high selling prices, relying on supplier rebates and display fees. We sell the same things cheaper than them, with more abundant SKU updates, similar to offline Pinduoduo."
On the other hand, compared with online channels such as e-commerce, live streaming, and community group buying, offline channels can better meet consumers' occasional needs for buying snacks, with characteristics such as being fun to browse, good prices, and immediate availability. "In fact, the average order value is not low. You might just pass by and want to buy a bottle of water, but at checkout you find you've bought a bunch of things because it's bulk, and the repurchase cycle is shorter," Chen Momo said.
The influx of franchisees has also boosted the development of the snack hard discount model in the past two years. Zhang Gouzi said that many franchisees previously did other franchise businesses and suddenly discovered a business model that is still growing rapidly in the market, so they decided to switch to franchising. "This is a business pushed by both consumers and franchisees, forming a resonance between supply and demand."
At the end of 2023, the "north-south confrontation" pattern of the snack discount industry initially took shape. Recently, the two major snack camps, Snack Busy Group and Wanchen Group, have both shouted the slogan of 10,000 stores and are eyeing the throne of "industry first".
Because only by stabilizing the industry's first place can Snack Busy Group have the opportunity to obtain a higher valuation at IPO, and Wanchen Group can have better performance in the secondary market.
Judging from Wanchen Group's performance, the merger has brought a significant increase in revenue, but also losses. According to Wanchen Group's performance forecast, in 2023, the group is expected to achieve revenue of 9 billion to 9.6 billion yuan, a year-on-year increase of about 1538.55%; net loss is 69 million to 89 million yuan, compared with a profit of 47.7656 million yuan in the same period last year.
According to Snack Busy Group, after the merger, the group's total store revenue exceeded 20 billion yuan in 2023. At the end of 2023, Snack Busy Group received 1.05 billion yuan in investment from Haoxiangni and Yanjin Shopu Holdings, which was seen by the outside world as "ready to burn money".
Snack Busy Group's performance also briefly boosted Wanchen's stock price. In the first half of 2023, due to the hot track, Wanchen Group's stock price soared to 47.53 yuan per share, but has now fallen to 29.28 yuan per share due to performance.
**Price Wars and Talent Wars**
**The Snack Discount Track Keeps Fighting**
The profit model of snack discount stores determines that these brands need to expand through franchising to share operational and capital risks and build brands. With the merger of Snack Busy and Zhao Yiming Snacks, franchisees have not yet reacted to the situation of "opponents becoming teammates", and a new war for people and locations has begun.
"Flipping" and "inserting stores" are common tactics.
In January this year, Snack Busy issued a "Notice" stating that "a certain Xianglai offered attractive conditions (minimum 200,000 yuan subsidy) to guide our franchisees to 'flip'." Soon after, Laiyoupin (Wanchen system) released a video of "Franchisee Joint Letter", saying that they had recently received frequent calls from Zhao Yiming business personnel, "requiring us to change our signs and buy stores at high prices, promising cash compensation." Currently, the video has been hidden.
"Flipping" refers to A brand using subsidies, high-priced store purchases, etc., to get B franchisees to change their stores to A's sign and reopen. "Inserting stores" refers to opening B brand stores opposite or next to A brand stores through subsidies. Chen Chong said that the cost of inserting a store is more than 1 million yuan, tens of thousands higher than the cost of opening a store normally.
In some regions, brands frequently engage in price wars to grab customers.
Chen Chong has franchised 7 Haoxianglai stores in Taizhou. On new store openings and member days, 88% discount is a common practice. Chen Chong said that when price wars are fierce in other provinces, competitors may even offer 49% or 46% discounts. "Both brands have to support, and both sides don't make money. Once this loss-making discount stops, customers will be dissatisfied."
However, because some have tasted the sweetness, there are many franchisees trying to squeeze in, and the huge subsidies from brands add fuel to the fire.
The southern Snack Busy Group is busy expanding into northern markets, including Henan, Hebei, Shandong, Shanxi, and Shaanxi, among which Hebei and Shandong are Wanchen Group's core markets. The northern Haoxianglai is advancing south, announcing entry into Hunan, Hubei, Guangdong, and Guangxi, and holding an investment promotion conference in Changsha, Snack Busy's home base.
According to media reports, Snack Busy Group and Haoxianglai almost simultaneously announced that franchisees can enjoy subsidies such as 0 franchise fee, 0 management fee, 0 training fee, and 0 service fee, and also support "price war activities". Snack Busy mentioned in its public investment conditions: "If a store encounters malicious discount promotions by competing stores, the company subsidizes gross profit to 15%." Wanchen also mentioned: "For stores within 200 meters of 'Busy system' stores, the company provides subsidies for activities."
Chen Chong told the author that Taizhou is equivalent to Haoxianglai's home base, with more than 200 stores covered. Last year, Zhao Yiming Snacks opened a store in Taizhou, but closed it soon after. Recently, they reopened two stores, still in trial operation. Dianping shows that Zhao Yiming Snacks has two stores in Xinghua, Taizhou.
But testing the waters in new cities is not easy. Chen Chong explained that competitors do not have warehouses locally, so logistics may not keep up, and cross-regional management costs are also relatively high.
There are still many franchisees who want to enter the game, and their biggest concern is: Is it too late to join now? Can they still make money?
According to the author's understanding, the general model for current snack discount store franchisees is daily sales of over 10,000 yuan (more than 200 orders, average order value around 50 yuan), comprehensive gross profit of 18%-20%, and initial investment averaging 500,000-600,000 yuan (including franchise fee, deposit, equipment, decoration, initial stocking, etc.). The payback period is one and a half to two years, and longer in the case of price wars.
The gross profit in the snack discount industry is not actually high. In this case, it is not easy for stores to make a profit.
Chen Chong said that now joining has a higher overall threshold than before, with the advantage of having accumulated a certain brand premium, and a higher probability of users entering the store and converting. However, specific site selection, rent, labor costs, payment terms, and inventory control test each franchisee's experience and ability.
"With such low gross profit, you need to judge whether the current rent and transfer fee are controllable based on estimated monthly revenue; an employee's base salary plus social insurance costs at least 60,000 yuan a year, and one more employee means 60,000 yuan more a year. Whether you can hire employees with high labor efficiency is also key," he analyzed.
As both the north and south snack camps have shouted the goal of impacting 10,000 stores, franchisees hope not to further densify existing areas or continue price wars.
Many franchisees, including Chen Chong, said that by the end of this year, a winner must be decided. "If we keep fighting disorderly, both sides will suffer, and they may not be able to afford to burn money anymore."
**Snack Discount Stores**
**Is the Industry Structure Stable?**
The development of any industry needs to follow the objective law of "sprout, growth, maturity, and decline." Now the snack discount industry is still in the growth period. Data from research institutions show that the snack discount industry will be a market of 2 trillion yuan, and the number of snack hard discount stores in 2023 is estimated to be between 22,000 and 25,000.
The current scale of Snack Busy and Haoxianglai is not enough to monopolize the market. Many industry insiders believe that the goal of impacting 10,000 stores is almost certain. As head players enter the 10,000-store era, giants are busy burning money to expand, merge, and go public, while small and medium players in the industry will face a reshuffle.
"Mergers and acquisitions are a common choice for the industry to avoid internal friction and improve efficiency," Chen Momo analyzed, especially in provinces with high store density, where over-competition may occur. For example, to open stores in the same location, transfer fees are inflated, and to attract franchisees, more concessions and promotions are made, which could be saved; in competition, ROI and site selection standards are lowered, and the resulting losses can also be avoided.
Mergers and acquisitions can also solve the industry problem of "expanding cities and stores."
Snack players all start from regions, and when expanding to new regions, they may not be able to integrate the local taste supply chain well or build localized teams. "What we call M&A is not just merging brands and channels, but also merging localization capabilities and know-how. Snacks themselves are strong categories with scattered channels, making integration relatively easier," Chen Momo said.
The industry structure seems basically stable now, so will there be larger-scale M&A? An industry insider told the author that Snack Busy Group is seeking an IPO and has extended an olive branch to other players in the industry.
After continuous integration, the head players are basically impossible to surpass, and the days of small chain players may become increasingly difficult.
Zhang Gouzi said that on the one hand, head brands have a better understanding of the franchise business, more resources, and stronger franchise operation control capabilities. On the other hand, snack discount companies leave very thin profits for themselves, and need to optimize costs by expanding scale and improving operational efficiency. Head brands can continue to invest in warehousing, logistics, and information construction, while penetrating private brands, all of which can raise the moat.
Chen Momo predicts that in the next three years, as the market share of head players continues to grow, a group of regional small players will be integrated or squeezed, and market concentration will increase. Because big brands, with economies of scale, can further optimize supply chain capabilities, and once facing competition, they can withstand greater price reduction space.
It is worth noting that more and more brand owners are willing to enter snack discount store channels, such as Three Squirrels, Liangpin Shopzi, Weilong, and Qiaqia Food. In 2022, Snack Busy surpassed Walmart to become the largest customer of Yanjin Shopu. Yanjin Shopu mentioned in its financial report that in the first half of 2023, revenue from channels such as snack bulk sales increased by more than 200% year-on-year.
Zhang Gouzi explained that when the snack discount channel first emerged, many brand owners were not optimistic, thinking it would disrupt brand pricing and impact the distribution system. Only brand distributors were willing to cooperate privately, until the industry grew to the point of impacting sales in other channels, and then brand owners came to their senses and cooperated with channel needs to produce customized and special supply products, gradually increasing the channel's voice and bargaining power.
But this is not a simple story of "channels defeating brands." Gloria, an investor at Qicheng Capital, pointed out that under the current trend of discounting, a cooperative zero-supply relationship (the relationship between retail stores and suppliers) will definitely go further than an adversarial one. Brand owners and channels have clearer boundaries in professional division of labor, jointly creating high-quality and cost-effective products for consumers.
Perhaps one day, these snack discount stores that have enriched the county economy will advance into first-tier cities. At that time, will they change the consumption habits of first-tier city users who buy snacks online? Will they take away some business from food delivery and fresh food channels?
Whether admitted or not, the entire snack discount format has taken root and been replicated in China, and traditional offline channels will also usher in upgrades. However, the fast-running Snack Busy and others should not forget that stability is more lasting than speed.


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