Exclusive: All Stores of Pet&Fresh, Founded by Hema Founder Hou Yi, to Close

Source | Lianshang.com ID | lingshouzixun Author | Lianshang.com Editorial Department

Another entrepreneurial venture by Hema founder Hou Yi may be on the verge of failure. On November 14, the author exclusively learned that all stores of Pet&Fresh, a pet fresh food brand founded by Hema founder Hou Yi, will close, less than nine months after its first store opened. According to Dianping information, among Pet&Fresh's 18 stores, 7 have shown "suspended" or "closed" status, including some new stores that have been open for only about 3 months. All stores to close, products on discount Pet&Fresh was established in Shanghai in November 2024. On May 7 this year, Pet&Fresh announced the completion of a $25 million (approximately RMB 177 million) angel round of financing, setting a new high for angel rounds in the pet industry in recent years. In terms of business model, Pet&Fresh created a three-dimensional model of "fresh food workshop + social space + full-category coverage," covering six major categories: main food, fresh food, health products, medicine, supplies, and snacks. The core highlights are differentiated fresh food products such as "made-to-order," "refrigerated fresh food," and "baked pastries," meeting pet owners' demands for high-quality, personalized feeding. Founder Hou Yi once publicly stated that choosing Shanghai as the starting point was due to its consumption upgrade potential as an international metropolis and its soil for innovative business models. He planned to open 100 stores in Shanghai in 2025, with a long-term goal of achieving a thousand-store scale nationwide and establishing industry standards for pet fresh food. However, from the current situation, Pet&Fresh's store count is far from the plan, and many stores have already ceased operations. The author's search of Dianping information shows that Pet&Fresh has a total of 18 stores, of which 7 are marked as "suspended" or "closed." By this calculation, only 11 stores remain in operation. Many still-operating stores are also conducting clearance sales with "50% off on all items." According to Pet&Fresh's official mini-program, there are currently 12 stores. Among them, the Pudong Qiantan Park Lane store has been open for over a month, but no specific information about the store was found online. The author consulted customer service, who said it is still in operation and that information on maps and review platforms has not yet been updated. Pet&Fresh Dahua Jinhui Store On November 13-14, the author visited several Pet&Fresh stores in Shanghai. At the Pet&Fresh Dahua Jinhui store near Huapeng Road Station on Metro Line 13, nearby merchants said it had been closed for over a month due to lack of business and customers. A passing consumer lamented, "It went bankrupt so quickly." Pet&Fresh Bohui Plaza Store Pet&Fresh Bohui Plaza Store opened on May 22 this year. Nearby tenants said it had been closed for over 10 days. Regarding foot traffic, nearby tenants said overall traffic was okay, as it was convenient due to nearby parking lots. "Jin Xiao Yi Ke" first store Pet&Fresh Zhongshan Park Cloud Nine Store The Pet&Fresh store on the sixth floor of Shanghai Cloud Nine Shopping Center was also closed with its doors tightly shut. At these store locations, basically only the brand slogan "Pets are family, love is freshness" and the storefront logo remained. Through the glass, the interior appeared messy, and there were no closure notices. Stores still in operation are also continuously clearing inventory and offering discounts. During the visits, the author learned that Pet&Fresh's first store, the Haishu Cultural Plaza store, will close on November 25. Pet&Fresh Haishu Cultural Plaza Store At the scene, the author saw that the Haishu Cultural Plaza store was conducting a 50% off promotion on all items, with some shelves already emptied. The store had 4 employees, who were busy with clearance work. "The store will close on the 25th of this month. All stores in Shanghai will close. We will discuss compensation matters next and also look for jobs," a store employee told the author. In addition, stores such as Suhewan MixC World, BFC, and Baoshan Longfor also carried out promotional activities. Almost all products on Pet&Fresh's online mini-program were "50% off." Regarding the closure of Pet&Fresh stores, Hou Yi exclusively replied to the author: "Business adjustment, it's normal." The author also received confirmed information from insiders: all Pet&Fresh stores will close, and Hou Yi personally plans to transition to becoming a fresh food livestream host. This will be Hou Yi's third entrepreneurial venture after leaving Hema. It is worth noting that Hou Yi's last share of Pet&Fresh updates on his Moments was on June 21 this year, and he has not mentioned Pet&Fresh since then. Reasons behind the closures Some industry insiders analyzed that the reason for Pet&Fresh's closures may be challenges from fresh food strategy and related cost burdens. At the brand's inception, Pet&Fresh's main features were "made-to-order" fresh food, with no additives, scientific formulas, and clean ingredient lists. For example, the core fresh food product "Daily Fresh Bento" emphasized daily fresh preparation and sale, priced between 9.9 and 39.9 yuan. However, pet fresh food may seem simple, but it places extremely high demands on supply chain, nutritional science, and production quality control. "Diarrhea after eating" and "intolerance" are the most direct feedback from pet parents and are major challenges facing the industry. Unlike dry food that undergoes high-temperature sterilization, fresh food typically uses gentle cooking methods (such as low-temperature slow cooking) or is served raw to preserve nutrients and taste. Pets generally have relatively fragile constitutions, and there can be significant issues with protein acceptance, ingredients, and palatability. The processing and storage of fresh food also test operational capabilities. A common scenario is that a pet's gut microbiota has adapted to previous food, and suddenly switching to fresh food with completely different ingredients and texture requires an adaptation period, during which soft stools may occur. For pets with sensitive pancreas or fragile stomachs, fresh food with higher fat content is difficult to digest, leading to diarrhea. In Xiaohongshu comments, some consumers said: "My dog had diarrhea after eating Pet&Fresh fresh food. Fresh food is not easy to make; it requires strong professionalism." Pet fresh food essentially applies the high-standard model of human "central kitchens" and "healthy light meals" to the pet food field, which has even stricter requirements for food safety and nutritional balance. From an operational perspective, fresh food emphasizes "freshness" and "customization," which inherently conflicts with the standardization and scale of industrial production. How to achieve stable, large-scale production without sacrificing quality and personalization is a huge operational challenge that brands need to solve. An industry insider who declined to be named told the author that capital overestimated the sustained capacity of the supply chain for fresh food and underestimated the harshness of target customers towards fresh food. "Currently, there is no unified industry standard for pet fresh food, and different brands and merchants have different definitions of 'fresh.' For example, many fresh food products are actually high-temperature sterilized, which is no different from wet food." In addition, many people on social platforms have raised doubts about Pet&Fresh's fresh food, such as "few categories," "use of frozen meat," and "stores smell bad." Some consumers complained on Xiaohongshu that the target consumer group for pet fresh food is definitely families who treat pets as children, but the products offered by Pet&Fresh include even vegetables and fruits that are all frozen, and the meat is repeatedly frozen to discoloration, like "scraps." Other consumers said that parents who can afford this price have requirements for their babies' food quality, basically imported food and snacks. But Pet&Fresh has very little real fresh food; 80% is freeze-dried, and the target customer group is completely not on the same level as the products. Regarding why frozen meat is used in the fresh food section, some Pet&Fresh stores posted notices to explain: "Freezing can kill some parasites, reduce cell structure damage, facilitate meal preparation, and reduce contamination risk from repeated thawing." Some pet industry practitioners analyzed that ingredients are not the most profitable part of the pet fresh food business. The gross margin for pet dry food is about 60-70%, and fresh food is not higher. It is a product that can make pets healthier and live longer, but it is not a quick-return, high-profit business. On the contrary, rent, labor, equipment, and logistics account for the majority of costs. In terms of equipment investment, small workshops can use relatively simple processing techniques when making fresh food, but industrial standardized production requires higher standards for parameters, equipment, and processes, with greater cost investment. Taking the HPP production line as an example, the cost is basically at the tens of millions level, and storage and transportation require cold chain support. In the Jiangsu-Zhejiang-Shanghai region, logistics costs for fresh food products account for one-third. Once returns occur, they are basically all losses. With limited order scale, the payback period for the fresh food business may be longer. It is worth noting that Pet&Fresh implemented the concept of cost reduction and efficiency improvement from the beginning in its store model design. For example, it followed the discount store model for site selection and investment, pursuing the optimal input-output ratio. Stores used standard shelves + PDQ + self-checkout to reduce operational difficulty and maximize labor efficiency. Under normal circumstances, a store with 3 employees could meet routine operations. But the bigger cost variable is in the market. Another reason for store closures may be rent burden. The author learned that Pet&Fresh set up three store types based on different consumption scenarios: pet-friendly stores, mall stores, and community stores, intending to form a "street-commercial district-community" three-dimensional layout to meet the needs of different pet owners. The 7 stores currently closed are mainly mall stores, such as Pet&Fresh Zhongshan Park Cloud Nine, Nanfeng City, Poly Time Square, and Bohui Plaza, all located in core transportation hubs with dense foot traffic. A person in charge of a large shopping center told the author that the overall commercial real estate supply is currently oversupplied. New formats like pet fresh food can create buzz and gather foot traffic, so shopping centers generally welcome them. However, there are some operational difficulties. For example, the pet industry does not drive much cross-business with other formats, the impact of low-priced e-commerce sales, the involution of free adoption due to consumption downgrade, and reduced impulse consumption due to lower income expectations all make pet fresh food a business that "looks good but is hard to do." "Overall, this format has low gross margins and low consumption frequency, and the foot traffic it brings is more from idle browsing and free participation. Under rent pressure, closing stores becomes the most reasonable choice," the person in charge said. Rational view of brand closures Pet&Fresh carries Hou Yi's expectations of promoting the industry's quality development. Previously, Hou Yi stated that he hoped to use Pet&Fresh to create a new retail track for pets, build a nationwide new retail channel, lower retail prices, and improve "freshness," ultimately allowing "fur babies" to live a happy life like humans. He also directly pointed out industry pain points: "The pet industry is still an immature, high-profit industry. Pet food prices are much higher than human food, but product quality is much worse; the channel is in a dilemma of 'weak offline channels and expensive online channels.'" From the product side, the supply capacity of domestic pet food urgently needs improvement. Although consumer demand for natural and healthy pet food is growing, the market currently has insufficient supply of related products. In terms of channels, unlike the global pet industry's focus on offline retail, 70%-80% of pet food in China is sold through e-commerce. Offline pet retail is mostly in the form of mom-and-pop stores, small in scale and lacking price competitiveness. Pet&Fresh's advantage lies in the accumulated experience of its founding team. Hou Yi is the founder of Hema, with rich retail experience and innovation capabilities. Pet&Fresh co-founder Xu Zhujun is a post-90s with extensive experience in consumer insights. Hou Yi's partner Huang Hualong is the founder of Naiveke, with his own pet food production base and pet nutrition care center, giving natural advantages in the supply chain. From a market development perspective, according to Euromonitor International data, the global pet fresh food market will exceed $4.5 billion (approximately RMB 31.921 billion) in 2025, with a compound annual growth rate of 21.3%, far exceeding the 5.2% growth rate of the traditional dry food market. However, the penetration rate of fresh food feeding in China is less than 5%, far lower than the 36% in the United States. Hou Yi also mentioned that one of the current difficulties of pet fresh food is the lack of strong brands. However, the current market situation is that pet fresh food is a pyramid-top product, market education is still in its infancy, and demand has not yet taken off. An industry insider said: "The future of fresh food is promising. But the current base is low, and there is still much room for market growth. Fortunately, market education for fresh food is progressing, and relevant group standards are about to be released." When an industry gradually becomes standardized, it is probably a sign of maturity. With changes in feeding concepts, fresh food products will gradually be accepted by more people. Pet&Fresh's business approach also provides innovative references for the industry. For example, emotional value is the primary factor in the explosive growth of the pet economy. Pet&Fresh stores are positioned as "pet social third spaces." "Dog Malatang" leverages the "made-to-order" format, where owners select ingredients for their dogs, which are processed on-site and can be taken away or eaten at outdoor seating. The store also provides water and other supporting services. By creating a composite format for human-pet social interaction, it emphasizes emotional connection with young consumers. Pet&Fresh also continued Hou Yi's approach when managing Hema. First, discounting: everyday low prices, every item a hit. Behind price competitiveness is still "quality-price ratio" and "good products not expensive," similar to the concept of "Low Price But Unique" advocated by Japan's retail group Kobe Bussan's discount supermarket "Business Supermarket." In terms of private brand development, Pet&Fresh's private brand (PB) accounts for more than 50%, with "freshness" as the core, including made-to-order, refrigerated fresh food, staple foods, and baked pastries, as well as over 300 bulk snacks displayed for selection. This also provides ideas for brand development in the pet food track. The strategy of "naked price procurement" and "sunshine procurement" is a continuation of its concept of building a sunshine supply chain at Hema. In supplier cooperation, Pet&Fresh directly connects with top-tier supply chains, proposing "naked price procurement" and "sunshine procurement" strategies, abandoning various "exorbitant taxes" in traditional retail, which is also the necessary path for the industry to achieve stable and long-term development. In the long run, quality upgrade is the key trend in the pet track. Consumer demand for products with high-quality ingredients, balanced nutrition, and safety is gradually increasing, and demand for customized food, especially fresh food, will also grow. Sales channels are becoming more diverse, with increasing integration of online and offline. Industry insider Zhou Yong believes that pets have become important family members, and pet consumption is an important part of emotional consumption. Therefore, the market is large, and it requires more professional operation to solve many pain points. In fact, store closures are an inevitable part of the normal operating cycle and strategic adjustment of retail enterprises. In many cases, they are precisely rational decisions made by enterprises in a complex and changing market environment. We need to view this business phenomenon with a more rational and professional perspective. However, closing stores is also a science. How to close a store with dignity and responsibility, including how to clear the premises, communicate with employees, handle member points and prepaid cards, and terminate contracts with landlords, all reflect a company's social responsibility and management level. Industry insider Li Ling believes that it is now normal for domestic retailers to close stores. If they can close with such respect for people, such enterprises will definitely have a future. "Now when I go to some stores, they are closed and full of garbage, not to mention consumers chasing their money everywhere, and suppliers list them as bad debts, never to be recovered."