---
title: "From Wealth to Debt: The Story of Liu Feng, Founder of Xi'an Youmuyou Convenience Store, Offers a Vivid Lesson for Convenience Store Operators"
description: "At 4 a.m. on July 9, Liu Feng, founder of Xi'an Youmuyou Convenience Store, published a 'confession' that was widely shared in the retail circle. It recounts the full journey of the store from glory to failure. Liu Feng was not a novice; his experience at Meiyijia and TODAY Convenience equipped him with management skills and supplier resources. Yet, despite these advantages, he suddenly closed all 78 stores and went from being worth millions to deeply in debt."
author: "张思遥"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2016-07-12"
language: "en"
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original_source: "https://mp.weixin.qq.com/s/FhZ0_bBEEgxvbCbXWhW-rg"
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---

# From Wealth to Debt: The Story of Liu Feng, Founder of Xi'an Youmuyou Convenience Store, Offers a Vivid Lesson for Convenience Store Operators

> At 4 a.m. on July 9, Liu Feng, founder of Xi'an Youmuyou Convenience Store, published a 'confession' that was widely shared in the retail circle. It recounts the full journey of the store from glory to failure. Liu Feng was not a novice; his experience at Meiyijia and TODAY Convenience equipped him with management skills and supplier resources. Yet, despite these advantages, he suddenly closed all 78 stores and went from being worth millions to deeply in debt.

At 4 a.m. on July 9, Liu Feng, founder of Xi'an Youmuyou Convenience Store, published a 'confession' that was widely shared in the retail circle. This 'confession' reviews the entire process of Youmuyou Convenience Store from glory to failure. Liu Feng was not a novice who blindly entered the retail industry; his work experience at Meiyijia and TODAY Convenience accumulated various conditions for him, including management experience and supplier resources.

It is precisely such an entrepreneur with first-mover advantages who suddenly closed the stores after reaching 78 stores. And he himself went from being worth millions to being heavily in debt.

Liu Feng's experience has poured cold water on the current hot convenience store entrepreneurship trend. 'Third Eye Retail' conducted an exclusive interview with Liu Feng at the first opportunity. What lessons will the detours he took during his entrepreneurial journey bring to convenience store operators?

In 2006, Liu Feng entered Beishan Supermarket as a loss prevention officer, and he called this work experience his 'initial exploration period in the retail circle.' Later, while working at Meiyijia, he gained an in-depth understanding of the convenience store format, which sparked his idea of starting his own business. To gain more experience, Liu Feng left Meiyijia and joined TODAY Convenience, responsible for store expansion. In the following year, Liu Feng expanded the number of stores under his responsibility from three to dozens. His excellent practical performance prompted him to make up his mind to found Youmuyou Convenience Store in Xi'an.

Relying on the connections he had accumulated over the years in the retail industry, Liu Feng obtained lower-cost, higher-quality product resources and longer payment terms from suppliers than typical individual operators in the early stages of his business. This alleviated the financial pressure of starting a business to some extent. In Liu Feng's view, as an ordinary entrepreneur with neither capital support nor market advantage in Xi'an, being able to open four directly operated stores in the first year of entrepreneurship was a smooth start.

'Success and failure are both due to the same factor.' It was this smooth sailing experience that made Liu Feng underestimate the difficulties of entrepreneurship. He accepted capital investment from a certain group without carefully weighing the pros and cons. From then on, his decision-making power was frequently restricted by the capital side. To break free from these constraints, Liu Feng acquired the shares of the other two major shareholders to gain control of the company, but this move led to a break in the capital chain of Youmuyou Convenience Store, triggering a series of 'latent' problems, and Liu Feng's entrepreneurial venture failed.

**Choosing an investor: You can't just 'call anyone mommy' just because they offer milk'**

In the Xi'an convenience store market, Youmuyou Convenience Store was performing well, which attracted many investors, and a certain group also extended an olive branch to Liu Feng.

In the first year of entering the Xi'an market, Youmuyou Convenience Store ended with four stores. Liu Feng hoped to increase capital investment on this basis to accelerate store expansion. Coincidentally, at the beginning of 2015, a certain group contacted Liu Feng, hoping to cooperate with Youmuyou Convenience Store by injecting capital, and promised not to interfere too much in his operational decisions. After consideration, Liu Feng agreed.

Liu Feng told 'Third Eye Retail,' 'Because I was blindly optimistic about the cooperation at that time, I accepted the group's funds without a comprehensive evaluation, which led to unprecedented restrictions on my decision-making power over Youmuyou Convenience Store.'

From a business management perspective, Liu Feng ignored the important factor of 'value alignment' when choosing an investor, which caused friction in the later cooperation.

After accepting the investment, Youmuyou Convenience Store actually became a subsidiary of the group. In Liu Feng's view, the so-called 'non-interference in operations' was virtually nonexistent. 'The group rarely participated in the daily work of Youmuyou Convenience Store, but when I needed to make strategic decisions, the group would use its equity to interfere,' Liu Feng described to 'Third Eye Retail.'

Liu Feng believed that the objections raised by the investor without understanding the daily operations of Youmuyou Convenience Store were mostly unreasonable. This led to frequent disputes between Liu Feng and the investor, and the cooperative relationship was on the verge of breaking down. Eventually, Liu Feng proposed three options: the group could either participate in decision-making based on involvement in daily operations, or give up interfering in his decision-making power and cooperate purely as an investor. Liu Feng stated that if the two sides could not agree on the above two options, he would have no choice but to withdraw from the operation team of Youmuyou Convenience Store.

For Liu Feng, Youmuyou Convenience Store was like his own child, and he was unwilling to give it up unless absolutely necessary. Therefore, Liu Feng ultimately chose to acquire the shares of the other two major shareholders to counter the unreasonable interference from the major shareholder in operations. But looking back, this share acquisition was an important reason for the break in the capital chain of Youmuyou Convenience Store.

In addition, Liu Feng believed that his measures to confront the investor led to the investor's promise to invest 5 million yuan to develop the Lanzhou market becoming a 'blank check.' The preliminary preparations for the stores had been completed, but the follow-up funds were delayed, which almost cost Liu Feng all his initial investment.

**Blind optimism and lack of risk awareness**

Liu Feng also lacked risk awareness when facing the market. On the one hand, this was because he did not have a deep understanding of the Xi'an market; on the other hand, as Liu Feng himself said, his 'experience' almost dominated all his decisions in operating Youmuyou Convenience Store. Although the early stage of entrepreneurship was relatively smooth, as the dividends of the convenience store business model faded, many hidden problems were triggered simultaneously, forcing Liu Feng to face huge losses due to the lack of 'risk control.'

In 2011, Youmuyou Convenience Store entered the Xi'an market. Liu Feng initially adopted a fully direct-operated model in the early stage of store expansion, but due to a lack of sufficient working capital and professional operational personnel, the number of stores failed to meet expectations. To address this, he shifted to a new expansion model with direct-operated stores as the main focus, supplemented by '5+5' (headquarters + franchisee) franchising and fully franchisee-invested franchising. The headquarters of Youmuyou Convenience Store also provided franchisees with a series of support, including site selection, operations, personnel training, and store distribution. Among these, there was a factor that caused severe damage to Youmuyou Convenience Store: the warehouse.

Because the rent within the third ring road of Xi'an was expensive and had certain space limitations, Liu Feng had to choose to build a warehouse in a rural area outside the third ring road. Before 2015, Liu Feng hardly thought that the warehouse would become an issue that caused him extreme anxiety. Because the village where the warehouse was located was demolished, after receiving the notice, Liu Feng contracted the construction of a new warehouse to a third-party agency. However, due to a site selection error, the new warehouse was demolished again before it was filled with goods after completion. This caused all the goods Liu Feng had at the time to be stored in an open area for half a month. Because the third-party agency was unable to compensate, Youmuyou Convenience Store had to bear all the losses itself.

A series of warehouse relocation incidents made the suppliers of Youmuyou Convenience Store uneasy. To reduce risks, some suppliers stopped delivering goods and even began to demand payment. Under the combined effect of various factors, the headquarters of Youmuyou Convenience Store was unable to guarantee store distribution services for a long period. This even led to situations where newly opened stores had completed decoration but had no products to sell.

**Rising from the ashes with 'convenience store + internet'**

Liu Feng summarized his entrepreneurial process and believed that the core problems were the lack of long-term planning and the ability to respond to crises in a timely manner, coupled with the temptation of 'temporary profitability,' which ultimately led to Youmuyou Convenience Store being eliminated in market competition. However, Liu Feng hopes to start from 'zero' based on the lessons learned, and he proposed a new concept of 'convenience store + internet.'

Liu Feng had experimented with this concept before, but it was shelved because he had not found the key point of 'interconnection.' Now, Liu Feng has identified campuses and communities as the target markets for this entrepreneurial project, positioning students as the main consumer group to enhance the feasibility of the idea.

Liu Feng's confidence lies in the fact that convenience stores on campus are 'rigid demand, high frequency, low gross margin' fast-moving consumer goods projects. Secondly, students, as the main force of internet consumption, have advantages such as strong acceptance, high consumption interaction, and high group word-of-mouth. In addition, his 'low-cost operation' model has the characteristics of 'cheap prices, door-to-door delivery, and buy now pay later,' which is more likely to attract the attention of the student group.

To further demonstrate the above concept, Liu Feng took a convenience store with a business area of about 60 square meters as an example and made a relatively comprehensive operation plan. Referring to the current market situation, Liu Feng set the total investment for a single store at 500,000 yuan, with monthly rent of about 20,000 yuan and per capita cost controlled at 2,800 yuan. He believes that if the gross margin of a single store can be between 25% and 26%, and the expense ratio is controlled at 60% to 70% of gross profit, the store can recover its costs within three to five years.

'Third Eye Retail' believes that the case of Youmuyou is a microcosm of the current convenience store trend. We use Liu Feng's summary in his 'confession' as the conclusion of this article.

When the company's development speed exceeded expectations and reached a certain scale, I neglected the evaluation of key links such as overall planning, operational management, financial risk control, and partner selection. The summary is as follows:

1. Selection of entrepreneurial shareholders: Values must align, division of labor must be clear, each must perform their duties, and you cannot 'call anyone mommy' just because they offer milk.
2. Achieve goals with a plan: Steady and sure, win step by step, never blindly develop because of 'temporary profits and greed.'
3. Be down-to-earth and do practical things: Act according to your capabilities, do not engage in face projects to build brand or image.
4. Have evaluation awareness and control measures: For all projects and decisions, 'risk assessment, benefit evaluation, financial budgeting, early warning measures, and later risk control' are indispensable.

Source: Third Eye Retail (retailobservation)

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