Once ubiquitous and favored by young people, are snack collection stores losing their appeal? Recently, Wenwen, born after 1995, noticed that the snack collection stores near her home are becoming fewer and fewer. "The ones I often visited have closed, and several others are having clearance sales." In fact, this is not just Wenwen's perception. Since the beginning of this year, news of snack collection store closures has frequently surfaced. Not long ago, some netizens reported that "some warehouses of the snack collection store chain brand 'Mrs. Rice' (老婆大人) have been shut down, and stores cannot use membership cards, suspected of going bankrupt." Subsequently, the brand came forward to "refute the rumors." At the same time, it also exposed the "fig leaf" between the brand and its franchisees. In its statement, "Mrs. Rice" mentioned, "(Some) 'Mrs. Rice' stores are currently unable to use membership cards because the franchise agreements signed between the franchisees of these stores and our company have expired. Their actions of spreading and posting false statements such as 'Mrs. Rice is going bankrupt' and 'membership cards cannot be used' have seriously damaged the value and interests of the 'Mrs. Rice' brand. Our company has decided to cease cooperation with these stores, and these stores are no longer authorized franchisees of our company." Consumers may not care about the details of the "grievances" between the brand and franchisees, but store closures or the inability to use membership cards have indeed affected consumer interests. Besides "Mrs. Rice," another snack brand, "a1 Snack Research Institute" (a1零食研究所), has also been closing stores frequently. According to its official mini-program, "a1 Snack Research Institute" currently has only 11 stores in operation, all located in some areas of Fuzhou and Xiamen. Ironically, the brand's founder, Zhou Weiping, had previously touted the slogan that "a1 Snack Research Institute will open 2,000 stores in the future." Meanwhile, on social platforms, from "I spent 500,000 yuan to open a snack store, with a daily turnover of over 6,000 yuan, but it's about to close" to "I opened a self-operated snack store before the New Year, but in the end, I lost money and am ready to close," both franchisees and self-operated owners of snack collection stores are sharing their experiences from "passionate entrepreneurship" to "closing down." In fact, for a long time in the past, snack collection stores were favored by the market, driven by young people. Tianyancha data shows that in May 2021, the snack chain brand "Snack Busy" (零食很忙) completed a Series A financing of 240 million yuan (RMB, unless otherwise noted). A year later, "Linshi Mofa" (邻食魔珐) announced the completion of a tens of millions yuan angel round financing. By February this year, the snack brand "Zhao Yiming Snacks" (赵一鸣零食) completed a 150 million yuan Series A financing led by Black Ant Capital with participation from Bestore (良品铺子); in May, the snack bulk retail chain brand "Snack Youming" (零食有鸣) completed a Series B+ financing led by Shenwang Fund under New Hope. With capital support, snack collection stores have accelerated their pace of "racing to claim territory." On June 25, "Snack Busy" officially announced that its total number of stores nationwide had exceeded 3,000. "Snack Youming" also has more than 1,000 stores, and official information shows that "Snack Youming" plans to exceed 16,000 stores nationwide by 2026. Regarding the polarization phenomenon in snack collection stores, food industry analyst Zhu Danpeng told the author, "Currently, the entire snack food industry faces issues of product homogenization, channel homogenization, promotion homogenization, and content homogenization." "Under the premise of insufficient product strength, brand strength can play a greater advantage. Therefore, although many snack bulk retail chain brands are attracting franchisees with zero or low barriers and accelerating their expansion, this low-barrier business model is easily imitated by competitors. Their store scale and supply chain level cannot form a brand moat in the short term, ultimately leading to store closures." Zhu Danpeng emphasized, "Under multiple factors, competition among brands can easily lead to price wars, which often result in unhealthy industry development. Unless snack collection store brands can establish brand effects and scale effects in a short period, they will find it difficult to survive." Once "Blossoming Everywhere" Momo, a post-90s girl living in Xianyang, Shaanxi, has witnessed the opening of three new snack stores on the commercial street in her hometown over the past two years. As a snack enthusiast, Momo was also among the first batch of customers to try them. "The prices are cheap, the variety is rich, and you can buy immediately." Regarding why she likes visiting offline snack stores, Momo told the author, "The prices of snacks in snack stores are cheaper than in supermarkets. Although online prices are not expensive, you basically have to buy a lot to get free shipping, and you have to wait several days. It's far less convenient than offline stores." There are many young people like Momo who "prefer snacks," and snack collection stores seem to have become a new trend in entrepreneurship "overnight." "Young people nowadays consume more rationally, and I think snack collection stores that focus on low prices have a market." As early as 10 years ago, Qiuqiu sold nostalgic snacks by setting up a street stall, but because her job was decent at the time, she didn't quit to start a business, and of course, she missed the bonus period of nostalgic snack stores. "In recent years, my work hasn't been going well. Last year, I quit my job to start a business and opened a snack collection store." Like Qiuqiu, more and more entrepreneurs have flooded into the snack store track in the past two years. On social platforms, discussions about snack collection stores are also everywhere. "Five snack collection stores at one intersection," "Snack collection stores are clustered in my hometown," "Several snack collection stores have opened in my hometown recently; they are everywhere"... On Xiaohongshu, "rich variety" and "cheap prices" have also become keywords in many netizens' recommendation notes for snack collection stores. Image: Snack collection stores "blossoming everywhere" Of course, the "blossoming everywhere" of snack stores cannot be separated from the boost of capital. The reason capital favors snack collection stores is not only that the new format better fits young people's snack consumption habits, but also because snack collection stores are becoming one of the important sales channels for snack food brands. Zhang Peiyuan, managing partner of Black Ant Capital, once publicly stated that with the change in consumer concepts, cost-effective consumption is favored, and urbanization and rural revitalization bring demographic dividends to towns. At the same time, after the improvement of logistics and infrastructure, the multi-layer distribution system is gradually being replaced by more efficient new models. Under multiple favorable conditions, snack collection stores are expected to become infrastructure in lower-tier cities and counties. As Zhang Peiyuan said, in its 2021 annual report, the snack food brand Yanjin Shop (盐津铺子) wrote that its top five customers were traditional supermarkets such as Walmart, Better Life, and China Resources Vanguard. But by 2022, "Snack Busy" jumped to become Yanjin Shop's largest customer, accounting for 7.31% of sales, nearly 5 percentage points ahead of Walmart, which ranked second. Yanjin Shop also publicly disclosed that it has many channels in its snack chain system and has in-depth cooperation with Snack Busy, Snack Youming, Dai Yonghong, Haoxianglai, Mrs. Rice, Tangchao, etc. Qiaqia Food also stated externally at the beginning of this year that the company is cooperating and testing products in the snack bulk retail channel with Snack Busy, Zhao Yiming, Snack Youming, etc., with more than a dozen SKUs. As a result, the booming snack collection stores accelerated their expansion, opening franchising and attracting small and medium-sized entrepreneurs with impressive revenue data. Jiemian News once reported that the daily sales of a single Snack Busy store range from 8,000 to 11,000 yuan, with gross profit margins of 15-20%, and franchisees can obtain a net profit of 8%. The products in the store are divided into brand products and white-label products (non-well-known brands), with a ratio of 4:6 or 3.5:6.5. Among them, brand products have stronger traffic-driving functions but generate extremely low gross profit; the real profit source relies on white-label products, with profit margins of 30% or even higher. This has also led to the continuous expansion of the business territory of snack collection store brands. Founded in 2017, Snack Busy currently has more than 3,000 stores nationwide, with over 1,000 new stores added in the first half of 2023 alone. According to Jiemian News, among Snack Busy's more than 2,000 stores, only 3 are directly operated. Snack Youming opened its first store in April 2021 and had over 1,200 stores by April 2023; Zhao Yiming Snacks, which opened franchising in 2019, has more than 800 snack stores according to its official website. Opening and Closing Stores in Parallel However, just as snack collection store brands were frequently financing and rapidly expanding, a scene of "opening stores while closing stores" emerged. During the May Day holiday this year, Momo noticed that one of the three snack collection stores on the commercial street had closed. "The design style of these snack collection stores is relatively fresh, and the product display makes people feel comfortable, so when they first opened, I would go almost every time I went shopping." Momo told the author, but over time, she found that the products in these snack stores were highly homogenized. "Also, there are many unknown miscellaneous brands that look good, but some are terrible, and I've been burned a few times. Now I only buy brands I've heard of." A consumer in Beijing also told the author that there used to be a snack collection store less than 1 kilometer from her home, and she often went there, but at the end of last year, the store quietly closed and was replaced by an electric bicycle store. "It felt like it had only been open for about 2 years; it should have been a self-operated store. The snack categories were quite complete, and the prices were relatively cheap, but I didn't expect it to close so soon." Behind the closure of snack collection stores, especially for franchisees, may be the high franchise fees and the operational pressure brought by dense store openings. On social platforms such as Xiaohongshu and Douyin, some franchisees who closed their stores bitterly recounted their experiences of being "harvested": "Daily turnover is only a few hundred yuan, and even on good days it's only a few thousand; it's hopeless to recoup the investment," "I spent 500,000 yuan to open a store, but daily turnover is less than 1,000 yuan, so I had to close to stop losses"... Image: On Xiaohongshu, there are many posts recommending snack collection stores and sharing entrepreneurial experiences. As mentioned above, taking Snack Busy as an example, according to its official website, the franchise fee plus deposit is 80,000 yuan, decoration costs about 100,000 yuan, equipment such as shelves and monitors costs about 120,000 yuan, and the initial stocking is 180,000-200,000 yuan. This means that opening a Snack Busy franchise store costs about 500,000 yuan. Of course, these fees do not include store rent. Official information shows that among Snack Busy's store types, the minimum business area is 100 square meters. It is not difficult to see that when all costs are added up, it is a considerable expense for franchisees. Another snack brand, Zhao Yiming Snacks, has a similar franchise fee. According to official data, the franchise fee for a Zhao Yiming snack store is 38,000 yuan, the deposit is 20,000 yuan, the management fee is 800 yuan/month, decoration costs 80,000-120,000 yuan, equipment costs 70,000-100,000 yuan, and the initial stocking fee is 180,000-250,000 yuan. In addition, unlike high-end snack brand stores such as Lai Yifen, Three Squirrels, and Bestore, the new generation of snack collection stores focuses on "more categories, lower prices," with product prices about 70-80% of supermarket prices. At the same time, to enhance the consumer experience, these stores are mostly medium-to-large format with simple and fashionable decoration, which have become "sharp tools" to attract consumers into the stores. But now, the "affordable" and "fashionable" anchors that attracted consumers to the new generation of snack collection stores have become the "pain points" for franchisees. "I roughly calculated that if I joined a franchise, the initial investment would be about 600,000 yuan, which even exceeds the initial investment of some new-style tea brands. Even in the most ideal state, it would take 3 to 4 years to recoup the investment, and the operating data provided by the brand is more or less 'beautified.'" After some market research, Qiuqiu gave up franchising and chose to open a self-operated snack collection store instead. Qiuqiu told the author that her total initial investment was less than 200,000 yuan. "The advantage of self-operation is greater autonomy in purchasing and pricing, but the disadvantage is also obvious: you can't get the same purchase prices as chain brands, and the product range can't be as rich." However, thanks to her previous part-time entrepreneurial experience, Qiuqiu also accumulated a number of low-cost purchasing channels, ensuring profit margins while keeping prices low. Qiuqiu revealed that her snack store is expected to recoup its investment by the end of this year. But at the same time, Qiuqiu also feels increasing operational pressure. "Snack collection stores are becoming more and more dense. For consumers, price and variety determine their willingness to buy. In the past two years, due to capital support, chain brands have been accelerating expansion, and my pressure is also increasing. To find my unique positioning before being 'besieged' by chain brands, I have also introduced some local specialty brands that 'others don't have' in my product selection." Snack Collection Stores Are Hot but Hard to Do As Qiuqiu said, the snack collection store track is becoming increasingly crowded. The "low prices" of snack collection stores stem from bypassing intermediate links, directly connecting with brand manufacturers or upstream agents, cutting out middlemen, and passing on the benefits to consumers. As the "main players," brands obviously have more "concession" advantages, so they have also flooded into the track. In addition, with the fading of e-commerce dividends in recent years, offline sales have gradually become the main channel for snack food brands. According to the "2022 China Snack Food Industry Research Report," offline channels are still the main sales channel for domestic snack food. Among them, snack stores, supermarkets, and convenience stores account for 83% of total sales channels, while online channels account for only 13%. Among them, Bestore not only invested in "Zhao Yiming Snacks" this year but also mentioned at an investor exchange meeting at the end of last year that in addition to its existing 3,000+ Bestore stores, it also expanded its snack bulk retail chain business with a new brand, "Snack Wanjia" (零食顽家), in the second half of 2022. Bestore stated, "With Bestore's existing efficient supply chain integration, store layout expansion, and organizational operation capabilities, 'Snack Wanjia' will focus on rapid expansion in the Hubei market in 2023." Panpan Food also opened the first directly operated store of its snack chain brand "Linglingzui" (零零嘴) in Quanzhou in November 2022, planning to open 1,000 stores nationwide by 2024. But offline snack stores are not an easy business to do. For example, the internet snack brand "Three Squirrels," which began laying out offline stores in 2016, could not escape the fate of store closures. According to its 2022 financial report, Three Squirrels closed more than 500 stores in 2022, and revenue from offline channels fell by 23.9% year-on-year. Zhu Danpeng believes that whether it is Three Squirrels or Bestore, leading enterprises, the homogenization phenomenon in the snack food industry is currently prominent, and gross margins are also low. In this context, the situation of "the strong get stronger, the weak get weaker" will be further highlighted. Brands lacking brand quality, high-quality service systems, and low customer stickiness will gradually withdraw from market competition. "The future development trend of the snack food industry will definitely be integrated online and offline operations, with online and offline resources mutually integrating and complementing each other's shortcomings. In addition, increasing the industry's intelligent and e-commerce layout is undoubtedly the right choice," Zhu Danpeng further stated. In addition, there are other snack formats that focus on low-priced snack products besides snack collection stores. For example, the near-expiry food stores that were popular two years ago also "won over" many young people with low-price discounts. But now the popularity of near-expiry food stores is gradually fading. On one hand, the near-expiry discount store Boom Boom Mart has declared bankruptcy; on the other hand, near-expiry food brands such as HotMaxx and HitGoo are actively seeking transformation, tearing off the label of near-expiry stores and moving toward the setting of brand discount stores. This has made the battle among offline snack collection stores even more intense. At the same time, snack collection stores, still in the early stages of development, face problems such as unstable supply sources and imperfect supply chain systems. The safety and quality of products also determine how far a brand can go. In Qiuqiu's view, snack collection stores are, after all, just a segmented channel, and the supply chain is the core competitive advantage. "Because snack collection stores sell a wide variety of products, they connect with many brands and manufacturers. Unstable supply sources and lax quality control can have a significant impact on the brand. Only by building a complete supply chain system can you obtain low-priced, high-quality products and ensure both profit margins and product quality." In this regard, Zhu Danpeng stated that although snack collection stores have been a track favored by capital in the past two years, a large influx of capital and rapid store expansion will inevitably lead to an imbalance in supply and demand leverage, and the entire snack industry will enter a stage of involution. *Cover image sourced from Visual China. *Names Wenwen, Momo, and Qiuqiu in the article are pseudonyms. *Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice to anyone.