---
title: "Layoffs, Store Closures, and Cancelled Year-End Bonuses: Has Bianlifeng's 'Algorithm' Failed?"
description: "Bianlifeng, a unique convenience store chain that rose rapidly to nearly 3,000 stores in five years, is now facing setbacks including layoffs, store closures, and cancelled year-end bonuses. The company's algorithm-driven model, once hailed as revolutionary, is being questioned as its new business ventures stumble and expansion slows."
author: "乔雪"
publisher: "New Distribution"
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published: "2022-04-24"
language: "en"
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# Layoffs, Store Closures, and Cancelled Year-End Bonuses: Has Bianlifeng's 'Algorithm' Failed?

> Bianlifeng, a unique convenience store chain that rose rapidly to nearly 3,000 stores in five years, is now facing setbacks including layoffs, store closures, and cancelled year-end bonuses. The company's algorithm-driven model, once hailed as revolutionary, is being questioned as its new business ventures stumble and expansion slows.

Among convenience store chains, Bianlifeng stands out as a unique presence. It rose at an extraordinary pace, opening nearly 3,000 stores within five years of its founding, and has carved out a place in the Beijing market, often called a "convenience store desert."

In his book "Value," Zhang Lei, founder of Hillhouse Capital, described Bianlifeng's founder Zhuang Chenchao as follows: "When founding Bianlifeng, Zhuang Chenchao still sought answers in the details. He didn't follow trends but looked at logic. When he discovered that the convenience store business model could be driven by algorithms, and no one had done it yet, he started his entrepreneurial journey again."

This math champion had tasted the benefits of numbers since childhood. Zhuang Chenchao had no prior retail background. His earlier venture, Qunar, used algorithms to become the largest travel search engine in China at the time, despite the crowded OTA (online travel agency) market.

Bianlifeng's rapid expansion was also based on what he called, **"using algorithms to optimize and cover everything in convenience store operations."**

However, this high-speed algorithmic train has recently begun to slow down. Layoffs, store closures, and cancelled year-end bonuses are snapshots of Bianlifeng's deceleration.

The public first learned of the setbacks from external reports, but internally, employees had already sensed something was wrong. Bianlifeng established a new business division to find a second growth curve, but its two ventures, the "Bumianhai" coffee chain and the "Wuqiongxiang" front-warehouse model, did not go as smoothly as expected and are now facing retreat or suspension.

Having charged ahead at full speed, Bianlifeng aimed to tell a magical story of algorithmic revolution to the market and investors. Algorithms transformed and improved the efficiency of traditional convenience stores, heralding the victory of new retail.

But now, Bianlifeng's successive halts seem to indicate the other side of the coin: algorithm-driven operations have not yet calculated a clear and bright future for the company.

**Store Closures, Layoffs, and Cancelled Year-End Bonuses**

Chen Xin was among the first batch of employees to be laid off. As the head of some R&D operations, he was the first to notice something wrong because his work allowed him to see the backend system that sends resignation notifications when employees leave.

Late last year, he noticed that resignation notices were becoming more frequent and denser. He asked his supervisor, who said that half of the procurement line would be cut. Soon, Chen Xin himself became one of those cut, just as he was about to complete his first year at Bianlifeng.

What was more unpleasant than the layoff itself was the poor communication over compensation. Bianlifeng not only sent the notice of termination of labor contract to Chen Xin's residence but also sent a copy to his hometown. The envelope, marked with the prominent words "Notice of Termination of Labor Relations," was seen by his grandmother, who fell ill from anger.

When Chen Xin requested his certificate of departure, the company specifically wrote, "Due to incompetence, the labor contract is terminated." Chen Xin consulted a lawyer, who said that writing such a reason in the certificate is illegal.

Fresh graduate Cheng Jie also felt his colleagues gradually disappearing. A colleague he had been working with on a project recently told him he had been laid off. Cheng Jie found that of the roughly 60 fresh graduates who joined with him, fewer than 10 remained. "The cost of laying off fresh graduates is the lowest," Cheng Jie analyzed.

The setbacks were also directly reflected at the store level. An internal employee told Tech Planet that from the end of 2021 to before April this year, Bianlifeng closed nearly 700 stores. When Tech Planet sought verification of the specific number of store closures, Bianlifeng responded that due to the pandemic, logistics and transportation difficulties forced them to temporarily close a small number of stores.

Laid-off employees had a hard time, but those who stayed also faced new problems. Bianlifeng pays year-end bonuses in June each year. Many employees revealed that even if they were unhappy at work, they would grit their teeth and stay until June for the bonus.

Unfortunately, on March 30 this year, Bianlifeng sent an all-staff email announcing the cancellation of year-end bonuses, citing the pandemic and the company's failure to meet performance expectations in 2021.

Working at Bianlifeng is not easy. The "New Employee First Day Guide" requires facial recognition clock-in and mentions basic attendance rules: "You need to clock in and out every morning and evening, with working hours not less than 9 hours." This means that if working hours are less than 9 hours, employees cannot even clock out. Multiple Bianlifeng employees told Tech Planet that most people do not work just 9 hours; working 11 hours or more is the norm.

Additionally, the guide states: if you work more than 11 hours the previous day, you will receive a free dinner the next day.

Cheng Jie said that many times he was still in meetings in the middle of the night. A mid-level employee also told Tech Planet that he was often called to meetings by senior leaders in the middle of the night. It is rumored within Bianlifeng that "CC (Bianlifeng CEO Zhuang Chenchao) only sleeps 4 hours a day," and another reason for midnight meetings is that "CC's demands cannot be left overnight."

**Algorithms and Systems Are the Soul**

The convenience store business model has no special magic. Like all convenience stores, it faces the three mountains of rent, labor, and supply chain.

Its development follows a "U-shaped" curve. In the early stages, a few stores can easily be profitable, but as the chain expands, the three mountains press down again, thinning profits. This is why the more stores opened, the more losses; but when economies of scale are achieved and per-store costs are compressed, it can return to the right track and gradually form an upward trend.

If there is only blind expansion, the company may eventually face bankruptcy when funds run out. Aggressive expansion is the epitome of many convenience store chains that rose quickly and fell just as fast:

In 2017, Good Neighbor, a convenience store chain that had been deeply rooted in the Beijing market for 15 years, was sold for $84 million. In August 2018, Linjia Convenience Store was exposed to a capital chain rupture, and all 168 stores closed overnight. That same year, 131 Convenience Store also closed. The following year, Suning Xiaodian, which had entered the market hastily, was divested by Suning.com due to severe losses. JD.com's plan to open one million convenience stores in five years also went bankrupt.

It was in 2018, when convenience store startups were facing a wave of closures, that Zhuang Chenchao, who had recently entered the market, made a crucial decision that would change Bianlifeng's fate: switching the underlying ERP system and everything else to an algorithm-driven automated operation process.

"This was an extremely difficult decision. I struggled for a whole year in 2018, wondering whether I dared to entrust the life and death of the company to a system that had just been born. But now I think, if I had to do it again, I would have made this decision earlier. So far, except for special circumstances, no one can beat the system at Bianlifeng," Zhuang Chenchao revealed his initial hesitation in an interview with Qingteng's "One Question" program.

Once the system was born, the first step was to cultivate a group of employees skilled in algorithms to make the system smarter.

Earlier, it was reported that Bianlifeng tested employees' advanced mathematics levels, and those who failed would be laid off or persuaded to leave. This "tradition" is still maintained. Chen Xin told Tech Planet that the company tests high school linear algebra and college probability theory, with advanced versions even including calculus.

Regarding the math test, Bianlifeng told Tech Planet that this claim is untrue and that the exam is voluntary.

However, Bianlifeng employees added to Tech Planet: The exam was created by the head of the Product Algorithm Analysis Department (TL1), and the algorithm team is responsible for setting questions. After passing, employees receive an internal certificate as a "Data Bee Analyst." All employees in data-related roles, including R&D, analysts, operations, and product managers, must have this certificate, so it is indirectly mandatory. Many functional departments also have to take the exam, including many liberal arts or business graduates who have never studied or only briefly touched advanced math. Even the HR department, which has nothing to do with data algorithms, is required to test logical reasoning.

Zhuang Chenchao himself took the exam in 2019 and scored 91 points. Remember, this is a math prodigy who won a national math gold medal. According to internal sources, the exam questions get harder each year.

To build this sophisticated algorithm system, Bianlifeng poached CTO-level talent from multiple internet unicorn companies over five years, gathering experts in data, algorithms, and artificial intelligence from Baidu, Meituan, KFC, and others. However, these talents must first pass the test of 7-Eleven and Bianlifeng before they are qualified to tune the system.

Stores are just the front-end shell of Bianlifeng; the system, after countless evolutions and iterations, is the soul. This sophisticated algorithm, built on massive data accumulation, is applied to every link: site selection, decoration, training, product selection, ordering, pricing, employee scheduling, and the production, logistics, and sales of own-brand products, all driving the high-speed operation of the Bianlifeng machine.

**Are Employees Becoming Machines in the System?**

Bianlifeng once conducted an experiment where 10 experienced 7-Eleven store managers reduced the SKU count of a store by 10%, and the next day, store sales dropped by 5%. The algorithm did the same test, and the next day, store sales dropped by only 0.7%.

Bianlifeng executive director Xue Enyuan once said in an interview with Huxiu, "We believe that every node with a human leads to a decline in overall efficiency."

Seeing the efficiency advantages of algorithms and data, Zhuang Chenchao decided to "use algorithms to optimize and cover everything in convenience store operations."

Bianlifeng imitated Japanese-style convenience stores to create high-margin, high-sales fresh food products. To this end, it established a dedicated food R&D department and central kitchen.

From R&D onwards, everything follows quantifiable data standards. The mapo tofu in the bento box is benchmarked against the standard of Beijing's "Chuanban" restaurant. Instruments measure the thresholds of sweet, sour, bitter, and spicy flavors to achieve data-level imitation. The hardness of potato shreds, the length of green beans, and the cooking time can all be precisely quantified.

Because convenience stores have shallow inventory, to achieve daily freshness, daily-distributed items like bread, rice balls, and yogurt use electronic price tags. The system dynamically discounts based on yesterday's same-period inventory and today's sales to efficiently digest inventory. Through these means, Bianlifeng can achieve "a thousand stores with a thousand faces," maximizing inventory reduction.

But there is another side to the coin.

"At Bianlifeng, the coldness of the algorithm is reflected in the fact that people must absolutely obey the machine," a store operations employee told Tech Planet.

At the front end of Bianlifeng, a store employee's daily work involves the most contact with, besides customers, the tablet.

Bianlifeng cares about the loss rate. Everything from stocking, shelving, and inventory counting must be reported to the system. Even the simplest step of heating requires the clerk to first generate a production plan on the tablet before operating. After completion, the system immediately enters a countdown. If it is not sold before the expiration date, the system will alert, and then under the camera, the day's loss is discarded.

As soon as the loudspeaker above sounds, employees must mechanically execute instructions. Before each process begins, they must reflexively pick up the tablet and take a photo. "Taking photos may account for one-third of the work."

The algorithm is precise to the second, calculating the time to complete a process. For example, the standard time to serve a portion of rice is 40 seconds. The system has arranged every minute and second of work, assigning tasks on time. The loudspeaker on the store ceiling strictly transmits every instruction. In the eyes of the algorithm, people are another machine.

This system is constantly being upgraded. Wang Zi, former founder of Linjia Convenience Store and now senior vice president of Bianlifeng, said in a speech: "The technical team uses AI algorithms like machine vision to complete more than 30 routine checks using the store's networked cameras, such as cleaning of floors and tables. If there is non-standard operation, it will alert. Since the system was launched over a month ago, the number of abnormal alarms has decreased by 25% to 60%. For large-scale store management, it is a very effective and economical tool."

But to ensure profit maximization and dehumanization, Bianlifeng does not increase staff due to the complexity of processes. Basically, only one person is assigned per shift. "The 12-hour work schedule is basically fully packed. Requests to add staff are never approved. If you need to go to the bathroom on the night shift, you have to apply to the system. If you lock the door and leave, it counts as absenteeism. So you often just hold it in," said a former part-time clerk.

Bianlifeng employees joke, "The surveillance cameras in the store are not to monitor customers but to monitor employees. Within the surveillance range, employees must keep moving non-stop."

The system is assumed to be infallible. A former clerk told Tech Planet that the store manager is responsible for inventory loss and hygiene. Because they trust the system, they rely on backend data, but the system can also be inaccurate. If the inventory count is wrong, the store manager has to pay for it. Night shifts also require checking expiration dates, but under the heavy workload, there is often no time to check. The consequence is that if a customer scans an expired product, the employee must pay triple compensation.

A former employee said: "The refinement of algorithms can better control losses, but it also means it can better control employees, making them work frantically for Bianlifeng."

**New Business Ventures in Coffee and Front Warehouses Suffer Setbacks**

In the business battlefield, there are no lucky ones who always win, especially in the highly fragmented and regionally strong convenience store track. So Bianlifeng kept searching for its second growth curve.

To this end, Bianlifeng established a new business division. The first new business to launch was the "Bumianhai" specialty coffee chain last year. Before that, Bianlifeng already had an unmanned coffee machine business.

2021 can be considered the year of the coffee trend. Seesaw, M Stand, Manner, and other coffee brands received financing. Manner, which had only a few dozen stores, saw its valuation soar to $2.8 billion. Bianlifeng wanted to create a one-stop consumption scenario for young white-collar workers. Specialty coffee is not only a necessity for workers but also offers high premiums and store efficiency.

Behind the coffee trend, high-margin coffee could also increase store revenue. To this end, Bianlifeng launched "Bumianhai" in a store-within-a-store format, focusing on specialty coffee. It not only required baristas to hand-pour but even to do latte art.

To quickly advance the business, Bianlifeng started a rapid hiring mode. A former HR told Tech Planet that he had to find at least 10 baristas a week, poaching from Luckin, Starbucks, Manner, and other coffee shops at high salaries, even giving baristas a commission per cup.

In terms of products, Bumianhai mainly includes specialty coffee priced at 12-20 yuan and new-style tea drinks with an average price of 15 yuan. When the business was just starting, Bianlifeng was determined to promote it heavily, issuing a large number of coupons, making it possible to buy a drink for as little as 3-5 yuan.

Product development was also another mathematical model. Previously, when Bianlifeng developed its own food, it would use data to break down elements like taste, capacity, and packaging. By aggregating popular products and flavors in the market, it built different models and finally analyzed the best combination.

This formula was also fully reflected in "Bumianhai." Products like Duorou Grape, Yangzhi Ganlu, Duorou Bayberry, and Sheng Ye Latte were pixel-level imitations of popular online drinks.

An insider revealed that Bumianhai's SKUs were entirely based on warehouse inventory. For example, if there was a surplus of Oreo cookies or biscuits nearing expiration that month, more of those ingredients would be added, and new products would be launched through combinations.

When "Bumianhai" was first established, it used high-end hand-pour coffee machines throughout, aiming to create the ceiling of convenience store hand-pour coffee. It used Asahi fresh milk, which is of good quality but also higher priced. Now, the hand-pour coffee project has been cut, with more milk tea drinks. The milk in milk coffee has also been switched to ordinary Aumare Ranch room-temperature milk, which is cheaper.

On the other hand, the pace of store openings is no longer as rapid as before. "Bumianhai" was launched in March 2021, relying on the base of over 2,000 stores at the time. By July, the number of Bumianhai stores had exceeded 100. According to "Zhai Men" data, Bumianhai peaked at 610 stores, but recently, only 300 stores are shown, almost halved. Some clerks said that a batch of "Bumianhai" stores were suspended or permanently closed within less than six months of opening.

Tech Planet sought verification from Bianlifeng, which replied that the pandemic also affected the transportation, logistics, and distribution of Bumianhai's raw materials. Therefore, Bumianhai is also adjusting its business pace and personnel structure.

Meanwhile, Bianlifeng's competitors have become more numerous and stronger. Chain coffee giants Starbucks and Luckin have expanded to 5,557 and 6,024 stores, respectively. Manner, which Bianlifeng benchmarks against, is gaining momentum, announcing in March a plan to open more than 200 new stores in 10 cities in one day. Even China Post and Goubuli Baozi have entered the coffee market.

The second new business Bianlifeng tried was Wuqiongxiang. Wuqiongxiang is similar to fresh food front warehouses, both being independent front-warehouse e-commerce projects. According to insiders, the project originally intended to abandon low-margin non-standard fresh food and focus on high-margin pre-packaged FMCG and even higher-margin daily necessities.

However, progress seems not to be smooth. Taking Beijing, Bianlifeng's home base, as an example, only one Wuqiongxiang front warehouse in Tongzhou District, which involves fresh food, is still operating. Other areas have not yet been widely expanded, or the project in those areas has stalled.

The approach of algorithm ruling everything seems not to have replicated its magical effect in new businesses. Convenience stores are highly regional, and each region has its own local players. Meiyijia, deeply rooted in Guangdong, has over 20,000 stores. In the central region, there is Yuelai Yuexi. In neighboring Shanxi, there are Tangjiu and Jinhu. The pandemic has also made it more difficult for Bianlifeng to expand beyond Beijing.

Bianlifeng previously announced a plan to complete 10,000 stores in the next three years. With only two years left, there is still a gap of over 7,000 stores. According to Tech Planet, in 2021, Bianlifeng's goal was to reach 4,000 stores, but by the end of 2021, it had opened fewer than 3,000, failing to meet the target. In response, Bianlifeng told Tech Planet that after the pandemic, it will catch up on the missed progress at a faster pace.

For Bianlifeng, which insists on direct operation and has not opened franchising, relying on algorithms to optimize costs, it announced that its Beijing front-end was profitable two years ago. It must both maintain profitability and expand store scale, which seems difficult to achieve simultaneously.

Can algorithms calculate Bianlifeng's future?

*Chen Xin and Cheng Jie are pseudonyms.

Cover image source: Visual China

Article source: Tech Planet (ID: tech618), Author: Qiao Xue

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