Snack bulk retail chains begin to consolidate Over the past two years, snack bulk retail stores have attracted huge attention, with their store counts growing at an explosive pace. Official data from some snack brands shows that Snack Youming opens an average of 4 stores per day, Snack Busy opens 6 stores per day, and Zhao Yiming opens over 200 stores per month. However, amid this rapid growth, mergers and acquisitions among major brands are intensifying, and the phenomenon of staking out territory is becoming more evident. On September 28, Wanchen Group announced the acquisition of the management team of Zhejiang snack brand Laoban Daren. Prior to this, Wanchen Biotech had already integrated four brands: Lu Xiaochuan, Laiyoupin, Haoxianglai, and Yadiyadi. It also stated that after these brands merge into Wanchen, they will be uniformly named "Haoxianglai Brand Snacks," and all storefronts will be rebranded. Earlier, on August 9, Snack Busy strategically invested tens of millions of yuan in Qiahuopuzi. On the same day, Ai Snacks, a bulk snack brand also founded in Changsha, announced it would take control of the Chengdu-based local snack brand "Dinosaur and Teddy." Previously, Snack Busy had also invested in Henan Wangfoufou and Shaanxi Xixi, while Snack Youming similarly integrated Yutaitai. This indicates that the prelude to M&A is slowly unfolding. In addition to M&A, financing events have also been frequent in the industry. According to incomplete statistics, last year alone, a total of 11 related companies in the leisure snack track received financing, with total financing of approximately 1.3 billion yuan. Snack Youming has completed six rounds of financing. Behind the active pursuit of capitalization by leading companies is more about using capital to stake out territory and secure a place in the market. After all, if they cannot achieve a certain scale in a short time, it will be difficult to become a leader in the future. For this reason, major leading brands are no longer satisfied with developing their own brands in a step-by-step manner; instead, they are aggressively expanding or using M&A to increase scale. This includes not only large brands acquiring small brands but also national brands merging with regional brands. "In the coming period, M&A and integration activities in this industry will become more frequent. Especially for brands that cannot become regional leaders, pressure from capital, supply chain, and franchisees will become increasingly severe," revealed an investor who has long focused on the retail industry. It is worth mentioning that integration and M&A in the bulk snack chain track actually began as early as last year. As early as August 2022, Wanchen Biotech established its own brand "Lu Xiaochuan" to enter the bulk snack market. By December of the same year, through controlling stakes and other forms, it reached cooperation with Anhui's "Laiyoupin" and Jiangsu's "Haoxianglai" brands to jointly expand the bulk snack business. The aforementioned investor further revealed that the development speed of the snack bulk retail industry may exceed industry expectations. When leading brands begin to accelerate, smaller regional brands find it difficult to obtain venture capital, which further intensifies the urgency of M&A and integration across the industry. Therefore, for these regional brands, choosing sides has become an inevitable choice. Only by gaining the "favor" of big brands or joining forces can they have room for survival and development. For example, the cooperation between Qiahuopuzi and Snack Busy is a typical case; both are local enterprises in Hunan, so such cooperation is expected. Reasons behind In the long history of retail development, M&A has always been an important means for enterprises to seek transformation and growth. Jiajiayue acquired Weike Commercial in 2017, then in 2019 acquired Zhangjiakou Fuyuexiang Supermarket, took over Shandong China Resources Vanguard, and acquired 31 stores of Anhui Zhenbang. In 2020, it acquired 33 stores of Inner Mongolia Weilehui Supermarket, and recently acquired Carrefour stores sporadically. Shanghai Bailian, Nanjing Xinbai, Dalian Dashang, Wangfujing Department Store, and other enterprises are also representatives of cross-regional M&A and restructuring. Through M&A, leading retail enterprises have established a nationwide network with a "bottom-fishing" momentum. In contrast, in the snack industry, M&A is often driven by the temptation of a huge market scale. Take "Snack Busy" and "Qiahuopuzi" as examples: the former mainly focuses on Hunan and neighboring provinces such as Jiangxi, Hubei, Guizhou, and Guangxi, while the latter takes Guangxi as its core market. Such regional layouts provide complementary advantages for both. However, regional advantages alone are not enough. For example, Ai Snacks, headquartered in Changsha, controls the "Dinosaur" and "Teddy" brands focused on the Chengdu market in Sichuan. Regarding this market choice, the company's head explained that they predict the Sichuan market has enough capacity to support three leading brands, and each brand could potentially reach a scale of about 1,000 stores. Let's also compare the regions where snack store brands open franchising. In the past, Zhao Yiming Snacks was the brand with the most open franchising, but after Wanchen Biotech merged the four brands, it will occupy the most franchising regions, even larger than Zhao Yiming. Haoxianglai has more provinces and cities than other brands, especially after laying out in Shanghai, Beijing, and Zhejiang, its market saturation will be higher, and its impact on other brands will be greater. In fact, with the strong push of capital, snack brands that were previously divided by region all want to gain a larger market share. The only way is to expand to external markets, which inevitably leads to intensified competition. But no matter in the capital market or in the eyes of peers and "franchisees," the core indicators for evaluating snack stores are the number of store openings and revenue capability. The so-called number of store openings is a side validation of the ability to expand nationwide, which also tests supply chain and operational capabilities, while revenue capability tests the promotion of the "franchise model" and the franchisees. Like the core underlying logic of all retail franchising, it also involves store efficiency and payback period. But as everyone's understanding of the industry improves, franchisees are also becoming more rational. However, the reality is that local regional brands find it difficult to expand to external markets. Lacking local advantages and time advantages, from the past of the retail industry, most brands find it hard to surpass local brands. Even well-known enterprises face significant challenges when developing across regions. First, advantageous store locations have already been taken; the location of community business is a key factor affecting business performance. Second, industry competition: as more stores open, competition inevitably increases, leading to price wars. Once a price war breaks out, leading brands will have relatively strong resource advantages. In terms of single-store operation capability, for snack enterprises that are not leaders, rapid expansion puts pressure on cash flow due to store subsidies and hardware investment for cross-regional development. Currently, after the full implementation of the registration system on the A-share market, it has become more difficult for franchising-related companies in the food industry to go public, or they may turn to the Hong Kong or US stock markets; otherwise, capital will become more cautious. Only through cooperation or M&A can snack enterprises run faster. To some extent, this is not only a contest with peers but also a game with capital. Future trends Chen Liping, a professor at Capital University of Economics and Business, pointed out in an interview his concerns about the discount snack format, believing that it is actually a market expansion driven by capital. This is highly ironic, as in the past few years, capital has not only played a role in fueling the retail industry but has also triggered a series of unconventional phenomena to a certain extent. Industries with excessive capital intervention usually find it difficult to achieve long-term success. Because whether in traditional retail or the emerging snack bulk retail industry, M&A or capital intervention is a complex strategic choice that requires multi-dimensional consideration. Success is not only reflected in whether an enterprise can expand rapidly, but more importantly, how to continuously optimize operations and management during the process to strengthen self-sustaining capabilities. While the barbaric growth business model can quickly bring immediate profits and market share, it cannot escape its inherent limitations. First, capital intervention forces these enterprises to expand rapidly before they are mature. But as the number of stores increases, if management cannot keep up or cash flow breaks, many of these enterprises collapse one by one. This phenomenon is not isolated but is more an inevitable result under capital logic. Second, from the consumer perspective, the snack category is vastly different from rice, flour, oil, and grain; it is not a necessity. If the economic situation continues to decline, even discount snacks may see limited demand. Furthermore, Chen Liping also stated that although discount snacks are cheap, this low price often targets low-income groups. However, many parents are unwilling to buy food from discount snack stores for their children, fearing that it may cause discrimination at school. This phenomenon reflects the complex interaction between social concepts and economic interests. Finally, in pursuit of low costs, the discount snack industry may lead to a large number of unhealthy foods entering the market. Professor Chen Liping cited Japan as an example: the reason why discount snacks have not developed in Japan is closely related to Japan's social hierarchy. People generally do not go to discount or near-expiry stores on the street to buy things. Many of Japan's snack discount stores and near-expiry small shops are basically in remote places. Later, I thought it might be to avoid acquaintances seeing them buying near-expiry products, which would make them feel embarrassed. In addition to these, there are also issues such as homogeneous competition, the difficulty of regional brands going national, and the gradually increasing threshold for new capital to enter the snack industry. However, the market will eventually return to the core value of products and services, where product repurchase rate is key. Enterprises need to continuously update products to ensure that consumers not only make one-time purchases but can continue to consume. In today's consumption environment, consumers are rational enough not to blindly buy just because of a brand's shiny appearance. Therefore, although the rapid development of the discount snack industry driven by capital once seemed beautiful, there are many problems and limitations behind it. Participants and franchisees need to examine this phenomenon more deeply, after all, this industry, born of capital, still has a long way to go.