Click 'Read Original' for details. FamilyMart appears to be powerful, but it can only be described as 'small profits, quick turnover.' Foreword: In 2018, the convenience store industry experienced a 'song of ice and fire' of expansion and closures. For example, Bianlifeng, established less than a year ago, rapidly expanded to over 200 stores in Beijing, but almost simultaneously, Linjia's 168 convenience stores collapsed overnight—dramatic ups and downs, very thrilling. 【Business Street Detective】 has reported on 'P2P Crashes in 4 Months, Linjia Quietly Taken Over by Bianlifeng', 'Bianlifeng's 'Math Cult'', 'In This Self-Media-Owned Convenience Store, Read China's Consumption Barometer' (JD Supermarket)... When discussing topics, reporters from Beijing and Shanghai invariably mention the same issue: the convenience store formats in Beijing and Shanghai are vastly different. For convenience stores, compared to Shanghai's steady stream, Beijing is more like a testing ground for capital and giants, rather than a stable environment for saving money. In terms of total store count and format maturity, Beijing's development lags far behind Shanghai. So, when a large number of so-called 'new species' emerged in Beijing, have Shanghai's convenience stores changed? Is it still profitable to open a convenience store in Shanghai? Unlike Beijing, which was once dominated by 7-Eleven, FamilyMart has always held half of Shanghai's convenience store market. FamilyMart opened its first store in Shanghai in 2004. It set industry standards with Japanese-style meticulous service and ready-to-eat bento boxes, and used above-market rents to take over prime locations from competitors, nearly doubling the rent for convenience store premises at the time. At that time, Shanghai already had over 4,000 convenience stores, with state-owned Hode leading, accounting for a quarter of them, while Lawson, also foreign-funded, had over 100 stores. FamilyMart came from behind, partnering with the Shanghai Metro in 2009, and in 2010, leveraging the World Expo, opened four stores in the expo park, thoroughly establishing its reputation and entering a rapid expansion phase. To date, FamilyMart has over 2,000 stores in Shanghai and surrounding areas. In comparison, rival Lawson has 1,220 stores, and 7-Eleven currently has only 141. Compared to catering, convenience stores face lower risks, have lower entry barriers, offer diverse business formats, and have strong profit extension capabilities. Additionally, FamilyMart has strict process control advantages, with unified distribution from headquarters and no warehouse management concerns, making it seem like a good franchise choice. But after crunching the numbers, 【Business Street Detective】(ID: bustanan) found that FamilyMart appears powerful but can only be described as 'small profits, quick turnover'—in other words, not very profitable. Franchise: Different Inside and Outside Currently, FamilyMart offers three main franchise plans: 1FC-B, 2FC-A, and 2FC-C. Among these, 1FC-B can be understood as external franchising, while 2FC-A and 2FC-C are internal franchising. As the name suggests, external franchising means the franchisee can be an outsider, not required to attend any FamilyMart training, but must provide their own store, which must meet high standards: a usable area of over 100 square meters, a storefront width of eight meters, and must pass FamilyMart headquarters' review and evaluation to qualify. Franchisees can hire their own store managers and employees, who participate in FamilyMart training alongside direct-store staff. The store's operations are managed by the store manager according to FamilyMart's standards. This franchising method has high capital requirements: In addition to a franchise fee of 60,000 yuan (non-refundable) and a security deposit of 150,000 yuan (refunded after the 5-year contract ends), franchisees must also bear rent and upfront decoration and equipment costs (about 400,000 yuan), totaling around 600,000 yuan in initial capital. At the end of each month, the franchisee shares revenue with headquarters, receiving approximately 70% of the total gross profit. Internal franchising is mainly for internal employees: FamilyMart direct-store managers or assistant managers can franchise through internal channels, or part-time employees can pass a series of exams and training to meet assistant manager requirements and then franchise. Outsiders who pass FamilyMart's evaluation and complete two months of company training can also franchise this way. This franchising method requires that the two contract parties must work full-time in the store and cannot delegate management to others. Ideally, they should be spouses or blood relatives. The capital requirement is much lower: Franchise fee of 60,000 yuan (non-refundable), security deposit of 200,000 yuan (refunded after the 5-year contract; the deposit can be loaned from headquarters, with monthly repayments deducted from cooperation fees), plus about 100,000 yuan in store opening reserves, totaling around 300,000 yuan. There are also two profit distribution methods: One is not bearing rent, directly receiving 38% of the monthly total gross profit; the other is bearing rent and property management fees, with 70% distributed for amounts within 40,000 yuan (inclusive), and 50% for amounts exceeding 40,000 yuan. In Shanghai, Chengdu, Hangzhou, and Guangzhou, the plans seem to differ. In Shanghai, franchisees must provide their own store premises; in non-Shanghai areas, FamilyMart headquarters will arrange suitable store locations based on the franchisee's suitability and distance from home. Monthly Savings of 9,000? FamilyMart's operating model is: All goods are supplied by FamilyMart headquarters, with unified pricing and regular new product promotions. Products are categorized by temperature zone (ambient, chilled, frozen) and enter a centralized logistics warehouse from suppliers, then are delivered to stores based on each store's order quantity, reducing delivery frequency and workload. Supervisors also assist in estimating order quantities to help store managers reduce waste. Waste comes from theft in camera blind spots, expiration losses from slow sales, etc., mainly controlled by the store manager. Regional supervisors regularly visit stores to inspect service quality, product display, and cleanliness in various areas, provide guidance, assist in setting and tracking order targets for fresh food, promotional items, and key items, research the regional商圈 and competitors to propose response strategies and adjustment suggestions, and assist operators in reviewing store operation reports. The convenience store profit model can be simplified as: Operating Profit = Gross Merchandise Profit + Other Business Income - Operating Expenses. Where Gross Merchandise Profit = Merchandise Sales Revenue - Merchandise Cost; Other Business Income = Value-Added Service Income + Membership Fees (for stores that manage members and charge fees, like FamilyMart's Premium Card); Operating Expenses = Employee Wages + Fixed Costs (rent, utilities, decoration, equipment) + System Construction (information systems and supply chain). A former FamilyMart store manager told 【Business Street Detective】: Typically, a store has one store manager, two to three full-time employees, and several part-time employees. Daily staffing is two to three people, but during peak hours, four people are usually needed, working in three shifts. The store manager's duties mainly include checking shelf inventory and restocking, calculating waste, preparing reports and reconciling accounts, depositing the previous day's revenue into the bank, forecasting product sales and ordering, and handling in-store recruitment and training. Full-time employees mainly handle shelf organization, morning shift handover, and verifying the previous day's accounts. After each peak period (morning, noon, evening), they clean up and restock items like oden. Between 9 PM and 4-5 AM, they coordinate with delivery logistics, inspect goods, and stock shelves. Regarding salaries, 【Business Street Detective】 also interviewed some convenience store employees. Taking FamilyMart in Shanghai as an example, both direct-store full-time and part-time employees are paid by the hour, with hourly rates concentrated in the 18-21 yuan range (higher on holidays and night shifts), part-time hourly rates between 14-18 yuan, and full-time employees also receive year-end bonuses and social insurance benefits. There are three shifts per day, each 9 hours, with 1 hour deducted for meals. Franchise stores vary depending on the owner and their recognition of the employee. Store managers earn about 1,000 yuan more. Franchise stores, like direct stores, must also accept inspections and constraints from headquarters. The most famous is the mystery shopper check. When new promotions are launched, mystery shoppers visit stores to check whether staff use the six standard phrases, recommend promotional items at checkout, and wear masks and gloves when handling food. Currently, failing a mystery shopper check does not deduct the security deposit, but violating company requirements can lead to contract termination and penalty payments. Specifically, according to a former franchisee, Zhihu user @Mr Feng Yunshu, if your store's business is poor, the company has a policy of a 'minimum guarantee'. That is, if your store's daily turnover is 8,000 yuan, you would definitely receive the minimum guarantee. If you choose the 2FC-A franchising method, your monthly share would be 25,000 + 8,000 * 6% * 30 = 39,400 yuan. But this is not all yours; you must deduct your monthly waste (normally not exceeding 6,000), monthly utility costs (shared half with the company, normally around 6,000, but varies by location; some are only 2,000-3,000), and employee wages. A store with 8,000 yuan daily turnover typically needs 5 employees (if you count yourself, you need to hire 4; if you can work hard, you only need to hire 3), each costing about 4,000 yuan per month (based on current FamilyMart franchise store wages), plus other miscellaneous costs of about 2,000. So, 39,400 - 6,000 - 6,000 - 16,000 - 2,000 = 9,400, which is roughly your monthly profit. In the end, for a single franchise store, the biggest impact is the balance between location and rent. According to the '2018 China Convenience Store Development Report' jointly released by the China Chain Store & Franchise Association and Boston Consulting Group, in 2018, the rapid increase in convenience store operating costs was mainly due to rent and labor: rent costs rose 18%, utility costs rose 6.9%, and labor costs rose 12%. Especially in first- and second-tier cities with a strong convenience store customer base, competition is already fierce, prime locations are scarce, and with rising property prices, the profit margin for convenience store franchising has shrunk sharply. If you have a qualifying store, it might be more cost-effective to simply collect rent. In third- and fourth-tier cities, the convenience store war may just be beginning. Source: Business Street Detective (ID: bustanan)