Source | Tech Planet ID | tech618 Author | Zhai Yuanyuan Two major snack brands have successively filed for IPOs. On September 23, Wanchen Group submitted its prospectus to the Hong Kong Stock Exchange, aiming for a main board listing. This comes less than half a year after another snack giant, Mingming Henmang, filed its prospectus at the end of April.

After a year of aggressive expansion, the bulk snack retail sector has developed into a giant with over 30 billion yuan in revenue and nearly 1 billion yuan in net profit. Wanchen Group's prospectus shows that from 2022 to 2024, its revenue was 5.49 billion, 92.94 billion, and 323.29 billion yuan, respectively, with net profits of 0.68 billion, -1.76 billion, and 6.11 billion yuan.

Mingming Henmang's prospectus also shows that from 2022 to 2024, its revenue was 42.86 billion, 102.95 billion, and 393.44 billion yuan, with adjusted net profits of 0.81 billion, 2.35 billion, and 9.13 billion yuan.

The two bulk snack brands together have nearly 40,000 stores, predominantly franchised. According to the prospectus, as of June 30, 2025, Wanchen Group's store network reached 15,365 stores, with franchised stores accounting for 99.4%, totaling 15,275. Mingming Henmang claimed in September that its national store count exceeded 20,000.

Behind tens of thousands of stores are thousands of franchisees. With Wanchen and Mingming Henmang about to go public, how is the franchisee business? Is bulk snack retail still a good business?

Opening 10,000 Stores in a Year, Gross Margin Only 7.6%

The biggest advantage of bulk snack stores is low prices.

A bottle of Coca-Cola costs 1.8 yuan, a bottle of Mizone 2.8 yuan, and jelly 5.1 yuan per jin. Wanchen's prospectus shows that about 95% of its products are purchased directly from brand manufacturers, and terminal retail prices are 20-30% lower than traditional supermarkets, ensuring profit margins for both the brand and franchisees.

Absolute price advantages have driven the brand's rapid expansion.

From 10,000 to 20,000 stores, Mingming Henmang took only 15 months. Its prospectus filed at the end of April this year showed that as of December 31, 2024, it had 14,394 stores, but by September, it claimed over 20,000 stores nationwide, certified by consulting firm Frost & Sullivan.

In 9 months, it added 6,000 stores; in 15 months, 10,000 stores. In June 2024, Mingming Henmang's store count just exceeded 10,000.

Wanchen took even less time, adding nearly 10,000 stores in one year. According to the prospectus, as of the end of 2024, Wanchen Group had 14,196 stores, compared to only 4,726 at the end of 2023, adding 9,776 stores in one year, an average of 26 stores per day.

Few companies add 10,000 stores in a year; only Luckin Coffee and Mixue Ice Cream & Tea have achieved such speed in the past.

Acquisitions and franchising are the fastest expansion paths. Wanchen started with edible fungi, entered the bulk snack track in 2022, acquired Snack Workshop assets, and created the snack retail brand "Lu Xiaochuan." Subsequently, Wanchen Group acquired "Hao Xiang Lai," "Lai You Pin," and "Ya Di Ya Di," merging them into "Hao Xiang Lai Brand Snacks." At the end of September 2023, Wanchen acquired the local Zhejiang bulk snack brand "Lao Po Da Ren" through a subsidiary. "Mingming Henmang" was formed by the merger of "Snack Busy" and "Zhao Yiming Snacks," completed in November 2023.

The "loose brand" model makes the company highly dependent on franchisee performance. Wanchen Group stated in its prospectus, "Our revenue primarily comes from selling snacks and beverages to franchised stores, and our financial performance is highly dependent on the business performance of franchised stores."

Compared to the milk tea industry, bulk snack retail has relatively low gross and net profit margins.

From 2022 to 2024, Mingming Henmang's gross margins were 7.45%, 7.50%, and 7.62%. Wanchen Group's gross margin was slightly higher but still below 12%. Its snack business gross margin was 10.9% in 2024, rising to 11.5% in the first half of this year. In contrast, Mixue Ice Cream & Tea, also known for low prices and a franchise model, has a gross margin of around 30%.

A "Hao Xiang Lai" franchisee told the author that snack stores are high-investment, low-margin businesses. His two stores, including rent, renovation, and initial stock, cost nearly 900,000 yuan in total. They look busy but don't make money. "It's thankless work. People see you busy, crowded, with queues at checkout, but in reality, you're not making money; you're working for the company and the landlord."

Red Dividend Period Over, Payback Period Lengthens

Mingming Henmang and Wanchen are successively competing for listing on the Hong Kong Stock Exchange. If all goes well, both will go public.

However, the brand's capital feast does not equal a franchisee carnival. Many have ridden the industry dividend, but many have not yet recouped their investment and some are even transferring stores at a loss.

Fewer and fewer people can recoup their investment within a year. A franchisee told the author that other stores with good sales recouped in a year, but he has invested over 1 million yuan and hasn't recouped after more than a year.

Another franchisee with two "Hao Xiang Lai" stores said the first store has been open for 1 year and 3 months, and the second for half a year. The first store's rent is paid semi-annually, with an investment of 750,000 yuan; the second cost 850,000 yuan. So far, the first is close to recouping, but the second is far from it.

The payback period is getting longer. An individual investor who once considered entering the bulk snack industry but ultimately gave up said that with costs spread monthly, the average payback period for snack store franchises is now 29 months, more competitive than convenience stores.

Moreover, brands do not guarantee store spacing; so-called "inserting stores" means no distance protection, allowing new franchise stores to open near existing ones. Additionally, some franchise contracts require franchisees to open secondary stores within a certain period, without guaranteeing profitability, and even force them to open.

The industry's dividend period has passed. A Zhejiang snack franchisee, who has franchised four Zhao Yiming Snack stores with an investment of about 850,000 to 1 million yuan each, has been open for a year and a half. He told the author that two stores have recouped their investment, while the other two need about half a year more. Cost control is crucial for recouping and profitability. According to his calculations, a store needs monthly revenue of 300,000 yuan to break even: selling 300,000 yuan, with 60,000 yuan gross profit, 25,000 yuan labor, 15,000 yuan rent, 3,000 yuan freight, 2,000 yuan miscellaneous, and 5,000 yuan electricity, just breaks even.

In fact, many snack stores do not achieve monthly revenue of 300,000 yuan.

Some lose over a million yuan and have to close stores to cut losses. A Hunan snack franchisee revealed that it's no longer easy to franchise snack stores. He and several shareholders franchised over 10 Zhao Yiming Snack stores, but the stores opened last year had mediocre business and closed after a year. At the end of September this year, they closed 3 stores, losing 1.5-1.6 million yuan. The market is now oversaturated; without the company's first-year subsidies, his stores would have closed long ago. Besides the 3 closed stores, some of the remaining 8-9 stores are also losing money.

Excessive store density has severely impacted franchisee business. The Hunan franchisee said that if business is good, the group forces them to open a second store; if they don't, the company opens the location to other franchisees, who can open as long as they are 500 meters apart. A town with 3 snack stores can still open more.

Although snack brands are lowering franchise thresholds, not charging franchise fees, and even subsidizing stores of certain sizes, it remains a decision that requires careful consideration for franchisees.

Snack Business Difficult, Store Closures Increase

The rapid expansion period of the snack industry has passed.

After the aggressive expansion in 2024, Wanchen Group's store opening speed has significantly decreased. New store additions dropped from 9,776 in 2024 to 1,468 in the first half of 2025.

Store closures have become common. In the first half of 2025, Wanchen Group closed 259 stores, exceeding the total closures for all of last year. In September this year, "Hao Xiang Lai" was reported to have multiple stores in Jinan closed.

Zhao Yiming is also exiting regions where it lacks competitiveness. A Chongqing snack franchisee revealed that Zhao Yiming Snacks has exited the Chongqing market. "Zhao Yiming bought all our company's directly-operated stores, changed the signs, operated for less than three months, and then withdrew from Chongqing for unknown reasons. There are many snack brands here, very competitive."

In the past, with fewer competitors, snack store owners could earn up to 100,000 yuan a month. The Chongqing franchisee has been in business for 4 years. He said that when he opened, Hao Xiang Lai and Zhao Yiming had not yet entered Chongqing.

Based on his experience, the first two years were relatively stable, but now it's worse than before. At its best, monthly revenue exceeded 700,000 yuan, with net profit of over 100,000 yuan a month. He also benefited from the pandemic period when nearby competitors were not allowed to open, and only three supermarkets and his snack store could operate.

Now competition is fierce, and already low margins are repeatedly compressed. The Chongqing franchisee said that companies are watching each other's prices, cutting them repeatedly, and some even sell at a loss. For example, some traffic-driving beverages have only 0.2 yuan profit, and after labor and electricity costs, it's a loss. Some portioned puffed foods have only 1-3 mao profit. With lower margins, franchisees' monthly income is no better than that of wage earners.

Additionally, inventory backlog has become severe. A "Hao Xiang Lai" store employee revealed that franchisees are stocking more than before.

In her store, some goods from last year's opening are still unsold. The company recently introduced new rules: if stores have expired or unpriced items, or customer complaints, the cash register system will be forcibly shut down, preventing sales for at least 2 hours. A Zhao Yiming store employee said that now stores are closed if near-expiry food is found, with increasingly strict enforcement.

The low-price label is increasingly questioned. Many consumers say that low-price snacks are not actually cheap. In bulk snack stores, only water and beverages are cheaper; other items are not. White-label bulk snacks are the worst.

A franchisee of "Huai Jiu Shi Guang Tong Nian" snack store revealed that bulk foods use "ghost scales," pre-packaged food weights differ from supermarkets, most brands are different, and shelf life is hard to control. When anti-counterfeiting inspectors come, all efforts are in vain.

"Hao Xiang Lai" and others are also exploring new growth curves. Many Hao Xiang Lai stores have added trendy toys like blind boxes and keychains. A Hao Xiang Lai store employee said that blind boxes sell well in her store, while keychains are average.

At the same time, "Hao Xiang Lai" is rumored to be transforming into a comprehensive supermarket, planning to create "Wan Shi Da Ji." Some industry media reported that brands like Hao Xiang Lai and Liangpin Shop are seeking to transform into full-category supermarkets, especially Hao Xiang Lai, which is planning a comprehensive supermarket brand called "Wan Shi Da Ji."

Whether the transformation will succeed is unknown, but for now, Wanchen's "Hao Xiang Lai" and Zhao Yiming need to go public before the industry window closes.