---
title: "Why Still Can't Make Money Franchising 7-Eleven? | In-depth Review"
description: "This article examines the profitability of mom-and-pop stores, franchised convenience stores like 7-Eleven, and unmanned stores in China. It concludes that while mom-and-pop stores can be profitable but demanding, 7-Eleven franchises require high investment and long payback periods, and unmanned stores face challenges in profitability due to low margins and service issues."
author: "蛋解创业"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-06-27"
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# Why Still Can't Make Money Franchising 7-Eleven? | In-depth Review

> This article examines the profitability of mom-and-pop stores, franchised convenience stores like 7-Eleven, and unmanned stores in China. It concludes that while mom-and-pop stores can be profitable but demanding, 7-Eleven franchises require high investment and long payback periods, and unmanned stores face challenges in profitability due to low margins and service issues.

Click 'Read Original' for details.

**Do Mom-and-Pop Stores Make Money?**
Our generation has a soft spot for mom-and-pop stores, as they remind us of the small shops from our childhood, where five-cent spicy strips and two-cent ice packs were the best treats we couldn't always get.
According to incomplete statistics, there are currently over 6 million, nearly 7 million, mom-and-pop stores in China. About 30% are in townships and rural areas, and 46% are in third- and fourth-tier cities and county-level cities. They contribute 40% of the total retail channel shipments.
It can be said that mom-and-pop stores are the smallest economic cells in the Chinese market.
So, do mom-and-pop stores make money today, and is it suitable for us to enter this business?
We first visited a convenience store in a new residential area near the Fifth Ring Road in Haidian District, Beijing.
The owner is a man born in 1982, with an initial investment of over 100,000 yuan. The store opened in March 2017 and is about 70 square meters. Within a 10-minute walk, his is the only supermarket. The store is well-stocked with breakfast items, snacks, fruits, vegetables, toothbrushes, socks, and more.
The store's average monthly revenue is around 150,000 yuan. Monthly expenses include about 70,000 yuan for goods, over 50,000 yuan for cigarettes, about 7,500 yuan for utilities and rent, and 6,000 yuan for labor. Roughly calculated, excluding the owner's own salary, there is a net profit of over 10,000 yuan.
To make money, you can't cut corners; you have to buy goods where they're cheapest. So the owner gets up at 7 a.m. every day to go to the market for fruits and vegetables, and then works until after midnight. He is alone and always feels tired, and the product placement and management are somewhat casual.
He faces two options: either grit his teeth and keep going to save money, or hire someone, which would add a salary.
The owner chose a third path: he plans to sell the store and return to his hometown to start a cross-border e-commerce business.
Next, we look at a medium-sized supermarket in Renshou County, Sichuan.
The owner is a post-90s woman who invested over 200,000 yuan. The store opened in December 2015 and is about 200 square meters.
Renshou County is near Meishan City, Sichuan Province, and was selected as one of the top 100 counties for investment potential in 2018. From January to September 2018, the per capita disposable income in Renshou County was 15,023 yuan, with a growth rate of 16.0%.
This store is located at a three-way intersection on the southern section of Nantan Road in Renshou County, surrounded by residential areas, making it a gathering place for foot traffic. Monthly revenue is about 240,000-250,000 yuan, with fixed monthly expenses of about 220,000 yuan, including rent, salaries for four employees, utilities, and goods. Monthly net profit is 20,000-30,000 yuan. The initial investment was recouped within six months, and the supermarket's income has been steadily rising.
The owner is proactive; within six months of opening, she adjusted the shelves twice and is learning how to maximize profits through different display methods and product combinations. She also has time to think about "this and that" because she has four employees, and labor costs in small counties are low, unlike the owner in Haidian, Beijing, who can't even afford to hire one person.
Now, she has also started a second-hand mobile phone business.
After visiting stores in big cities and small counties, overall, mom-and-pop stores can make money, but it's hard work. Although most are profitable and can cover daily expenses, many operators lack knowledge of operations and retail, and are still confused about how to increase income.

**Mom-and-pop stores have low investment, with a payback period typically around six months, and income is relatively stable with low growth. They are suitable for those who don't expect to get rich but want to work steadily for themselves.**

However, with the acceleration of urbanization, branded convenience stores are expanding aggressively, and some mom-and-pop store owners are hoping for change by upgrading through franchising Tmall or JD.com small stores.
Next, we analyze in detail whether it's suitable for mom-and-pop stores to upgrade to Tmall or JD.com small stores. For this, we also visited several Tmall and JD.com small stores in Tianjin.
From our field visits, whether JD convenience stores or Tmall small stores, some are renovated mom-and-pop stores, and some are new stores, so each store we visited was different. Visually, the interior decoration, product selection, product placement, and business module combinations are not standardized; only the storefront signage is uniform.
Some stores have messy product placement and dim lighting, with products mainly from traditional offline channel brands; some have brands like Baiweicao and Three Squirrels, which are rare in other convenience stores; some are bright and tidy with neatly arranged products and many internet-famous and imported brands, such as Belgian Liefmans beer and French Kronenbourg 1664; some have fresh food, steamed buns, and oden; others don't.
Franchising a Tmall or JD.com small store has low costs: no franchise fee, only a 10,000 yuan deposit, refundable after the one-year contract expires. After joining, the signage must be renovated, installed by Tmall or JD.com, with several types to choose from, priced within 10,000 yuan. The interior can be renovated or not, entirely up to the owner.
Based on the above, the additional cost for franchisees is low regardless of which brand they join.
In operations, stores vary widely; some still operate as traditional offline small stores, while others have introduced internet practices like limited-time promotions, WeChat-based membership systems, differentiated pricing for members, and food delivery. So, whether JD convenience stores or Tmall small stores, they don't provide much help in store operations and management; after joining, owners still operate independently.
The big data advantages and supply chain advantages of JD and Tmall are not fully realized. So if you don't have a store and never thought about opening a convenience store, but just see the JD and Tmall brands and think you'll make money, starting from scratch carries the same risk as not joining JD or Tmall: you need to understand retail.
Through visits and analysis, we summarize the advantages of mom-and-pop stores:

**1. Access to lower-cost goods:** A phone call brings a salesperson with goods, no delivery fee. Mom-and-pop stores don't need invoices, so purchase prices are lower.
**2. Low rent costs:** Many community stores are in residential buildings, with doors cut into the first floor, cheaper than commercial rents. Some owners even live on the first floor, paying zero rent.
**3. No invoices, no taxes, all profits go into their own pockets.**

But to make money, most mom-and-pop owners save by cutting corners. They don't hire employees; the couple works from 6 or 7 a.m. to 11 p.m. or midnight, which is exhausting, and they can't leave the store all year round. If they hire someone, costs rise immediately, and some stores might only earn enough to cover wages.
Everything has two sides; with advantages, there are also disadvantages. The shortcomings of mom-and-pop stores are limited product selection, no fresh food, unguaranteed quality, and short service hours. Young people today have many needs that mom-and-pop stores struggle to meet.

**Does Franchising 7-Eleven Make Money?**
When it comes to convenience stores, the most representative is 7-Eleven, which most convenience store practitioners in China admire and learn from.
**Currently, 7-Eleven has over 60,000 stores globally! In 2016, their 8,000+ employees created nearly 10 billion yuan in profit, with per capita profit close to 1.2 million yuan, comparable to Alibaba.**
In Japan, people's lives are almost inseparable from 7-Eleven. You can buy daily necessities, meals, shirts, plane tickets, movie tickets, and amusement park tickets; there are free phone translation services, elderly services; parcel delivery and storage, tax and pension insurance payments, laundry services...
It can be said that 7-Eleven truly achieves convenience.
But what is it really like in mainland China?
**Currently, 7-Eleven has over 7,000 stores in China, but Taiwan accounts for over 5,000, with only about 2,000 in the mainland!**
From the number of stores, 7-Eleven hasn't developed well in China.
In 2011, 7-Eleven ambitiously entered Chengdu, planning to open 250 stores in 5 years. But it only opened 100 before stopping due to heavy losses, and now only about 60 remain.
**Why does 7-Eleven, which opens stores aggressively in Japan and Taiwan, change its style in China? Danjie Chuangye analyzes three reasons:**

**1. High rent and labor costs in China**
7-Eleven's truly profitable stores are in core business areas of first- and second-tier cities, but competition is fierce, and commercial properties are extremely expensive, accounting for over 30% of opening costs. Labor costs are among the highest expenses for almost all companies. In Beijing, for example, convenience store employees earn a basic salary of around 5,000 yuan, plus social insurance, housing fund, and taxes. With 24-hour operation, staff numbers are not small. Labor costs generally account for over 20% of total costs.
Together, rent and labor costs exceed 50%.

**2. China's vast low-end market, where 7-Eleven has little advantage**
China's largest consumer market is in third- and fourth-tier cities, where people are price-sensitive. High-end convenience stores like 7-Eleven can't compete with the 6 million mom-and-pop stores. For example, a pack of spicy strips from an unknown brand in a mom-and-pop store sells for 0.5 yuan, while a pack of Weilong spicy strips at 7-Eleven costs 4 yuan. The 0.5 yuan ones sell well, while the 4 yuan ones sit on the shelf until they expire.

**3. Competition from local brands and disadvantages in political-business relations**
China is a society of personal connections, and political-business relations are a factor restricting convenience store development. Many local supermarkets have strong government backgrounds, and with local protection and policy support, they create resistance to outside brands. Of course, this isn't the most important factor.
Even so, 7-Eleven remains an excellent company. Most domestic convenience stores imitate its retail philosophy, management methods, supply chain capabilities, SKU control, and franchise authorization model.
Data shows that 7-Eleven franchises account for 98% of its stores, meaning its strength relies heavily on a franchise model. In many places, 7-Eleven forms joint ventures or cooperates with other companies, delegating operational rights.
For example, in Thailand, 7-Eleven's operational rights belong to Charoen Pokphand Group. In different regions of China, operational rights belong to different companies. In North China, mainly Beijing and Tianjin, stores are under 7-Eleven Beijing; in the South, under a Hong Kong company; in East China, under Taiwan's Uni-President Group.
**Before 2011, 7-Eleven operated directly; only after 2011 did it open franchising.** But its franchise conditions are strict. For Beijing and Tianjin, franchise fees range from 350,000 to 700,000 yuan, and there must be two full-time operators (preferably a couple). The high threshold is one thing; more importantly, 7-Eleven's payback period is slow. This is a long-term investment, which many find unsuitable.
We understand that 7-Eleven has two main franchise models:
Under this model, it's hard to make big money quickly. In other words, from the moment headquarters opens franchising, it's decided that this is a career investment, not an opportunity investment. So among 7-Eleven's many thresholds, one is that the franchise contract must be signed by two people with a kinship relationship; otherwise, franchising is not granted.
Some may wonder why this requirement exists.
There's a story from McDonald's early days that might explain.
When McDonald's first opened franchising, its criterion for selecting franchisees was: wealthy people. Founder Ray Kroc believed it was easier to persuade rich people to invest than ordinary people.
But it didn't last long. A few wealthy people did sign franchise contracts generously, but they were negligent in operations: beef wasn't cooked properly, pickles in burgers became lettuce, and garbage was everywhere. This angered Kroc.
One day, a young man came to Kroc selling Bibles.
Kroc asked him why a Jew would sell Bibles. The young man said: to survive.
Kroc had an epiphany. He realized that the franchisees he needed weren't those with big money, but those with a sincere business attitude. So Kroc signed a franchise agreement with the young man.
The young man worked with his wife, giving full effort every day, controlling food temperature, serving time, and store hygiene excellently. McDonald's business gradually improved.
From then on, Kroc took back franchise rights from the wealthy, and his requirements for franchisees became struggling couples.
7-Eleven's franchise policy is the same. Moreover, 7-Eleven's profit distribution logic suits small couples better—they can't make big money, but they can't earn as much elsewhere, and they can be long-term, reliable workers creating value for the company.
This is the secret to why 7-Eleven's many franchise stores can continuously bring high value to headquarters.
During our field visits to several 7-Eleven stores near Zhongguancun, we found that most are franchises, and many have been operating for at least four years, indicating extremely stable operations.
According to our incomplete statistics, these stores' daily revenue hasn't reached 20,000 yuan. Estimated final income is around 10,000-20,000 yuan, which, though not high, is acceptable for ordinary-income families.

**So, what kind of people are suitable for franchising a 7-Eleven convenience store?**
First, you need a certain amount of startup capital (this is a prerequisite):
1. Veterans and others who have been disconnected from society for a long time and have no other experience.
2. Ambitious youth from third- and fourth-tier cities who aren't content with local life, want to develop in first-tier cities, but lack the ability to start their own business.
3. Couples who can only earn money through physical labor.
As for whether you'll make money after franchising, it depends on your perspective. If you think earning 100,000 yuan a year is making money, it's worth doing; if you think you can earn 100,000 a year through work, then it's not worth it.

**Does Franchising an Unmanned Convenience Store Make Money?**
When shopping at convenience stores or supermarkets, you've probably experienced waiting in line to check out, which is annoying, and you've imagined how great it would be to skip the line.
Now, unmanned convenience stores have made this possible. Grab and go, no lines, the system automatically identifies your purchases and deducts from your account.
Under the new retail concept, capital has been paying significant attention to unmanned stores since 2017. According to statistics, at least 27 companies in the industry received financing in 2017, totaling 3.1 billion yuan.
With capital support, is the unmanned store a good business?

**First, ask: why have unmanned stores when there are already convenience stores? Is it just to solve the queue problem?**
Obviously not. **The industry promotes an advantage of unmanned stores—cost reduction and efficiency improvement.**
In first- and second-tier cities, over 50% of a convenience store's costs are rent and labor, yet gross margins are only 20%-35%.
High costs and low margins mean convenience stores struggle to make money.

**Unmanned stores use container-style setups to reduce rent costs, and use mobile payment, IoT, and other technologies for smart checkout, improving efficiency and saving labor costs.**
This is what the industry calls cost reduction and efficiency improvement.

**Moreover, smart shopping can collect user data, generating big data, opening up more business possibilities in the future.** This is the essence of new retail: integrating online and offline data. Convenience stores are naturally close to users and have high traffic. Unmanned stores have low costs and are easy to expand quickly.
So when the unmanned retail concept became hot, capital followed to grab positions. Once this link is filled, the business closed loop from online to offline will be more complete.
This business looks promising.

**However, we also found that unmanned stores create new problems, such as theft, competitiveness, and foot traffic.**
It's hard to judge the prospects. For this, Danjie Chuangye visited unmanned stores to analyze for you.

**Danjie Chuangye visited two unmanned stores of different brands in Beijing: Xiaomaipu and Bingobox.** These two brands are leading in financing: Xiaomaipu raised 120 million yuan in Series A+, and Bingobox raised $80 million in Series B.
Both stores are in closed communities. Unmanned stores have more flexible site selection than manned stores; if a location doesn't sell well, they can be moved elsewhere, but they are mainly in relatively closed environments like communities, campuses, and large companies, with three advantages:
1. These places have repeat customers, making it easy to cultivate stable traffic;
2. Lower theft risk;
3. Manned stores are far away and can't cover these areas.

**Inside the store:** Less than 20 square meters, narrow space, with three rows of shelves, three freezers, a checkout counter, and aisles only wide enough for one person. There's a water dispenser providing hot water for instant noodles.
**Products:** Mainly beverages, snacks, and simple daily necessities. From nearby residents, we learned that sometimes simple meals and rice balls are sold.
**Checkout:** The counter is simple; customers scan codes to pay themselves.
How about theft prevention? When mentioning unmanned stores, many people's first impression is whether they'll be stolen from. The editor tried to walk out with a bag of fries without any barriers or alarms, and no payment notification was received on the phone.

**Inside the store:** About 20 square meters, with four rows of shelves, two freezers, a checkout counter, and aisles only wide enough for one person. The air conditioning is on, making it warm.
**Products:** Mainly snacks, beverages, and simple daily necessities.
**Checkout:** The counter has some tech; no need to scan barcodes; just place items in a designated area for automatic recognition, then scan a QR code with your phone to pay.
The editor tried to use the function, placed an item, but couldn't check out; the system showed three unpaid items from before. Wanting to help pay, scanning the code led to a page like this.
Calling customer service via the wall phone, no one answered after two attempts, and the shopping failed.
How about theft prevention?
The editor directly took a ham sausage and walked out without any obstruction or alarm (though a sign on the wall said "Taking items without payment will trigger an alarm"). Of course, we're civilized; after walking around, we returned the sausage.

**Is it worth franchising now? We'll analyze from two aspects: cost and profitability.**

**1. Are costs high?**
Taking Beijing as an example, let's compare costs: opening a manned store costs about 600,000-700,000 yuan per year, while an unmanned store only needs 130,000-150,000 yuan.
In labor costs, unmanned stores don't need staff on duty; one stocker can handle several stores, so labor costs are naturally lower.
Of course, theft is also a cost.
Danjie Chuangye learned that an unmanned store of less than 20 square meters on Peking University's campus has annual shrinkage (stolen or expired goods) of about 18,000 yuan. The store's annual revenue is 800,000 yuan, so the shrinkage rate is 2.25%, not high. But this store is on campus, where people are more educated and theft is lower. In other communities, the situation might differ.
In theft prevention, brands don't have mandatory measures; currently, they rely on supervision and reminders, like cameras and warning signs, mainly relying on consumer self-discipline.

**Overall, unmanned stores have a cost advantage.**

**2. Can they make money?**
**A convenience store's profitability depends on two things: gross margin and foot traffic.**
Unmanned stores can only sell standardized products, so gross margins are low. In the industry, fresh food typically has the highest profit, but it's difficult for unmanned stores to offer fresh food.
There are two main reasons: first, fresh food requires staff on-site; you can't have customers operate cold skewers or oden themselves, as it would be a poor experience and unhygienic; second, unmanned stores are scattered, so even if they offered fresh food, supply chain costs would be high.
So most unmanned stores only sell standardized items like beverages, instant noodles, and chips, resulting in lower gross margins.
You might think of selling more at lower margins, but unmanned stores don't have a foot traffic advantage.

**A convenience store's foot traffic depends on three factors: location, product SKU, and service experience.**
In location, unmanned stores are in closed communities with small user bases. The highest traffic in a community is at the entrance, where manned stores are usually located. Unmanned stores are often placed in open areas, serving only nearby residents.
In service experience, unmanned stores lack staff for guidance, promotion, and timely restocking, which affects shopping experience and sales. The unmanned store at Peking University initially had poor sales; after arranging staff on duty, daily sales increased from 3,000 yuan to 4,500 yuan, a 50% growth.
In product SKU, unmanned stores can't compete with manned stores: unmanned stores have only 600 SKUs, while manned stores typically have 3,000. Additionally, in communities, mom-and-pop stores rely on regulars and repeat customers, with emotional connections that unmanned stores can't replicate.
Unmanned stores have a distance advantage but sacrifice many other advantages. And in this position, there's a long-standing business model—vending machines.
Unmanned stores are essentially enlarged vending machines; their function can be fully replaced by vending machines, with just two or three needed to meet demand.
Moreover, vending machines are more efficient, products aren't messed up by customers, and they're easier to secure. Without heavy equipment investment, costs are lower. They're small and have low rent.

**Overall, it's hard for unmanned stores to be profitable.**
In the past two years, unmanned stores have seen large-scale "deaths." In 2018, 51 Snacks was sold to Xianfeng, Guoxiaomei acquired Fanqie Bianli, and Linjia Convenience Store closed all 168 stores overnight. After 2018, few unmanned store startups received financing.
This all indicates that unmanned convenience stores are not a profitable business.
But practitioners are exploring various methods, such as Bianlifeng, which uses staffed checkout with unmanned payment; and Xiaomaipu, which combines dining and convenience store formats. In the future, more new models may emerge.
So, while unmanned convenience stores solve the high rent and labor costs of traditional convenience stores, they create new problems:

**1. Poor service experience: no staff for guidance, promotion, or timely restocking.** The upstream and downstream industry chain isn't perfect, and automatic checkout and AI recognition systems aren't mature, leading to recognition failures.
**2. Low profit margins.** Without staff, they can't sell the most profitable fresh food, only standardized products, which have low gross margins.

Due to these reasons, unmanned stores have poor rent-bearing capacity, can't get good locations, and have little advantage in foot traffic.
So currently, unmanned stores can't solve the profitability problem, and we don't recommend franchising now, but you can watch. The industry is exploring different business models, and it's possible a successful model will emerge in the next two to three years.
Of course, if you have resources and the ability to solve the three problems of cost, gross margin, and foot traffic, it could be a good business.

**Does Bianlifeng, Which Opened 700 Stores in Two Years, Make Money?**
Danjie Chuangye has struggled to survive on Zhongguancun Entrepreneurial Street for 5 years. We've watched the rise and fall of businesses in this 200-meter area, seeing stores open and close.
But in the past year, a store called "Bianlifeng" has surprised us. Since its founding in December 2016, it has covered Beijing, Nanjing, Shanghai, Tianjin, and Langfang, with about 300 stores in Beijing. By the end of 2018, Bianlifeng had about 700 stores.
And on this small street, over a dozen stores have opened; you can meet one at every corner. Here's a screenshot:
Red: Number and locations of Bianlifeng stores within 1km of Zhongguancun.
Bianlifeng started in Zhongguancun, which has 25 large office buildings, with an average daily floating population of 87,896, 75% aged 19-59, and 80% with an average income of 10,000 yuan/month or more.
We visited over a dozen Bianlifeng stores within 1km of Zhongguancun to see if the capital-favored appearance is as beautiful as it seems.
First, let's show two photos for a visual impression:
Bianlifeng's site selection focuses only on location, not store size. 95% are on the ground floor of commercial buildings, in prime locations with convenient transportation. Many stores are complementary, like Tianshi Building Store 1 and 2, where the larger store can supply delivery services to the smaller one, saving costs and improving efficiency.

**1. Visual impression of store appearance and product placement**
**Upon entering, the first feeling is brightness and tidiness.** First, you see the fruit section, with fruits under the private brand "Fengzhixuan."
At the side of the entrance are self-checkout machines and coffee machines. Compared to 7-Eleven's manual checkout and freshly ground coffee, Bianlifeng's unmanned checkout and coffee machines not only reduce labor costs but also greatly enhance the shopping experience.
Next to the checkout is the fresh food section, with oden, steamed buns, various meat skewers, and hot lunch dishes, meeting the diverse breakfast and lunch needs of office workers.
The core of a convenience store's product structure is fresh food. As non-standardized products, fresh food best reflects a store's differentiation and has high gross margins (typically at least 40%, while overall store margins are around 30%), improving profitability.
To ensure fresh food supply, Bianlifeng has partnered with Yami Yami, the same factory that supplies 7-Eleven Beijing, giving it the same supply advantage in fresh food as 7-Eleven. This will become one of Bianlifeng's core barriers in the future.

**Next are shelves for snacks, and on the back shelves are daily necessities, instant noodles, bread, etc.** Many products are Fengzhixuan, showing Bianlifeng is expanding its private brand "Fengzhixuan" series to increase margins. In contrast, 7-Eleven has fewer private label products.

**Finally, there are prepared fresh food and refrigerated dairy and juice cabinets.** There are sandwiches, various set meals, noodles, porridge, sushi, etc., with shelf lives of about one day. Next to these are a few fruits. Products aren't much different, but prices are generally more favorable than 7-Eleven.
Next to the fresh food refrigerated cabinet is a beverage cooler. There are sweetened and unsweetened tea drinks, various beers, and carbonated drinks. These aren't much different from 7-Eleven's offerings; they're all standardized products.
Each store has a photo printer and shared umbrella area, usually at the entrance. Larger stores also have more alcohol sales. Some alcohol is also Fengzhixuan, and App members can enjoy significant discounts. 7-Eleven doesn't have membership, and its alcohol isn't private label.

**2. Shopping experience and service attitude**
When shopping, **scan items at the self-checkout, then open the Bianlifeng App to scan and pay, without staff involvement, making the entire shopping experience very convenient.**
Staff are enthusiastic and occasionally briefly introduce daily specials. When buying fresh food, I noticed every staff member wears gloves, hairnets, nose clips, and masks, giving a very hygienic impression.
Every Bianlifeng store has a dining and leisure area, with 2-3 seats in small stores and 20-30 in larger ones, allowing customers to dine comfortably.
In contrast, 7-Eleven only has manual checkout counters, often with long lines, and staff are relatively "cold," without greetings or farewells, and no dining area, lacking warmth and human touch.

**The above are differences in "surface phenomena" from store visits. Any business must see through the surface to the essence, or it's just fooling around.**

**1. What are the fundamental differences between Bianlifeng and 7-Eleven?**
First, their purposes differ. 7-Eleven aims to make each store profitable; Bianlifeng treats each store as a form of traffic acquisition, with plans beyond just convenience stores.
Second, their core points differ. 7-Eleven's core is high gross margins from fresh food, efficient supply chain, and developed franchise model; Bianlifeng's core is high gross margins from fresh food and private label products, efficient supply chain, and self-service shopping and payment smart systems.

**2. Why hasn't Bianlifeng opened franchising like 7-Eleven, choosing direct operation instead?**
Because Bianlifeng is smaller and less known than 7-Eleven. It can only ensure profitability by opening stores densely in a region with heavy investment, like the 10 stores within 1km of Zhongguancun. If it opened only 2 stores, it would need to build front warehouses and logistics for those 2, which is too costly, so it can only operate directly. Even if it opened franchising now, either the products wouldn't be fresh or tasty, or the product range would be incomplete, or delivery costs would be too high, making franchisees cannon fodder and harming the brand.

**3. Why is Bianlifeng developing so rapidly?**
Because behind "Bianlifeng" is Zhuang Chenchao, founder of Qunar, who left to create Zebra Capital, and he initially reserved 1 billion yuan in development funds for Bianlifeng.
With ample funds, Bianlifeng is faster and bolder than competitors in site selection, store opening, supply chain and logistics setup, and App smart payment system development.
Besides money, it also has talent. The team, led by Wang Zi, is from 7-Eleven's former management. After leaving 7-Eleven, they opened Linjia Convenience Store, gaining rich operational experience, which has given Bianlifeng wings.

**Bianlifeng defines itself not just as a convenience store, but as a means to acquire more user data and traffic through numerous stores and other projects.**
For example, Lawson treats its App as a mobile payment tool for stores, while Bianlifeng's offline stores serve the online App. Everything is to attract more users to the App, purchase memberships, and provide more data, which is then used to extend new consumption scenarios.

**So measuring Bianlifeng's profitability shouldn't be like traditional convenience stores, calculating single-store rent, labor, utilities, but rather looking at its grand strategy.**
If Bianlifeng, through continuous store openings, acquires a large amount of user data and traffic, convenience stores become one of its channel entrances.
Like its attempts at shared power banks, shared bikes, and smart shelves, these are not just for additional product experiences but mainly to attract traffic. For example, after Meituan established its food and entertainment business, it developed many forms of consumption scenarios.
So Bianlifeng might become a logistics company, advertising company, or supply chain company. Since it earns in segments, we ultimately need to see if the group is profitable and can make money for investors.

**Of course, rapid development also brings risks.**
(1) Take delivery: unlike 7-Eleven, which partners with Meituan and Ele.me, Bianlifeng has built its own delivery team. But fresh food delivery is difficult because fresh food can't be preserved, and it's hard to synchronize online and offline inventory.
(2) How to replicate and output excellent store managers, supply chain, and achieve full-region delivery are issues Bianlifeng needs to consider.
(3) Rapid expansion and strengthening supply chain and logistics require significant capital, so Bianlifeng's biggest challenge remains solving its capital chain problem.

**4. Currently, Bianlifeng doesn't open franchising. If it does, is it worth doing?**
If you insist on franchising, you must consider two points:
(1) Whether the headquarters in your city provides a delivery system, front warehouses, and supply chain;
(2) The company's overall strategy: whether it considers investors more, franchisees more, and whether it offers high-margin products like fresh food and private label products.
If both are present, there's a premise to do it; otherwise, don't, as there's a 99% chance you'll become cannon fodder.

**Big Trends and Small Tips in Convenience Stores**
**After over a month of visits, research, and analysis, we've summarized several major trends in the convenience store industry:**

**1. Convenience stores are no longer the "convenience stores" of the past**
In the past, we thought of small shops and convenience stores as places to buy urgent small items like cola, toothbrushes, yogurt, etc.
But today, convenience stores might sell homemade milk tea, coffee, yogurt, self-made boxed lunches, and fast food, and also accept parcel deliveries and sell lottery tickets. You can borrow umbrellas, print selfies, and even find seats to enjoy a cup of instant noodles for a high-calorie lunch.
So, if you want to open or franchise a convenience store, you must first change your mindset; you're not opening the convenience store of the past.

**2. All convenience stores are trying to increase gross margins through food and beverage**
**The convenience store industry is actually a low-margin retail industry.** The generally accepted gross margin in the Chinese market is around 20%-35%, with net profit between 3%-8%, averaging 5%. The main costs are rent and labor, accounting for nearly 50% of costs.
With low margins, starting with 7-Eleven, there have been attempts to increase margins through food and beverage. Currently, in Beijing's branded convenience stores, at least one-third of the area is used for oden, boxed lunches, rice balls, and bread.
7-Eleven's operating data in China shows that FF (Fast Food) products have become the largest component of sales and gross profit, with FF products accounting for 42.9% of sales and 46.6% of gross profit.
In a 7-Eleven survey of Chinese consumer shopping behavior, in-store cooking, dairy, beverages, oden, and rice balls/sushi ranked in the top five target products. Except for dairy and beverages, which are traditional categories, the rest are fast food.

**3. Data is the lifeline of the convenience store industry**
In an era of low productivity, retailers sold what they had, and consumers bought what was available. But today, it must be reversed, starting from customer needs, integrating what products, logistics, prices, and displays are needed.
7-Eleven emphasizes "thousand stores, thousand faces; thousand times, thousand faces." Where is your store? Near a hotel, company, hospital, or residential area? Are the nearby people older or younger? Is it winter or summer? Different times, dates, and weeks mean different product quantities and categories on shelves.
**Today, a digital supply chain network is the lifeline of convenience store brands. Traditional linear supply chains will gradually evolve into dynamic network supply chains. 7-Eleven can supply different stores 1-3 times a day at different times.**
Your store, suppliers, distribution centers, and headquarters must all be connected. What products each store has, when to stock, and what promotions to run should be decided by "the store manager and the data in the store manager's hands."

**4. If you must franchise, look at these three points:**

**First, check if there's a fresh food supply chain and related qualifications.** As analyzed earlier, fresh food is an effective way to increase convenience store margins. So, when franchising, you must examine whether the brand has a reliable fresh food supply chain and food-related qualifications, including delivery systems, central kitchens, and fresh food factories.

**Second, check the brand's local awareness.** Branding is a major trend in convenience stores. A brand means guaranteed products, after-sales service, and a complete training and support system.

**Finally, and very importantly, check if there's an exit mechanism.** Danjie Chuangye has always emphasized that entrepreneurship is risky, and success is sometimes a matter of probability. Additionally, convenience stores are a low-margin, hard industry. Some franchisees may not persist, or the brand's profit structure may be flawed. So it's crucial whether the brand has designed an exit mechanism.

Source: Danjie Chuangye (ID: manjiechuangye)


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