On May 30, the "2023 Commercial Franchise TOP280" released by the China Chain Store & Franchise Association showed that the total number of commercial franchise TOP280 stores in 2023 reached 631003, an increase of 10.29% compared with 2022. Among them, there are only 9 franchised brands with more than 10,000 stores.
In China, there are almost no chain brands above the scale that are not open to joining, according to this, if the data released by the chain operation association is accurate, there are only 9 stores in the chain brands of all walks of life in the country, obviously, it is not easy to reach this scale. According to public information, Mixue Bingcheng, Zhengxin Chicken Chop, Luckin Coffee, Wallace, Juewei Duck Neck, etc. are all in stores with more than 10,000 stores.
On June 12, the snack chain enterprise Snack Busy Group disclosed that as of now, the total number of stores of its two major brands, Snack Busy and Zhao Yiming Snacks, has exceeded 10,000, becoming the first 10,000-store brand in the snack chain industry, and the group officially changed its name to Mingming Busy Group (hereinafter referred to as "Mingming Busy").
In recent years, a large number of brands have been born in the mass sales of snacks, and in this highly fragmented market, the alliance of leading brands has become a significant trend in which the concentration of the industry continues to increase, and the Matthew effect is becoming more and more obvious. The alliance of the leading brands is not only to expand market share and influence, but more importantly, to form a "crowding" of the market of a large number of small and medium-sized snack retail brands.
1. The influence of supergiants on the industry has deepened
On November 10, 2023, Snacks is busy and Zhao Yiming announced a "strategic merger". At that time, snacks were very busy with 4,000 stores, in the first place in the industry, and Zhao Yiming's stores reached 2,500, in the third in the industry, after the merger last year, the number of stores on both sides reached 6,500, and in just over half a year, more than 3,000 new stores were added.
The news revealed when Snack is busy and Zhao Yiming merged is that the two sides keep their respective brands unchanged, the team framework remains the same, and the operation mode does not interfere with each other. Yan Zhou will continue to serve as the CEO of Snacks, and Zhao Ding will continue to serve as the CEO of Zhao Yiming Snacks, "At the same time, Yan Zhou will also serve as the chairman of the group company."
From the perspective of personnel arrangement, in this merger, snacks are very busy.
This time, the store reached the scale of 10,000 stores, and Yan Zhou and Zhao Ding jointly issued a joint letter. The two expressed their grand ambition to "become a snack brand for the people"! He believes that "today's Mingming is very busy with a larger scale, which can integrate better supply chain resources on the product side, give better sales channels to supplier partners, and bring more competitive goods to stores."
Whether it can become a "people's snack brand" can not be concluded, but after the boss and the third join forces, the profound impact on the entire snack retail channel is inevitable, less than half a year to add more than 3,000 stores, such a speed of development, the entire market resources is a huge "siphon effect", the so-called grass under the tree, on the one hand, other small and medium-sized brands are struggling to survive. On the other hand, I am afraid that in the future, upstream snack brand manufacturers will also have to look at the face of the giants. Third, in a situation of monopolistic competition in the market, the top retail channel brands have a large degree of pricing power over goods, and consumers cannot enjoy the price dividends brought by full market competition.
2. The development of an uneven mass snack track
According to data, from 2018 to 2022, the domestic snack food market will grow from 1.23 trillion yuan to 1.67 trillion yuan, and it is predicted that the size of China's snack market will reach 2.4 trillion yuan by 2027. Snacks are very busy and Zhao Yiming Snacks announced at this year's "All Things Growth Partner Conference" that the group's national store turnover will reach 20 billion yuan in 2023, and it is expected to maintain rapid growth in 2024.
A few are happy and some are sad, and the earning power of each mass snack is not the same. From January to September 2023, the gross profit margins of Wanchen Group's mass snack business and BESTORE, Laiyifen and Yiming Food were 7.91%, 28.54%, 42.48% and 30.18% respectively, and the industry average was 33.73%.
Wanchen Group is currently the only listed company with the main business of mass selling snacks. It includes its four major snack channel brands: Lu Xiaoyu, Ao Di Di, Hao Xiang Lai, and Laiyoupin. As of May 2024, there are more than 6,000 stores in the Wanchen snack retail sector across the country. Wanchen's 2023 financial report shows that Wanchen Group's revenue in the past year reached 9.293 billion yuan, an increase of 1592.03% year-on-year in 2022, but the net profit attributable to the parent company lost 82.92 million yuan, a year-on-year decrease of 273.72%.
If Mingming is busy after the merger, the sales volume really reaches 20 billion, which is twice that of the industry's second Wanchen Group. And the forecast data shows that Zhao Yiming's gross profit margin is as high as 30.18%, and after the merger, this data may be improved, after all, such a huge scale can greatly reduce the cost of the upstream supply chain.
3. Traditional snack brands have to "bow their heads"
The rise of the mass-selling snack model has put huge pressure on traditional food products such as BESTORE, Let's One, Three Squirrels, etc.
In 2023, BESTORE will achieve operating income of about 8.046 billion yuan, a year-on-year decrease of 14.76%; net profit attributable to shareholders of listed companies was about 180 million yuan, down 46.26% year-on-year; Looking at Laiyifen, headquartered in Shanghai, it will achieve revenue of 3.977 billion yuan in 2023, a year-on-year decrease of 9.25%; The net profit attributable to the parent company was 57 million yuan, a year-on-year decrease of 44.09%, and the net profit attributable to the parent company after deducting non-profits decreased by 80.43% year-on-year. Laiyifen said in the financial report that "the decline in performance is affected by the intensification of competition in the industry".
A large number of mass-selling zero foods have emerged - and under the background of the alliance of leading brands, the entire snack industry has entered a brutal reshuffle stage. In the face of huge "channel power", snack brands can only choose "investment".
In the first quarter of this year, Three Squirrels chose to introduce its four nut products into snacks and Zhao Yiming snacks all stores across the country, which are expected to cover seven or eight thousand stores. In addition, Three Squirrels plans to gradually increase the variety of products and consider promoting the products to other brands of snack stores.
Some well-known snack brands, including Yanjin Shop, Weilong, Jinzai Food, Ganyuan Food and other snack brands, have succumbed to the snack mass sales channel. Qiaqia Food is also trying to cooperate and test sell snack mass sales channels. In 2022, snacks have become the largest customer of Yanjin Shop when they are very busy, and Ganyuan Food mentioned at the performance briefing that the snack discount channel has become one of the important sources of new growth in performance in the first half of 2023.
4. Vicious competition
With the large-scale expansion of mass snack brands, franchisee resources are "insufficient". In the first half of this year, Snacks was very busy, claiming that competing products were digging their own walls - "a certain want to obtain the confidential personal telephone information of our franchisees through improper means, and guide our franchisees to flop and change to a certain brand in the name of offering attractive conditions".
The Laiyoupin under Wanchen Group claimed that some Laiyoupin franchisees were "rebelled" by the snacks that were very busy - the snacks were busy and the group asked them to flop the Zhao Yiming brand.
Under the snowball effect of giant brands, franchisee resources are very likely to tend to them, while other small and medium-sized brands will only become more and more difficult.
On the other hand, Ming Ming is very busy, although a new group brand has been formed, but the store operation is still a dual-brand strategy. On June 12, in response to the fact that "the name of the snack is busy group is officially changed to Mingming busy group, and whether the national stores will be renamed", Mingming is very busy responding that the national stores will not be renamed, and the main name of the group company will be changed. Up to now, Zhao Yiming has 4,500 stores and more than 5,000 snacks are busy.
From the comparison of store form, business positioning and product categories, there is no differentiation and dislocation between Snacks and Zhao Yiming's store, which will inevitably bring about "left and right fighting" in the actual business process. For example, in terms of developing store expansion, choosing better store locations and striving for franchisee resources, whether to prioritize the development of Zhao Yiming or the priority development of snacks is very busy, and there will be some degree of competition within it.
Industry insiders believe that so far, the merger of the two sides is still "two sets of team operations", and there is also a subtle relationship between the division of responsibilities and the division of power between Zhao Ding and Yan Zhou. After a period of time, how Snack is busy and how to truly integrate and integrate with Zhao Yiming or part ways is still full of variables.