Summary of Key Points
Fresh snack shops have recently become a hot topic in the consumer market, with monthly sales breaking records and a rapid expansion of new stores (94 new stores opened in July). However, beneath the surface of this success lie several concerns: some brands have quietly closed their stores for adjustments, and most stores rely on low-priced, short-shelf-life products to attract customers without generating much profit. Long-shelf-life products, despite higher prices, struggle to sell. Coupled with high costs for rent, labor, and inventory loss, the business models are struggling to be sustainable. This surge, driven by low prices, may not be able to continue for long.
I. Why Have Fresh Snack Shops Suddenly Become So Popular? – The Surface-Exciting “Phenomenal” Business
The popularity of fresh snack shops is reflected in two key terms: “explosive growth” and “rapid expansion.”
- Explosive Growth: Stores like Zhengzhou Qingshan Sen and Hefei Jiduoquan have achieved monthly sales of 4-6.2 million yuan, which is equivalent to the annual revenue of traditional snack shops (such as Snack Very Busy). The Jinlimen store in Shenzhen even caused the checkout system to crash due to the high volume, with sales per square meter exceeding industry benchmarks.
- Rapid Expansion: Brands are opening stores at an alarming pace, with 94 new stores added in July, a 35% increase from the previous month; some brands have opened five stores simultaneously and plan to open dozens to hundreds more this year.
However, there are also signs of cooling interest: the Juewei Fresh Snack test store has quietly closed two locations; Jinlimen, although seemingly full at all times, is actually re-opening in better locations; the founder of Pumama said that monthly sales dropped from over one million in the first three months to 700,000 in the fourth month, which is the industry’s recognized break-even point.
II. The “Shelf-Life Philosophy”: Attracting Customers with Short-Shelf-Life Products, Making Money with Long-Shelf-Life Products? – An Idealistic Plan
The core strategy of fresh snack shops is to “gain popularity with short-shelf-life products and make money with long-shelf-life products.”
- Attracting Customers with Short-Shelf-Life Products: They use freshly made drinks and baked goods with short shelf lives to attract customers. For example, Jiduoquan’s Bingbok milk tea, which uses icebark tea that costs 40% more than regular ingredients, is sold for 6.9 yuan (60% off the price of similar products from Bawang Tea Ji). Fresh drinks account for 35% of Jinlimen’s best-selling items, often selling out quickly.
- Making Money with Long-Shelf-Life Products: The goal is to profit from snacks with medium to long shelf lives (such as dried mangoes and seaweed), but consumers are not receptive to these products.
Where do the problems lie?
- Consumers mainly come for the short-shelf-life products: Although these products only account for 45% of the inventory, they generate 60% of the revenue. Yili’s 70% of revenue comes from freshly made products.
- Poor cost-effectiveness of long-shelf-life products: For example, Jiduoquan’s dried mangoes cost 16 yuan per 100 grams, while similar products at Sam’s Club, with better ingredients and no additives, cost only 10 yuan. The six-month shelf life also contradicts the “fresh” image, leading consumers to compare prices and choose other options after a few purchases.
- Low Profitability of Short-Shelf-Life Products: Most short-shelf-life products have minimal profits or are sold at cost price, resulting in higher losses the more they are sold. Additionally, there is significant competition (fresh drinks are similar to those from new tea brands, and Swiss rolls mimic Sam’s Club’s offerings), so the novelty fades quickly, leading customers to move on.
III. The High Cost of “Freshness”
The “freshness” and “cost-effectiveness” of fresh snack shops are both costly:
- High Rent: Stores are located in prime areas, often on the ground floor of shopping centers or next to large supermarkets, where rent is expensive.
- High Renovation Costs: The use of warm yellow lighting on shelves and equipment for freshly made products increases hardware costs by 60% compared to Sam’s Club.
- High Inventory Losses: Freshly made products have a short shelf life; for example, Saisong’s baked goods are best consumed within an hour, and any leftovers must be discarded. The industry average for inventory loss is 8%-15%, compared to 1%-3% for traditionally packaged snacks.
- High Labor Costs: Small-packaged snacks require frequent restocking and checking of shelf lives, requiring 50 employees in large stores (with each employee managing at most two areas). The tasting process also requires staff, and the crowded environment can lead to mistakes and customer deterrence.
These high costs make it difficult for stores to turn a profit. For instance, Pumama’s sales dropped to 700,000 in the fourth month, just below the break-even point, potentially resulting in losses.
IV. How Long Can This Boom Last? – Unsustainable Business Models, with Tides Turning Back
The main issue with fresh snack shops is that they fail to rely on either strategy effectively:
- Short-shelf-life products attract customers but do not generate significant profits, and long-shelf-life products are too expensive to sell.
- There is severe competition, with no unique, bestselling products that can retain customers.
- High costs, including rent, labor, and inventory losses, are difficult to reduce, as the popularity of the stores depends on their location and freshly made products.
Some brands have already started making adjustments: Juewei has closed test stores, and Jinlimen is re-opening in better locations. If these problems are not resolved, the boom driven by low prices may soon come to an end.
Conclusion
Are fresh snack shops a fleeting trend or a sustainable business model? For now, they have filled a market gap for affordable, fresh snacks. However, their fundamental weaknesses (high costs, low profitability from short-shelf-life products, and difficulty in selling long-shelf-life products) remain unaddressed. If brands cannot find new solutions (such as creating unique bestselling products or reducing losses), this excitement may quickly fade. After all, consumers ultimately make their choices based on value for money—they want both freshness and affordability.