Summary of Key Points
Xueji Snacks, which once expanded rapidly with a high-end positioning and a 600 million yuan financing round, briefly made it onto the list of defendants due to a rent dispute over more than 60,000 yuan (later corrected), revealing management flaws in its growth process. Today, it faces multiple challenges including a lack of funding, misalignment between prices and declining consumer spending, risks associated with franchise expansion, and potential food safety issues. The company is attempting to transform by adjusting its positioning and reorganizing its supply chain. However, whether it can return to the authentic essence of snacks as a more affordable and accessible product remains crucial.
Detailed Analysis
1. The 60,000 Yuan Rent Dispute: A Small Pitfall of Rapid Expansion
This seemingly minor rent dispute is actually a reflection of the consequences of Xueji's rapid expansion. After securing 600 million yuan in funding in 2022, the company expanded aggressively, giving its regional branches significant autonomy. The headquarters focused solely on increasing the number of stores and maximizing profits per square meter, without thoroughly examining the rental agreements in older commercial areas. As a result, Xueji's branches got embroiled in legal issues, and the brand was even listed as a defendant (although the error was later corrected). In short, they moved too quickly without properly assessing the underlying challenges.
2. From 600 Million Yuan in Funding to Mass Store Closures: The Downward Trajectory
In 2022, Xueji received the largest financing in the snack industry (600 million yuan), and its founder set the goal of opening 4,000 stores within five years. The number of stores soared from 736 to 1,000 in just one and a half years. However, the enthusiasm of investors faded quickly, and no new funding was secured after that. Without financial support for expansion, the company began to shrink: it started closing subsidiaries (Xueji companies in Shanghai, Nanjing, and Shandong) and branches (more than ten branches in Nanjing) in 2024. Xueji's trajectory has followed a parabolic pattern, with a sharp decline after reaching its peak.
3. The Decline in Popularity: High Prices and Shrinking Consumer Spending
Xueji is often referred to as a "snack jewelry store" due to its premium prices—for example, roasted pine nuts cost 218 yuan per pound, and freeze-dried strawberry chips 138 yuan per pound. The average transaction value is 80-120 yuan, which is three to four times higher than that of bulk snack stores. While the company claims its high prices are justified by quality ingredients and craftsmanship, its gross profit margin is nearly twice that of pre-packaged snacks. However, consumers are now more budget-conscious, with their desire for casual treats being met by bulk snack stores offering products for 20-35 yuan per purchase. Xueji's target market (mainly mothers buying gifts) is also saving money, making it difficult to compete in this context.
4. Franchise Expansion: High Barriers and Significant Risks
In 2024, Xueji introduced its franchise program with daunting requirements: applicants needed 10 million yuan in liquid assets (or at least 5 million yuan), three years of business experience, and were required to manage the store personally. Opening a 80-square-meter store cost nearly 1 million yuan, with an estimated payback period of six months for outsiders, but actually took a year for franchisees. Brand control was another issue; problems that existed during direct operations only worsened under the franchise model—franchisees competed with each other, and best-selling products were often copied at lower prices. More seriously, food safety issues emerged in 2026, with consumers reporting finding live maggots in products, as well as complaints about dead insects and spoiled goods. Food safety is a critical aspect of a brand's reputation, and any mishaps can be devastating.
5. Transformation Efforts: Can a Reorganized Supply Chain Save Xueji?
Xueji is taking steps to improve its situation: it has repositioned itself from "high-quality" to "quality with value for money" and is investing 1 billion yuan in building factories and setting up warehouses to expand online sales (offering different products on both platforms to reduce internal competition). However, building factories addresses only production capacity, not the core issue of difficulty in selling products. Consumers today prefer affordable and accessible options. Xueji's previous high-end image and expensive pricing do not align with the more informal nature of snacks sold in street markets. Perhaps returning to a more down-to-earth approach would be more effective.
Conclusion
Xueji's difficulties stem from the mismatch between its rapid expansion, high-end positioning, and the current consumer landscape. To survive, it needs to reconnect with the essence of snacks as affordable and enjoyable treats. After all, snacks are not luxury items; consumers want something tasty and reasonably priced for their daily enjoyment.