Fighting for the Same Customers: The Rise and Struggles of Mixue
The Rapid Expansion and Its Consequences
Mixue, a popular Chinese brand known for its wide range of beverages and snacks, has rapidly expanded its presence across the country. Its stores can now be found even in small towns, with multiple outlets often opening on the same street, sometimes as close as 200 meters apart. This aggressive expansion strategy has led to intense competition among franchisees, all vying for the same customer base. While the company’s growth might seem impressive at first glance, it has also raised concerns about the sustainability of this model. The financial data from the first nine months of 2024 reveals that the average daily gross merchandise value per store decreased by 5% to 4,184 yuan, hinting at the beginnings of cannibalization among stores. This suggests that as more Mixue outlets open, they are essentially competing with one another, leading to reduced profitability for individual franchisees.
Franchisees Bear the Brunt of Operational Risks
The franchise agreements that Mixue has in place do not require new stores to maintain a minimum distance from existing ones. This lack of restriction has led to a situation where franchisees are left to fend for themselves in an increasingly crowded market. Many franchisees are finding it difficult to cope with the financial strain of operating a Mixue store. On average, each store processes around 367 orders a day, which translates to an order every 2 minutes during a 12-hour operating day. Despite the high volume of orders, franchisees are under immense pressure to perform. According to reports, it can take some franchisees two to three years to break even, which is significantly longer than what Mixue employees initially suggested. This disparity has led to growing frustration among franchisees, who feel that the company is prioritizing its own growth over their well-being.
The Human Cost of Hyper-Competition
The daily grind for Mixue franchisees is grueling. Operating a store requires constant attention and hard work, with little room for error. Franchisees often work long hours, managing everything from inventory to customer service, while also dealing with the financial uncertainty of their business. The pressure to meet sales targets is relentless, and the fear of falling behind is ever-present. Many franchisees have taken to online platforms to voice their concerns, expressing feelings of burnout and financial anxiety. Despite their struggles, Mixue continues to open new stores at a rapid pace, outnumbering the closures. This has created a challenging environment where franchisees feel overwhelmed and undervalued.
The Company’s Success and Its Impact on the Economy
Mixue’s success in the capital market has further amplified the hyper-competitive nature of the economy. The company’s ability to attract investment and expand aggressively has created a ripple effect, pushing smaller businesses to work harder just to keep up. However, this model is unsustainable in the long run. Small businesses, particularly franchisees, are bearing the brunt of this hyper-competition, as they struggle to maintain profitability in a saturated market. The lack of bargaining power among small business owners in a weak economy means that they are at the mercy of larger corporations like Mixue. This imbalance is exacerbating the already challenging conditions faced by franchisees and contributing to a system that is heading towards burnout.
The Future of Franchising in China
The story of Mixue serves as a microcosm for the broader challenges facing the franchising industry in China. Rapid expansion and aggressive competition are driving down profits for individual franchisees, who are increasingly shouldering the operational risks. The lack of protections in franchise agreements and the absence of measures to prevent market saturation are contributing to a system that is unsustainable. As the economy continues to weaken, the pressure on small businesses is likely to intensify, leading to further dissatisfaction and potential burnout. For Mixue and other similar companies, finding a balance between growth and sustainability will be crucial to maintaining the health of their franchises and the broader economy.
Conclusion: A Call for Sustainability
The rise of Mixue has been nothing short of meteoric, but the company’s success has come at a cost. The franchisees who have contributed to this growth are now bearing the brunt of the operational risks, working long hours for uncertain returns. As the economy continues to weaken, the pressure on these small business owners is likely to increase. For Mixue to maintain its success in the long term, it must address the concerns of its franchisees and work towards creating a more sustainable business model. This includes implementing measures to prevent market saturation and providing better support to franchisees to ensure their profitability and well-being. Only by doing so can Mixue create a truly win-win situation for both the company and its franchisees.
