Core Viewpoint - The rapid growth of Wancheng Group in the snack industry contrasts sharply with the declining performance of established brands, raising questions about sustainability and potential risks in its business model [1][26]. Financial Performance - In the first half of 2025, Wancheng Group reported revenue of 22.583 billion yuan, a year-on-year increase of 106.89%, and a net profit of 472 million yuan, a staggering increase of 50,358.80% [1][3]. - The significant profit surge is primarily attributed to the strong growth in the bulk snack business, which contributed 22.345 billion yuan in revenue, accounting for 98.95% of total revenue, with a year-on-year growth of 109.33% [3][6]. Business Model and Revenue Sources - The bulk snack business generates revenue mainly through three channels: wholesale supply to franchisees, store sales, and others. The majority of income comes from supplying products to franchisees, with 21.810 billion yuan in revenue from this channel, a year-on-year increase of 112.56% [6][8]. - As of June 2025, Wancheng Group had 15,400 stores, a net increase of 8,727 stores compared to the same period in 2024, representing a growth of 131.47% [8]. Franchisee Dynamics - Despite the growth in franchisee numbers, individual store revenue has declined, with average monthly revenue dropping from 32.20 million yuan in the first half of 2024 to 29.57 million yuan in the first half of 2025, a decrease of 8.16% [13]. - Franchisees face increasing pressure due to rising costs and declining revenues, with the initial investment for a store estimated at around 500,000 yuan, leading to a payback period of approximately 17 months under ideal conditions [16]. Market Competition - The snack market is becoming increasingly competitive, transitioning from a "blue ocean" to a "red ocean" environment, with intensified competition among existing players and new entrants [17][19]. - Wancheng's store expansion strategy has led to high regional concentration, particularly in East China, where over 56.80% of its stores are located, resulting in internal competition and diluted customer traffic [17]. Risks and Challenges - Wancheng Group faces significant risks, including food safety issues, high debt levels, and the potential for franchisee closures due to profitability challenges [22][24]. - The company's asset-liability ratio is projected to rise to 90.97% following a planned acquisition, indicating a precarious financial position that could exacerbate cash flow issues if revenues decline [24][26]. Conclusion - While Wancheng Group has achieved remarkable growth through its franchise model, the sustainability of this growth is under scrutiny due to market saturation, franchisee profitability challenges, and associated risks [26][27].