Core Viewpoint - Mingming Hen Mang Group, a leading player in the snack retail industry, has shown rapid growth in performance, driven by its low-price strategy, but faces challenges in establishing a stable supply chain and developing high-margin private label products for long-term profitability [1][6][9] Group 1: Company Performance - As of June 30, 2023, Mingming Hen Mang Group has 16,783 stores, with 99.9% being franchise stores [1][3] - The company achieved a GMV of 41.1 billion yuan in the first half of the year, representing an 86.9% increase year-on-year [3] - Revenue for the first half of 2023 reached 28.124 billion yuan, up 86.5% from the previous year, while adjusted net profit was approximately 1.035 billion yuan, a 265.5% increase [3][6] - The company has maintained a compound annual growth rate (CAGR) of 203% in revenue and 234.6% in adjusted net profit from 2022 to 2024 [6] Group 2: Market Position and Strategy - Mingming Hen Mang Group is the largest chain retailer in the domestic market for leisure food and beverages, according to data from Frost & Sullivan [3] - Approximately 58% of the company's stores are located in county towns and rural areas, covering 1,327 counties [4] - The average price of the company's products is about 25% lower than similar products in offline supermarket channels, contributing to its competitive edge [6] Group 3: Challenges and Risks - The company faces challenges related to rising rental, labor, and logistics costs, which impact its low gross margin [7] - The reliance on a franchise model poses risks, especially in a competitive market that is transitioning from rapid expansion to more refined operations [8] - Analysts suggest that the company must focus on supply chain efficiency and the development of high-margin private label products to ensure long-term profitability [9]

Core Insights - The concept of "snack freedom" reflects consumers' desire to eliminate excessive pricing and marketing tactics, returning snacks to their essential value as everyday items rather than luxury goods [1][2] - The emotional value associated with snacks is increasingly recognized, as consumers seek immediate gratification and comfort in a fast-paced, anxiety-inducing society [1][2] Group 1: Industry Dynamics - The snack wholesale model allows for reasonable profit margins at each stage, replacing inefficient models with more effective ones to provide cost-effective products to consumers [2] - Scale effects in wholesale platforms help to dilute fixed costs, enabling better brand marketing and emotional value offerings [2] - Despite challenges such as poor profitability, homogenization, and quality control issues, the snack wholesale model significantly reshapes the retail value chain and meets the demands of the lower-tier market [2] Group 2: Consumer Experience - The snack wholesale model empowers consumers by returning the choice of quality and price to them, contrasting with traditional channels that struggle to balance these factors [2] - As product prices align more closely with their true value, the consumer experience is simplified, emphasizing the joy of enjoying snacks without the burden of premium pricing [2]

Group 1 - The rise of snack stores is a significant consumer trend in China, comparable to the popularity of milk tea shops [1][2] - Snack stores primarily cater to consumers outside of first-tier cities, tapping into a vast market [2][3] - The appeal of snack stores lies in their variety and affordability, allowing consumers to purchase multiple flavors at a low cost [3][5] Group 2 - Snack stores fulfill two consumer desires: the craving for variety and the need for affordable indulgence [5][6] - The low investment and operational requirements make snack stores attractive for franchisees, contributing to their rapid expansion [10][11] - The uniform demand for snacks across different regions facilitates quicker establishment of snack stores compared to restaurants [12][13] Group 3 - Despite their growth, snack stores face challenges, particularly low profit margins, with "Mingming Hen Mang" reporting a gross margin of 7.5% and a net profit margin of 2% [14][15] - The average gross margin for franchisees in the snack industry is around 20%, while the parent company retains a lower margin [16] Group 4 - The entry of new players, such as "Chayan Yuesheng," a well-known milk tea brand, into the snack market indicates the sector's attractiveness [21][22] - Chayan Yuesheng's strategy involves developing its own snack products, differentiating itself from typical snack stores that rely on existing brands [24][26] - The brand's expertise in flavor development from its milk tea business enhances its ability to create appealing snack products [27][28] Group 5 - Chayan Yuesheng's expansion into snacks is a response to local market saturation and aims to attract repeat customers [30][31] - The integration of snack offerings at milk tea locations allows for cross-selling opportunities, enhancing customer experience [34][36] - The ability to sell self-branded snacks through e-commerce platforms broadens market reach beyond local areas [37][38] Group 6 - Chayan Yuesheng's approach of combining high-margin milk tea with low-margin snacks can improve overall profitability [41]