Mixue stores are popping up like mushrooms.
The franchise business model is always favored by many investors thanks to its attractive profit margin and ability to save on brand building costs. In our country, this business model is increasingly popular.
Mixue is one of the famous franchise brands in China and Vietnam in recent years.
In 2018, Mixue officially entered the Vietnamese market under the legal entity Snow King Global Co., Ltd. In September 2018, this brand launched its first store in Hanoi.
Mixue's main products are ice creams for only 10,000 VND, milk tea for an average of 25,000 VND/cup - prices considered super cheap compared to similar products on the market (45,000-75,000 VND).
The low price makes the product easily accessible to a large number of customers, including students, families with small children. In addition, the investment cost for a franchise store is 600-700 million VND (excluding rental costs and staff), with a quick capital recovery within 7-8 months.
With attractive advertisements and commitments, many people immediately agreed to sign a franchise contract for the Mixue brand.
Accordingly, Mixue will sell raw materials, packaging materials, equipment, tools, vehicles and other goods to franchise stores; at the same time, collect franchise fees, management fees, training fees... from these stores.
In just a few years of penetration, Mixue stores have mushroomed in 43 provinces and cities. By mid-April 2023, Mixue announced that it had reached the milestone of 1,000 stores in Vietnam.
Talking to PV.VietNamNet, a market development expert of a large supermarket brand in Vietnam acknowledged that franchising is becoming more and more popular in our country today.
Without discussing the right or wrong in the recent controversy over Mixue's new pricing policy, this expert believes that this brand exclusively supplies raw materials, management fees, training, etc., meaning that profits come from franchising, not from doing business on their own, so the more franchise stores they open, the more profit they make.
In some franchise brands or supermarket chains, when opening a new store, there will be conditions on the minimum geographical distance, or based on the revenue of the previously opened store in the same area. For example, each store must be at least 0.5-1km apart; if the revenue is above average, a new store will be opened and vice versa.
With the Mixue brand, according to the feedback of franchise store owners, the stores are at least 50m apart, which is too dense. Thus, Mixue stores not only have to compete with other brands but also compete with customers from their own brand.
"In franchising, at the beginning, the number of stores is small, the market is in a state of "excitement", and the store owners will immediately see profits. But when the franchise stores spring up like mushrooms, the investors have not yet recovered their capital and the market is saturated. The franchising company also continuously introduces new unfavorable policies, and in the end, the losers are the store owners," the expert shared.
Investing billions, the owner sits and "picks up the change"
Before deciding to invest in opening 5 Mixue franchise stores in Hanoi, Ms. Nguyen Thi Lung was advertised by Mixue staff that the rental price for a store is from 10-20 million VND/month. If the revenue reaches 6-7 million VND/day, it will only take 7-8 months to recover the capital.
“They also said the cost to invest in the store was only around 600-700 million VND. But in reality, when completed and put into operation, the investment amount was up to 1.1-1.2 billion VND,” said Ms. Lung.
According to her, with the current selling price (new price of 15,000-30,000 VND/cup of tea), a store's revenue reaches 6-7 million VND/day but still loses money. Not to mention, the store has to bear all the costs of promotional discount programs.
It is very difficult for shop owners to recover their capital, accidentally becoming Mixue's employees or suffering losses, Ms. Lung shared.
Ms. Le Thi Dung, owner of Mixue store in Bac Giang, also admitted that the revenue is only a few million VND/day while the investment cost is from 900 million to 1.2 billion VND, so she does not know when she will recover her capital.
“In the summer, we can still sell products, but in the winter, there are no customers. The store in the district has a revenue of only over 1 million VND/day, so it cannot recover its capital within 3 years as per the signed contract,” she worries.
Having spent more than 3 billion VND to open 3 Mixue stores in Hanoi and Quang Ninh, Mr. Trung said that he opened the first store a year ago. When he researched the franchise business, Mixue said that it would only take 6-7 months to recover the capital. However, in reality, up to now, the capital has only been recovered by 10-15%.
Not only is capital recovery slow, according to Mr. Trung, Mixue applies too many discount programs. The store system must run these programs. At that time, products sell a lot but the store owner has to bear the loss, while Mixue profits because it sells a lot of ingredients.
If the store owner does not run promotions as announced by Mixue, he will be fined. Meanwhile, they even have to print banners to hang in the store themselves, and Mixue does not support them.
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