101,000 stores have been closed down, and the 200-billion-yuan baking sector is currently undergoing reshuffling.

This year, the baking industry presents a starkly contrasting landscape of boom and bust.

According to data from Zhaimen Restaurant Eye, the number of brick-and-mortar bakery stores has seen a net decrease of 101,000 since the start of this year, with at least 270 stores exiting the market every day on average, not counting small stores unrecorded on the platform. On the other hand, data from Euromonitor International shows that the overall domestic bread market size exceeded 200 billion yuan in 2025, and it is projected to surpass 280 billion yuan by 2030, with an average annual compound growth rate of 6.8%. Pre-packaged room-temperature bread accounts for 45% of the market, while the remaining more than half is dominated by freshly made and freshly baked products.

Who is exiting the market and who is gaining momentum? Let's first look at the types of players facing obvious operational pressure.

In the past two years, Christines, known as China's "first listed baking stock" with a chain of thousands of stores, was delisted and subsequently entered bankruptcy liquidation. BreadTalk had more than 400 stores at its peak, but only 129 stores remained by July this year.

The once viral first-generation internet-famous brand 85°C demonstrated how to stop losses in a year and a half. At the beginning of 2025, it still had 460 stores in the Chinese mainland, but the number dropped to less than 300 by the end of June this year, with its market presence in North China and Southwest China almost completely withdrawn. The direct cause was capital bleeding: its mainland business turned from profit to loss in the second half of 2023, lost nearly NT$400 million in 2024, and lost another 200 million yuan in the first half of 2025. Its parent company issued an announcement to close regions and stores with continuously below-expectation profitability, calling this move "selective optimization through elimination".

Since the start of this year, more brands have accelerated their contraction. The Roll'ING has shrunk from a top-tier check-in hotspot to less than 30 stores nationwide, with its first Beijing store already closed. Youhe, the once famous long-queue brand, has posted closure notices in many cities, leaving only 18 stores open in Hangzhou. KUMO KUMO closed around 180 stores over the past year, withdrew from 5 provinces, and only 47 stores remain in operation nationwide.

It is not just internet-famous stores in first-tier cities that are contracting. At the end of March, Hot Air Bakery, which raised tens of millions of yuan in financing and once announced a plan to open 1,000 stores in three years, was exposed to have large-scale store closures. In May, Tous Les Jours closed 4 stores overnight in Wuxi, and many stores of Top East Bakery Garden in Dongguan posted rental notices for prime shop spaces.

Unbranded individual stores have not been spared either. A couple in Nanning invested all their life savings of 250,000 yuan in a bakery, but closed it a year later, with the husband going back to work for others. A bakery owner in Kunming has posted a transfer notice for 10 months, and all inquirers are real estate agents.

At the root of their poor performance lies the same mistake: they treat physical in-store baking outlets with ovens as the entire baking business.

Huaan Securities did the math: for a 100-square-meter bakery, even at the ideal monthly revenue of 270,000 yuan, raw materials, rent and labor alone will take up 246,000 yuan, leaving a profit margin of only 8.9%. Once the revenue drops by 20%, the business will immediately turn from profit to loss. Once the store opens, costs including rent, labor and equipment are generated every day, while customer sources are constantly diverted. Some brands became popular for a short period due to traffic, but their business cooled down once the hype faded; others never updated their product offerings, leading to a continuous drop in repurchase rate. The overall baking market is still expanding, but the new growth dividend is out of their reach. In this round of industry reshuffling, the first to be eliminated are exactly these stores that fail to keep up with changes.

The reshuffling is driven by changes on the consumer side.

Lai Yang, member of the Expert Committee of the China General Chamber of Commerce, said: "Against the backdrop of consumption upgrading, the baking industry is increasingly shifting to daily, snack-oriented and meal-replacement consumption. Demand is expanding, and consumption frequency is rising. However, growing demand does not mean all operators can benefit from it. The current baking industry is in a stage of structural reshuffling and value chain reconstruction, which determines that the widespread closure of traditional baking formats and the long queues for new baking models will inevitably coexist."

Amid the store closure announcements of older-generation baking brands, two new business models are rapidly gaining traction.

Sun Beibei is a typical representative. This Shanghai-based bread brand founded in 2022 has a founding team with internet and retail backgrounds. Its core business strategy is to weaken the catering attribute and turn baking into community retail. The three heaviest cost items for traditional bakeries are bakers, professional equipment and large back kitchens. Sun Beibei moves 80% of the production process to a central factory, leaving only the final 20% of on-site baking and quality inspection to be completed in stores. Its standard store model covers 20 to 40 square meters, with a maximum of 2 to 3 employees per store and no full-time dedicated bakers. The factory produces products in a unified manner and delivers them to stores via cold chain on a daily basis, retaining the fresh aroma of freshly baked products while removing the heavy asset burden of physical stores.

Sun Beibei avoids shopping malls and city centers. Most of its Shanghai stores are located in Baoshan, Putuo, Jiading, Jinshan and Fengxian districts, with sites selected at community entrances, along community streets and near wet markets, targeting residents who buy bread on their way home from work, following a community penetration strategy. With open display windows, puffs, egg tarts and toast are directly placed in street-side glass cabinets, so passers-by can smell the aroma of freshly baked bread. It focuses on impulsive purchases and long-term repurchases by local residents. In terms of product structure, daily staple bread such as toast accounts for about 45%, traffic-driving products with strong fresh-baked aroma such as puffs and egg tarts make up 30%-35%, cakes and desserts account for about 15%, and the rest are a small selection of milk and snacks. The brand does not blindly expand SKUs, nor does it force high-investment categories such as coffee. By April this year, its total number of members exceeded 2.4 million, with a weekly consumption frequency of over 2.1 times, and female members accounting for more than 70% of all members.

The input-output calculation for a single store is relatively simple: the upfront investment is about 150,000 yuan (excluding rent deposit), the average monthly rent nationwide is less than 8,000 yuan, and around 10,000 yuan in Shanghai. 80% of the stores have monthly sales between 90,000 and 120,000 yuan, with a comprehensive gross margin of around 45% at the store end, and the average payback period is 12 to 14 months. About 80% of its Shanghai stores are currently profitable. Although the gross margin is lower than the 60% level of traditional bakeries, rent, labor and loss are greatly reduced, leading to relatively sound operating performance for individual stores.

Sun Beibei opened its first store in January 2023, launched 50 directly-operated stores in Shanghai in the first half of the year to verify its business model, and opened up franchising in October. In July 2024, the number of its stores exceeded 100, then it expanded out of Shanghai into Suzhou and Kunshan, and further south to Shenzhen. Its 2025 turnover exceeded 200 million yuan. Sun Peng, the founder, revealed that the total revenue is expected to exceed 300 million yuan this year, and the brand plans to expand to 1,000 stores next year, penetrating into the sinking markets in Shandong and Henan, while testing the feasibility of applying this baking model in tier-4 and tier-5 cities in Jiangsu and Zhejiang provinces.

If Sun Beibei retains the sensory experience of fresh baking and transforms the bakery workshop into a community retail outlet, the other brand Lubian Pipi moves in a completely different direction, barely resembling a traditional bakery at all.

Lubian Pipi moves all production links to upstream factories, removes back kitchens and baking processes from its stores, and only operates self-service retail of frozen baked goods. Most of its stores cover around 150 square meters, with priority given to locations in suburban industrial parks and on the periphery of large communities, avoiding high-rent core business districts where rent is only 1/3 of that of mall bakeries, targeting purpose-driven purchases. There is no proofing room, oven, operation table or dine-in seats in the stores, and the core equipment across the whole store are multiple freezers. The decoration is extremely minimalist, making the store look like a warehouse supermarket. Each store is staffed with 3 to 5 people, whose only responsibilities are restocking and checkout with no shopping guides, and customers can pick products completely by themselves.

Over 90% of the products in the store are frozen pre-packaged bread and desserts with a shelf life of 3 to 6 months. These products are mass-produced by upstream factories in a standardized manner, freshness-locked at -18°C, and delivered to stores via cold chain, leading to nearly zero product loss. Its product portfolio is very focused, covering only bread, European-style bread, bagels, toast, sliced desserts, Basque cheesecakes and mille-feuille, with a stable SKU count of around 110, and no categories such as coffee or beverages. Each product is printed with home reheating instructions on its packaging, leaving the final heating experience to consumers to complete at home.

Most of its core products are priced below 10 yuan, such as 3.9-yuan ciabatta, 9.9-yuan Basque cheesecake and sliced mille-feuille, which are priced at 1/3 to 1/2 of those of traditional fresh-baked stores, with a small number of high-priced products as supplements. The comprehensive gross margin of frozen baked goods is around 35%, and the brand relies on high turnover and high customer order value to drive sales. Most customers stock up enough breakfast for a whole week in one purchase, with the average order value stably around 80 yuan.

Lubian Pipi's mini-program has covered 14 stores. In addition to Shanghai, it has laid out stores in Zhengzhou, Guiyang and Xining. It added a net of 7 stores in October alone, all of which are franchised stores.

To put it simply, the difference between the two brands is that Sun Beibei retains the "sensory experience of fresh baking" by transferring heavy production processes to central kitchens, while Lubian Pipi directly removes the in-store baking process, turns bread into a frozen fast-moving consumer good, and shifts the experience link to consumers' homes, which can be regarded as a hard-discount model in the baking track.

Zhang Li, General Manager of Bimbo China, one of the world's largest baking companies, judges that the player with higher supply chain efficiency will have the best chance to survive and develop.

Supermarket baking is exactly following this path.

Sam's Club's Swiss rolls are custom-produced by Enxicun, and this single product generates annual sales of over 1 billion yuan, accounting for 8% to 10% of the monthly turnover of some stores. Sam's Club does not build its own central factories, and all production is outsourced to contract manufacturers, while Sam's Club is responsible for defining consumer demands and finalizing product standards.

Hema once invested heavily in its own production capacity, building a self-operated baking factory in Kunshan in 2023 to operate the whole supply chain by itself. At the end of July this year, it sold the controlling stake of this factory to raw material supplier Hairong Technology for 130 million yuan, retaining a 45% stake. It is not necessary to own the factory in full, but the production capacity must be firmly locked.

Their answers are highly consistent. Only by improving supply chain efficiency can they reduce costs and achieve affordable pricing. The frozen long-shelf-life system controls product loss, leaving far more operational tolerance space than independent street-side stores.

The market share of supermarkets and membership stores in retail baking continues to rise, from 33% in 2020 to a projected 42% in 2026, and is expected to reach 46% by 2030, when it will jump to become the largest channel in the baking industry. Data from Yiou Think Tank shows that 51.4% of consumers prefer to buy baked goods in large supermarkets and membership stores, while 54.3% choose chain brand stores, with the two figures already very close.

However, the industrialized supply chain can win the efficiency battle, but it cannot replicate the unique warmth and freshness of fresh-baked stores. A fresh-baked store can build an afternoon tea social scenario with a croissant paired with coffee, create a breakfast combo with toast paired with milk and eggs, and take ad-hoc custom birthday orders, all of which are very difficult for supermarkets and membership stores to implement. It does not need to lock in large-scale production capacity, can launch new products on a rolling weekly basis, collect consumer feedback through small-batch test baking of dozens of units, and adjust recipes at any time. For categories with low demand, complex production processes and unwilling to be scheduled separately by factories, such as natural sourdough bread, low-sugar additive-free products and seasonal limited editions, small stores with a single oven can easily roll out these products.

Fresh-baked stores target young people who pursue the hot aroma of just-out-of-oven products and love to try new things, diners who gather for small outings, and community consumers who are picky about ingredients and willing to pay for personalized experiences. What they buy is not just staple bread, but also a relaxing stay and a fresh expectation. Such demands are very difficult for efficiency-oriented supply chains to meet.

Of course, this path also has risks. A joint survey by iResearch and Kluee shows that the repurchase rate of check-in type internet-famous brands is less than 15%. At the same time, the pressure of new product iteration is high: the 60cm egg tart of Baoshifu was sold for more than 700,000 units in just 8 days, but the hype only lasted for two months.

The industry turmoil is still ongoing. Stores that can neither provide customers with unique scenarios and fresh baking experience, nor compete with supermarket baked goods on price, give customers no reason to choose them. In this round of reshuffling, these stores that fall between two stools can hardly stay in the game. They have to excel in either efficiency or experience.

The exit of 101,000 stores is not the end.

This article is from the WeChat official account "Retail Circle", written by Jing Yan from Retail, and published with authorization by 36Kr.