Babi Food: The Rise from RMB 3 Baozi to Billions – But What Challenges Followed?

The Babi Bao Story: How a Steamed Bun Built a Billion-Dollar Brand—And Why It Now Faces a Crisis

Babi Bao is a familiar sight for millions of commuters grabbing breakfast in China’s bustling cities. This seemingly ordinary steamed bun brand achieved a remarkable feat: it turned a simple, 3 RMB bun into a publicly traded company worth billions.

But behind this incredible success story, Babi Bao faces significant challenges threatening its future.

From Humble Beginnings to Shanghai Success

The story began in 2001 when founder Liu Huiping opened his first small shop in Shanghai. Initially, the brand didn’t resonate with the city’s sophisticated palates. Shanghai locals preferred a different style of bun—one with fresh, hand-cut meat, vibrant green vegetables, a fluffy wrapper, and a lighter flavor profile.

Recognizing this, Liu quickly adapted. He made two critical decisions:

Localized the Flavor: He began sourcing fresh pork from his home province and insisted on hand-cutting the fillings to perfect the taste and texture for his new customers.

Strategic Location: He paid very high rent to open stores in prime, high-traffic areas. He believed the visibility would quickly build brand recognition.

The strategy worked. Babi Bao captured the breakfast market by being fast, convenient, affordable, and delicious. It quickly became a local favorite.

The Real Secret: Industrializing the Bun

While good flavor got Babi Bao started, its real competitive advantage came from revolutionizing its production process.

Traditional bun shops rely on chefs waking up at 2 AM to prepare dough and fillings by hand—a process that is slow, inconsistent, and impossible to scale.

Babi Bao completely changed the model by building a central kitchen with a cold-chain delivery system. In its modern production facilities, every step—from fermenting dough to preparing fillings and steaming the buns—is automated. A single facility can produce 2 million buns daily, an output far beyond what traditional shops could ever achieve.

This massive scale lowered production costs and, most importantly, ensured a perfectly consistent product at every single store. Babi Bao’s core strength isn’t the bun itself; it’s the incredibly efficient supply chain behind it.

Rapid Growth Through Franchising

To expand nationwide, Babi Bao chose a low-barrier franchise model. This strategy was key to its explosive growth. According to the company’s financial filings, franchise sales account for roughly 90% of its total revenue.

This approach allowed the brand to spread rapidly across China, growing to over 3,000 locations. The franchise system delivered massive revenue and turned Babi Bao into a dominant force, easily out-competing thousands of traditional “mom-and-pop” bun shops.

Signs of Trouble: Stagnant Profits and Unhappy Franchisees

However, the period of rapid growth has stalled. From 2022 to 2023, Babi Bao's net profit declined sharply. More alarmingly, the average revenue per store has been steadily falling.

This decline directly impacts franchisees, and as a result, many are choosing to leave the system. Last year alone, over 800 Babi Bao stores closed down. For a company that relies almost entirely on its franchise network, this is a serious threat.

In response, the company has tried to improve franchisee support and management. It also announced an aggressive plan to open 1,000 new stores this year, hoping to make up for declining single-store sales with higher overall volume.

Facing Intense Competition and a Crowded Market

This expansion plan faces major hurdles. The breakfast market is now a hyper-competitive "red ocean.” Babi Bao is no longer just competing with local food stalls. Its rivals now include:

Convenience store giants like 7-Eleven and FamilyMart.

Fast-food leaders like McDonald's and KFC have strong breakfast offerings.

Even popular tea brands like Guming and HeyTea are now adding food to their menus.

Babi Bao also attempted to diversify by launching a hamburger concept called “Babi Fun Bao.” The brand failed to gain any traction against powerful competitors and proved to be a costly distraction.

Recent financial data suggests the company's recovery efforts are not yet working. In the first quarter of this year, net profit declined by another 6.13%.

Babi Bao’s history is a legendary startup story. But with its core business struggling and competition on all sides, the brand that perfected the steamed bun now needs to find a new recipe for growth.