This is an English adaptation of a FoodBud historical article originally published on January 10, 2022.
At the end of 2021, Bao’s Pastry announced that its store count had passed 100. Data seen on Narrow Door Canyan showed 110 operating stores at the time.
The brand had also been pulled into the broader financing heat around China’s bakery sector. Rumors of a RMB 10 billion valuation became a Weibo trending topic; Bao’s Pastry responded that valuations were “floating clouds” and that it would focus on making better products and opening more stores.
Bao’s Pastry raised a Series A round from Tiantu Capital in 2018, followed by another financing round from Kunlun Tech in 2020. Although the company said it was not considering financing for the moment, one possible reading was that its own valuation expectations were too high for the market. One PE investor reportedly said the valuation was “hard to understand.”
The article cited a Jiuqian middle-office document with several business indicators:
On paper, the single-store model looked strong. But the article noted that store revenue data had been questioned and may have declined to some degree.
According to Narrow Door Canyan, Bao’s Pastry accelerated in the final month of 2021, opening 12 stores in a single month.
The brand’s 2021 store-opening target was to exceed 100 stores, so a year-end push was understandable. The harder question was distribution: its official website showed stores concentrated mainly in Guangdong, Beijing, Jiangsu, Zhejiang and Shanghai, but still highly scattered. The 110 stores were spread across 19 provinces and 40 cities.
That footprint raised operating questions. With such a dispersed network, logistics and delivery costs would likely be higher, and national management more difficult. From a brand-building perspective, the company also struggled to create dense regional brand power. The article suggested this store strategy may have been closely linked to Bao’s long-running anti-counterfeit campaign.
In 2018, there were more than 1,000 counterfeit Bao’s Pastry stores across China. Bao’s Pastry began its anti-counterfeit campaign from that point. One of the most aggressive imitators was Yishang, which operated in a more corporate and replicable way. Yishang registered trademarks that could confuse consumers, expanded quickly through franchising, traded time for quick money and left brand-maintenance problems behind.
Bao’s Pastry reportedly spent almost 80% of its energy on anti-counterfeiting in 2018, with 80% of company executives also involved. At its most difficult point, the company even considered changing the Bao’s Pastry brand name.
From an operating perspective, that level of attention may have shaped the national expansion strategy. To suppress counterfeit stores, the company may have wanted to open across national markets quickly and dilute the impact of imitators. The article questioned whether that could become a detour.
Mixue Bingcheng had also faced counterfeit stores in tea drinks. Once Mixue stores were everywhere, the impact of counterfeit stores was directly weakened. That dense opening strategy worked for Mixue.
Bao’s Pastry, however, used a directly operated model. The article argued that a comparison with Muwu BBQ may be more appropriate. Muwu BBQ also had imitators, such as “Li Jia Muwu BBQ,” but its core approach was to focus on its own business while using legal tools for targeted action.
Bao’s Pastry’s product strategy was still worth studying. It kept a narrow, refined assortment, with fewer than 20 products on shelf year-round. It did not focus on bread or Western cakes. Instead, it upgraded traditional Chinese cake textures and made them more snackable and retail-friendly. Its stores were counter-style, with no dine-in area, supporting high sales per square meter.
The brand opened the market with meat-floss xiaobei. For many customers, meat-floss xiaobei became the first association with Bao’s Pastry. The company then extended xiaobei flavors vertically and expanded horizontally into categories such as egg-yolk pastry, pineapple pastry and raisin pastry.
This built a recognition barrier around xiaobei as the hero product, while allowing continued micro-innovation and supporting items around it.
The article argued that in recent years, many foodservice categories had overemphasized product launches. For both tea-drink brands and bakery brands, frequent new products can conflict with gross margin: the more products are launched, the more gross margin may decline.
Often, the core high-repeat products remain the classics. The key question is whether continuous product launches actually improve store output efficiency and supply-chain integration.
From the perspective of store expansion and overall operating-system efficiency, the article viewed Bao’s Pastry’s strategic layout as weak. The dispersed store layout created higher cost, weaker aggregation of brand power and greater management difficulty.
Another critical issue was store-level output efficiency. With 90% of products made in-store, the required labor cost and production efficiency both remained open questions.
The broader issue was scale effect. If opening 10 stores and opening 1,000 stores do not create meaningful efficiency improvement, the model becomes awkward. Even 10,000 stores would not create a defensible moat if supply-chain and store-level efficiency do not improve.
If the goal is simply to build a century-old brand, the article offered a different path: buy a property and operate one self-owned store for 100 years. A single strong store could also become a century-old shop and brand.
As the article put it: either cover the market everywhere, or make one store stand tall.
References cited in the source article: Huxiu, “Why is top internet-famous store Bao’s Pastry worth RMB 1 billion?”; China Entrepreneur, “The Battle Between Real and Fake Bao’s Pastry.”
Note: financing, valuation, store-count, target and forward-looking production figures are historical as of the original January 10, 2022 article.