Bliss Cake: The Developing Crisis Beneath the Fine Coat of Millions Funding
COVID-19 and China
The Happy Four Symphony cake. Photo: BlissCake Official Website

Bliss Cake(幸福西饼), also named Xingfuxibing, is struggling in its recent scandal of using expired ingredients to make cakes, which is ironic for a cake branded Bliss. Despite of recent scandal, as being a C2M bakery company, Bliss Cake is the recognized pioneer and pacesetter in its industry on accounting of public acceptability and having received funding over millions of dollars.

Bliss Cake had originally been a traditional bakery company headquartered in Shenzhen, China from 2008 and operated its chain bakery stores. Along with the development of logistics and O2O business, Bliss Cake’s founder YUAN Huohong(袁火红) made up his mind to transform Bliss Cake into pure C2M business to follow the main trend in 2014. The decision was bold and profound to transform Bliss Cake from pure offline to pure O2O. Its slogan is simple but impressive –“3-hour delivery guaranteed”.

Bliss Cake Order Flow

The “3-hour delivery” hits customer in target. Customers could order their cake online and then Bliss Cake would send the order to the nearest bakery factory. With the Bliss-Cake-Only delivery chain, the freshly-made cake should be handed to the buyer within only three hours.

Fresh cake and fast delivery are appealing to O2O spoiled customers. Bliss Cake found its place in O2O bakery business and attracted series of funding in following years. In July 2018, Bliss Cake completed its series B+ funding with the total amount of CNY 400 million (USD 58 million) from Huaxing Capital, BrightVC, ABC Capital, ChinaEquity Group and so on. Dated now, Bliss Cake has raised approximately CNY 900 million (USD 129.43 million).

C2M, is a demand-driven mode that the product is manufactured based on existed demands not on past operational experience, which seems more efficient and adaptive to the market. The mode seamlessly links customer to the production maker: customer could propose individualized requirements and even participate in product design and manufacturing; product manufacturer could quickly respond to customer’s needs through big data capabilities and flexible manufacturing capabilities, ultimately achieving diversification and individuality in an efficient and low-cost manner. In another word, C2M essentially re-structures the three-in-one supply chain of information flow, capital flow and logistics. The nature of C2M is O2O. What Bliss Cake aims to do is to open its bakery market through O2O.

In 2018, Bliss Cake’s franchisees covered more than 200 cities and daily order number reaches 40,000. Considering its slogan of 3-hour delivery, traditional O2O bakery mode is the wrong shoe for Bliss Cake. Jumping out of the box, Bliss Cake underlines its network of satellite bakery factories. In the process of building satellite bakery factories, Bliss Cake chose to expand its franchisees from alpha to gamma cities in a top-to-bottom order, where the large customer base is the guarantee and the essence for such a bakery O2O company. Satellite bakery factories are located close to their customer pools while keeping away from downtown areas so that the fixed costs (especially rent) are under control.

Theoretically, the mode guarantees its promised on-time delivery, but the freshness may not like Bliss Cake promised so. In November, Bliss Cake’s jaw-dropping scandal spread widely. A franchisee of Bliss Cake claimed the pastry puff he received had expired more than nine months and the Bliss Cake quickly responded that the date label on the pastry puff had been printed wrongly and the scandal was a retorsion act from the franchisee due to their past unpleasant cooperation. The ingredient is expired or not is yet to be confirmed, the conflict between Bliss Cake and its franchisees has developed into scale. Other franchisees told media that the Bliss Cake branded its products are freshly made while most ingredients are made from the center factory and then frozen and send to each franchisee factory through cold chain logistics. Frozen ingredients are not fresh, though the producing process could be considered as freshly-made.

Problems are coming out from the rapid expansion of Bliss Cake. It is not the first one who encountered above problems and will not be the last one, either. Rapid expansion requires tantamount management elevation. The communication between the center and its franchisees needs accordingly strengthened. The difficulty of quality control of product increases geometrically along with the aggressive expanding. But it is not the excuse to loosen the nerve on quality control. The change in quantity will reflect on quality changes, but changes in a downward direction is a dangerous PR problem and customer trust crisis for a food company. Next time, the decayed matter may be a real substance, not the management or franchisee's matters any more. 

The claimed-to-be wrongly-printed label has severely damaged its accumulated reputation despite the authenticity of the investigation. It is time for Bliss Cake to slow down and reform its management, not only emphasizing on progressive market occupation, but also reinforcing the sustainability of the company for a sound development.

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