Why 85°C’s General Manager Stepped Down in 2014

In late 2014, a major resignation shook Taiwan’s retail food industry: Xie Jiannan, then General Manager of 85°C, stepped down. This wasn’t just executive turnover — it capped off a turbulent period for the company as it struggled to adapt its bakery-and-coffee model across Greater China, especially in mainland China where competition and strategy missteps mounted.

85°C had nearly 500 stores in mainland China by the time Xie left, but despite early rapid expansion and internal reform attempts like franchising, no official franchise system launched before his departure. His ambitious plans for mainland expansion and operational restructuring never fully materialized.

Xie Jiannan’s Tenure and the Franchise Push

Xie Jiannan was brought in during 2013 by 85°C’s founder and chairman, Wu Zhi-xue, specifically to address the company’s management gaps amid rapid store growth. At the time, 85°C had 324 directly operated stores in mainland China, growing quickly but struggling with operations.

Xie’s plan was to begin rolling out a “commissioned operation” model — a halfway step toward franchising — as early as the end of 2013. Under this model, top employees would manage stores while the parent company retained ownership of equipment. But the first actual commissioned store only launched in November 2014 in Hangzhou. By then, 85°C had over 475 locations on the mainland.

In Taiwan, Xie also attempted a shift from a “voluntary franchise” to an “authorized franchise” model in March 2014, aiming to turn franchisees into business partners rather than just product buyers. He also raised product prices in Taiwan, claiming the long-term benefits would outweigh short-term revenue risks.

Why Xie Left

By late 2014, rumors swirled about Xie’s future. Taiwan media reported that F- (85°C’s parent company) had sidelined him due to declining revenue, replacing him with another executive. Xie denied losing authority but continued advocating for the mainland’s planned commissioned operation model, insisting 85°C was losing ground to larger local bakery chains.

Officially, in January 2015, F- announced Xie would step down as GM in April, transitioning to a group advisor role, with founder Wu Zhi-xue resuming the GM position. At the time of his departure, 85°C had nearly 500 stores on the mainland.

What Went Wrong in Mainland China

Despite entering mainland China in 2007 — first in Shanghai — 85°C developed a distinctly different identity there compared to Taiwan. In Taiwan, coffee led the brand; in mainland China, bread and cakes dominated sales, making it more of a traditional bakery in consumers’ eyes.

Industry experts noted 85°C lost clarity in its target demographic. Its mixed coffee, bakery, and cake offerings failed to sharply define its brand, causing it to compete with a wide range of local players such as Paris Baguette, BreadTalk, Holiland, and local chains like Crystal Sugar. Unlike Starbucks in Taiwan, 85°C’s mainland rival became mass-market bakeries.

Management decisions also faltered. Initial high-salary recruitment of experienced managers from brands like KFC couldn’t sustain longer-term growth. As the company scaled, internal hires replaced external leaders, saving costs but widening the gap with competitors. Frequent, though isolated, food safety issues further hurt the brand’s reputation, leading observers to label the chain as prioritizing expansion over management discipline.

Consumer experiences soured, particularly in first-tier cities. Analysts observed that 85°C slowed expansion in metro areas and shifted focus to second- and third-tier cities — moves seen as cost-driven rather than strategic. But even there, rising rents and competition made growth difficult.

The Bigger Picture: Competition and Industry Challenges

Beyond internal issues, 85°C faced intensifying pressure across China’s bakery sector. Low barriers to entry, rising costs from stricter food safety enforcement, and an influx of niche and online competitors created a brutal environment for mid-sized chains.

Some competitors offered hyper-focused products — like constellation-themed cheesecakes generating annual sales of RMB 80 million — while others leveraged low-cost production models to undercut traditional bakery pricing. Single-product specialists using artisan techniques also gained traction, challenging 85°C’s broad but undifferentiated product mix spanning bread, cake, and coffee.

Meanwhile, the rise of casual dining outlets selling baked goods, and even coffee, added further disruption. One Beijing-based group with a million members reportedly sold cakes for RMB 60 — far below standard retail prices — leveraging online membership and offline retail integration.

Experts argued that 85°C’s lack of a clear brand identity and failure to cultivate a loyal fan base during its peak expansion window (2007–2011) proved costly. Although it eventually reached nearly 500 stores, the growth lacked the brand momentum that could have sustained it against newer, nimbler rivals.

Frequently Asked Questions

Who was Xie Jiannan and what was his role at 85°C?

Xie Jiannan was the General Manager of 85°C, hired in 2013 by founder Wu Zhi-xue to address operational challenges during rapid expansion, especially in mainland China. He led efforts to introduce franchising and restructure operations before resigning in 2014.

Why did Xie Jiannan leave 85°C in 2014?

Xie Jiannan resigned by early 2015 after failing to implement planned franchise systems in both mainland China and Taiwan. His departure followed reported revenue declines and strategic disagreements, with the official transition announcing his move to an advisory role in April 2015.

How many stores did 85°C have in mainland China when Xie left?

By the time Xie Jiannan stepped down in early 2015, 85°C had nearly 500 stores operating in mainland China, having expanded rapidly from 324 stores in 2013.

What was Xie’s franchise strategy for 85°C in mainland China?

Xie Jiannan aimed to roll out a “commissioned operation” model starting in late 2013, where experienced staff would manage stores under the parent company’s ownership. The first such store launched in Hangzhou in November 2014, but no full franchise system was officially adopted before he left.

Why did 85°C struggle in mainland China compared to Taiwan?

In Taiwan, 85°C was known for coffee-first offerings, but in mainland China it became more of a bakery, with bread and cakes driving sales. This shift blurred its brand identity, causing it to lose focus and compete with a wider range of local bakery and coffee chains without a clear distinction.

What broader challenges did 85°C face beyond management issues?

Beyond leadership struggles, 85°C dealt with intense competition from niche bakeries, low-barrier market entrants, food safety issues, and shifting consumer preferences. The rise of single-product specialists and hyper-localized competitors further pressured the brand in an oversaturated market.

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