Haidilao

The name of the company originates from a mahjong term, haidilao, literally meaning "deep sea dredging", analogous to the act of completing a mahjong winning hand on picking up the last available tile in the game.[5] This is very rare and considered very lucky.[5]

Zhang Yong is the founder of Haidilao, and in March 1994 opened the first Haidilao hot pot restaurant along with three other founders with 8,000 Yuan in Jianyang, Sichuan Province.[6] Sichuan is a place where people love having hotpot every day, which means there are many hotpot restaurants in the Sichuan area.[6] Haidilao is not competitive under that situation due to Mr Zhang cannot make hotpot in a professional way.[6] Haidialo is not based on the flavor and excellent of the food, but rather, the competitive advantage that the chain holds is based on the customer service.[6] For example, there was an instance where is a customer came with dirty shoes, Mr Zhang asked the staff to shine the shoes for the customer.[6] Although a customer might not think Haidilao's flavor is the best, they still come for the special services.[6] After five years, Haidilao started to expand beyond Sichuan to other provinces like Xi an, Shanxi province and all around the world.[6]

In 2018, Haidilao Hot Pot served more than 160 million customers, with an average daily table turnover rate (i.e. the number of parties hosted per table per day) of 5.0.[7][8] Haidilao Hot Pot has more than 36 million VIP members and 60,000+ staff.[9][10]

Running for more than 20 years, Haidilao has received multiple awards and certifications, both domestically and internationally.

With the rapid development of haidilao, it achieved more than 180 chains globally, more than twenty thousand staff, and an annual turnover of 5 billion RMB (almost US$0.77 billion).[11]

At the end of June 30, 2020, Haidilao Hot Pot had 935 stores in operation.[12] In addition to the many locations in China, the company is serving in the areas of Hong Kong, Malaysia, Singapore, Australia, Taiwan, United Kingdom, Canada, United States, Thailand, Indonesia, Vietnam, South Korea, and Japan.[13]

The company opened its first restaurant outside of mainland China in Clarke Quay, Singapore, in 2012. This was followed by its first US outlet, which opened in Westfield Santa Anita (California) in September 2013.[14][15] Haidilao continued to develop its network abroad, entering the South Korea market in 2014, the Taiwan and Japan markets in 2015, and the Hong Kong market in 2017.[12]

In 2008, haidilao plans to increase $600 million to $700 million in the Hong Kong IPO which could increase the popularity in the global market.[16]

In 2017, Haidilao's net profit rose 22% to 1.19 billion yuan and revenue increased 36% to 10.64 billion yuan.[13]

In 2018, haidilao raised nearly US$1 billion in a Hong Kong initial public offering (IPO).[17] The ipo figures show that even though haidilao faces some safety issues over the past two years, investors are still feeling positive of haidilao's growth in the future.[17]

Founded as a privately held company, Haidilao International Holding Ltd. filed to launch an initial public offering (IPO) in Hong Kong in 2018, aiming to raise up to US$700 million for further expansion.[13][18]

As of 2018, Haidilao's IPO price of 17.80 Hong Kong dollars a share makes its market capitalization $12 billion.[19]

Haidilao treats staff as an important role, providing creative service for employees which builds infinite relations under the management system.[11] (1) Haidilao satisfies the physiological needs of the staff.[11] Haidilao's salary is relatively high compared with other catering restaurants.[11] To make sure staff have a good rest after working, haidilao arranges staff to live accommodations which are very close to the working place.[11] If any staff is sick, haidilao will provide special care for them. Employees’ children get the opportunity to study at haidilao's school.[11] (2) haidilao meets the safety requirement of staff.[11] Employees working in haidilao usually come from rural areas. Haidilao pays wages and insurance on time and provides employees tailor-made training which is based on safety knowledge.[11] This training can increase employees' sense of security issues.[11] (3) haidilao satisfies the staff's social needs.[11] Every new staff will have a teacher which means they can follow everything through guidance.[11] Also, working employees will communicate with each other every day which could increase the quality of service.[11] For the new Haidilao employees, they are required to attend a mandatory four-day orientation and a month of trial. This allows them to understand company culture and to learn required skills.[23] (4) Haidilao meets the demand for staff self-fulfillment.[11] Haidilao encourages staffs to be innovative their new ideas, encourage entrepreneurialism and give staff flexible rights to deal with the emergency problems.[20] For example, when customers feel disappointed because of a lengthy waiting time for their table, staff can give customer discounts.[20] Giving staff flexible rights cannot only eliminate customers’ satisfaction but also makes staff feel being trusted and respected.[20] It is an encouragement to employees to always bring positive and patient service to customers. It created a company culture that would bring motivation and enthusiasm to its employees, and the company culture centers around interpersonal trust and respect.[23] Satisfied employees are motivated and willing to provide exceptional service to its customers.[11]

The Haidilao College is an employee training and development program that was established in 2010. Its motto is, "hard work can change the destiny and wisdom makes dream come true". The goal is to share its company culture and identify the essential skills required to succeed in business. A variety of training sessions are offered by the Haidilao College. Course topics range from culture, systems, to vocational skills and knowledge. The college offers both online and offline training programs to provide the most flexible learning experience for its employees.[12]

Haidilao created the “Hi to send” delivery service in 2003.[11] When staff sends hot pot to customers’ homes, they wear shoe covers and help customers to divide food.[11] They will wait outside until customers finish their food and take away the kitchenware.[11] Since 2013, Haidilao opens for 24 hours a day and offers service of delivery food.[23] Once customer orders delivery food, staff will send an electromagnetic pan, an induction cooker, a wiring board to customers’ home.[23]

Service in the restaurant is divided into three processes: (1) before eating; (2) during eating; (3) after eating.

(1) Before eating

Haidilao's employees will welcome customers warmly first.[11] Every haidilao restaurant has a waiting room for customers.[11] The waiting room has different sections that satisfy customers with various needs.[11] To respect women's nature of loving beauty, Haidilao provides hand massage and manicure service.[11] As for children, Haidilao also has a parent-child paradise, an indoor children's play area with facilities.[11] Service before eating includes all free services like a car wash, fruits, snacks, drinks, nail salons and games.[20]

(2) During eating

A hot towel is provided to clean hands when customers are seated.[20] Different taste beverages were provided to different customers.[11] Then staff will also offer an apron and mobile phone bag for free during the eating process, providing small hairpin for long-haired customers.[20] After the staff introduced themselves, the customers’ name and birthday will also get recorded in the system, Haidilao will provide gifts when customers’ birthday is coming.[20] People who are old, pregnant, and young will get special care from employees.[11] If customers are celebrating a birthday party or wedding ceremony at haidilao, they will get a special gift.[11] While eating at the dining area, customers can experience the Chinese culture through Sichuan's characteristic face-changing as well as hand-pulled noodles performances.[27] In China, hotpot is usually enjoyed by groups of people.[28] Haidilao can make solo dinner more comfortable.[28] For example, If a customer visits a haidilao by one person, staff will provide a toy to sit in front of the customer which will make the customer not feel awkward to have a hotpot by one person.[28]

(3) After eating

In the final stage of eating, the staff will provide free snacks and fruits.[20]

For people who order in online store，Haidilao also provide service to help do all the cleaning jobs and take the tableware back.[26]

Haidilao hot pot table.

On August 25, 2017, the kitchen hygiene problems were reported from the Legal Evening News in the restaurants of Beijing Jinsong and Taiyanggong.[6] A video of rat is lying on the sink. This news instantly drew public's online attention.[6] After three and a half hours, Haidilao posted an apology letter about the hygiene issues.[6] A few hours later, Haidilao provided three main steps to solve the hygiene problems immediately:

Haidilao indicated that all stores need to have a “bright kitchen” which means that the kitchen is now visible to all customers thanks to the instalment of transparent glass and opening up of the space for visibility to all.[31]

1. Haidilao welcomes all customers, media and management department to monitor Haidilao in order to comply with local laws and regulations (Wu, 2017).
2. The board of Haidilao will take the primary responsibility for this hygiene crisis in two stores.[31]

The Beijing Municipal Food and Drug Administration had two meetings with the representatives of this Haidilao's hygiene problem, required Haidilao to make rectification and all stores in Beijing need to be inspected within one month.[6]

Since the COVID-19 pandemic is getting better in mainland China, haidilao reopened many stores.[32][33] When customers return, they are surprised by the rise in prices.[32] With the increase in prices in haidilao, discussions online are very controversial.[32] Most customers online stated that they will not go back to haidilao again due to the increased prices.[32] After customers' complaints, the representative of haidilao stated the current price will only be limited to within 6% of the normal price before.[32] Every restaurant can select their price hikes based on different locations.[32] Although haidilao reopened many stores in different cities, there are limitations on the number of customers in the restaurants. Haidilao provides 15% to 31% discount to customers who are ordering online.[32] However, under the Coronavirus situation, customers have to face economic pressure, and the ability of customers to bear the price hike becomes weaker.[34] Many customers feel very disappointed with the price hikes in haidilao.[34] As a result, haidilao posted an apology letter on official Weibo which state that haidilao will change the price to the pre-coronavirus price.[34]

On the afternoon of January 5, 2019, a haidilao restaurant located in Wuhan Great Ocean mall suddenly played a porn video on the restaurants’ TV screen.[35][36] One customer shared the image on Chinese social media Weibo，the hashtag of “Haidilao TV shows vulgar scene” has been talked about more than 240 million times.[36] According to the Headline News on Weibo, haidilao staff explained that the screen is used to monitor the kitchen hygiene rating and customers can check whether their food is ready or not directly.[35] After the porn video is noticed by customers, staff cut off the TV screen directly.[35] According to Chutian Metropolis Daily, this accident happened at 3 pm.[35] When the reporter came to the location at 7 pm which is the peaking time for dinner, the TV screen still switched off.[35] On January 6, haidilao posted an apology letter on official Weibo.[36] Haidilao stated that the police are already investigating this incident.[36] In China, post pornography online is banned, and sharing porn videos is illegal.[36]