It plummeted by 200 billion in 56 days. This is the Nth time that Haidilao has been on the hot search.

From February 16 to May 7, 2021, in the 56 trading days, Haidilao’s share price fell from 85.80 Hong Kong dollars to 43.15 Hong Kong dollars, with a market value of 228.7 billion Hong Kong dollars, a sharp drop of 208.5 billion Hong Kong dollars from the highest market value in February. This is the "rapidly drop of 200 billion in 56 days" widely reported by the media.

In stark contrast to the collapse in market value is Haidilao's market expansion rhythm.

The annual report of Haidilao shows that in 2020, Haidilao will open 554 new stores. At the end of 2019, the total number of Haidilao's stores was 744, which is equivalent to Haidilao's opening of new stores in 2020 that exceeds 70% of the total size of stores opened in the past 20 years.

A leading brand that is accelerating the increase in the market has been decimated by the capital market. Why?

ONE

Haidilao’s "signature" is made like this

Haidilao has made service a "signature", Haidilao = catering service; catering service = Haidilao, Haidilao has become the benchmark, even the "ceiling" of catering services. In recent years, many catering companies have tried to benchmark Haidilao's services, but few have succeeded. Behind the "signature" of Haidilao's service is a corporate operating mechanism that many companies cannot imitate.

Haidilao’s mentorship system is still the object of learning for many catering companies, because this internal promotion mechanism has contributed to the in-growth of Haidilao and has become a talent pool for Haidilao.

The new store manager is brought out by the old store manager. This is Haidilao's mentorship system. In order to encourage masters to give their apprentices to each other and ensure cultural heritage and innovation, Haidilao has introduced a supporting profit-sharing mechanism.

First, the manager of the A-level store is qualified to lead apprentices. Secondly, Master’s salary is divided into basic salary and variable salary. Among them, the variable salary belongs to the category of profit sharing. Master can choose 2.8% of the profit of his restaurant or choose 0.4% of the profit of its own restaurant + 3.1% of the profit of the apprentice restaurant + 1.5% of the profit of the apprentice restaurant. If you choose the latter, the ability of the apprentice and the apprentice will be directly linked to the master’s income. 3.1% of the apprentice shop’s profit is automatically included in the master’s floating wage, and 1.5% of the apprentice’s store profit is automatically included in the master’s floating wage.

Yes, in Haidilao, it is not uncommon for seniors to have a million annual salary. Some media reported that the average monthly salary of Haidilao shop managers is around 50,000, and that of good shop managers is around 100,000, which is several times higher than that of peers.

The apprenticeship system + super-high cash incentive policy has promoted Haidilao to realize the fission of talents and the inheritance of culture.

Based on this, Haidilao has also done three things. One is “delegating authority”, that is, fully authorizing employees, exempting orders, giving gifts, and giving dishes... Behind these services, Haidilao has granted full access to front-line employees. The right to make these "cost-requiring" services become daily.

The second is "visible" development space. Haidilao's internal promotion mechanism and higher salary levels have greatly stimulated the enthusiasm of employees.

The third is the assessment linked to customer satisfaction. Customer satisfaction and employee effort are the assessment indicators of Haidilao. From Haidilao's point of view, if the employees work hard, the customer satisfaction is achieved, and the store's business will come.

This is how Haidilao's service "signature" is made. The apprenticeship system allows the spirit and even the essence of the service to be passed down, and sufficient incentives can promote the employees to truly contribute from the heart. For other companies, the model itself is easy to replicate. What is not easy to replicate is the salary that is several times higher and the internal culture of Haidilao for a long time.

TWO

Is the "service" sign really useful?

Haidilao’s trump card is not bet on the chef, but on the manager, which is rare in the catering industry. In fact, there are few brands in the catering industry that use service as a barrier to competition, because the "service" card is really hard to play.

The reason why Haidilao strives to promote service as a barrier to brand competition is not accomplished overnight, and it has a great relationship with its category. Compared with other food and beverage categories, hot pot is a category that has a difficult taste gap. It is also often mentioned in a large number of reports that introduce Haidilao’s development story. At the early stage of its establishment, Haidilao found that it was difficult to compete with other products on the product side. The difference is that the "good service attitude" has attracted many customers for it, which paved the way for Haidilao to continue to emphasize service quality. Regarding the hot pot category, instead of making taste differences, it turned to another way to create competition barriers through services. The facts have proved very successful, but the hidden dangers are also great.

The service itself is an operating sector that is extremely difficult to standardize, and is highly dependent on labor, which also means that its output is very flexible. There is no uniform standard for the quality of service. Service personnel provide services within the scope of their own understanding, and customers judge services based on their perceptual cognition. Last year when Haidilao opened a lot of shops, it was also the year we heard the most complaints about Haidilao's services.

The reason can be analyzed from two aspects. One is that Haidilao opened stores last year in some sinking markets, and many cities opened Haidilao's first stores. Some customers can be said to be spending a lot of time with "famous names", and Haidilao may not be famous under the high expectations. The second is the rapid expansion of Haidilao, whether the growth rate of high-quality store managers can match the growth rate of store scale, and whether the service level of new store employees can keep up with the overall service level of the brand. These are all questions.

The "scale" of service is difficult to grasp, and it is difficult to cover everything. Many people said that Haidilao’s birthday service in “Juanzi” was not “moved”, but “dare not to move” and “very embarrassing”... Haidilao’s work was “smashed” by incentive policies. Whether the staff is over-serving, this issue has caused too much controversy. But does Haidilao "dare" to remove the embarrassing birthday greetings for many people? "Don't dare". Now Haidilao's "embarrassment" is that some people will say that it is over-service when providing services, and people will complain about it if they don't provide it. Between the ultimate service and the desire not to be disturbed, it is difficult for Haidilao to find a suitable “scale”.

Compared with meals, service is actually more difficult to innovate. Today, Haidilao’s “excellent” service still lies in the delivery of hair ropes, toys, on-site ramen, and birthday greetings. At the first experience, customers may be moved by the novelty. As time passes, people become accustomed to them, and even after these are regarded as standard features of Haidilao services, the "superiority" of Haidilao services will disappear.

It is not easy to standardize, to promote on a large scale, and to innovate. While Haidilao has become a service benchmark in the industry, it has also touched the ceiling of upgrading. At present, Haidilao urgently needs to break through the single cognition of “catering service = Haidilao” and form a new competition barrier that includes but not limited to services.

THREE

If you want to wear a crown, you must bear its weight

In the past two years, the frequency of Haidilao’s hot searches has also been a bit high, and most of them are not events that are beneficial to brand development.

#17元吃海底捞# The cause of the incident was Haidilao’s innovative eating method of beef cubes and tomato soup base, which attracted a group of customers to use this eating method to stir up Haidilao’s wool. Some of them ate hot pot at 17 yuan in Haidilao, and they also disliked that Haidilao's service was not enthusiastic, so they boarded the hot search.

Or because there are too many "wool parties", Haidilao removed the beef pellets and posted a hot search for it. Because of changing a small material and boarding the hot search, Haidilao's hot search physique is fully demonstrated.

Recently, Haidilao has been on the hot search because customers "brought their own cockroaches" to eat Bawang meal in its store and were blackmailed by thousands of dollars...

As an out-and-out leading company, a leading company that is good at telling stories, creating topics and other marketing methods, Haidilao has already sent itself into the whirlpool of public opinion. A small incident in the restaurant may trigger public opinion. earthquake. Therefore, compared with other catering companies, a food safety incident and a behavior that consumers do not like may have a deeper impact on Haidilao.

Let’s take a look at the media reports on Haidilao in the past six months. A half-year blood loss of 1 billion; annual profits fell by 90% year-on-year; Zhang Yong cashed out and retreated to China... These reports must have an impact on capital confidence. Faced with a steady stream of "small incidents and big hot searches" and various kinds of false and real reports, the "transparent" Haidilao must do something "practical" if it wants to regain its capital confidence.

FOUR

From "seeing" Haidilao to "eating" Haidilao

In the final analysis, Haidilao does not have irreplaceable advantages. For catering consumers, the value of service is far less than the food itself. Meals are the key element that ultimately leads to unlimited buybacks.

In contrast, Haidilao, in its product system, does not have any so-called explosive or hit products. The only "tomato beef cube" that has exploded is a "DIY" meal that is a combination of self-service ingredients and pot bottoms. Haidilao’s overall revenue did not help much, and the “wool party” may even lower overall profits.

All in all, Haidilao's products are lacklustre. In this regard, some people may hold different opinions. Many people think that to make a brand, especially a large-scale chain brand, what you need is not amazing products, but a product structure that does not lag behind and a complete brand system. However, it must be admitted at any time that in catering, the highlight of the brand that consumers are most happy to see is always the food itself.

What has Haidilao done for food competition? When other brands are working hard to promote hot products, Haidilao is talking about the service; when other brands advertise the freshness of ingredients, Haidilao is talking about the service; when other brands are drastically upgrading the scene, Haidilao is talking about the service. Still talking about the service...Finally, the audience got tired of it.

So, the current crux of Haidilao is not how to inherit the service model, but how to change the perception of “see service” consumption when going to Haidilao to “eat hot pot” when going to Haidilao. It is the competitive advantage that Haidilao currently lacks to build and consolidate its own product competition barriers.

Under the reports of various media, Haidilao, whose profits have fallen and its market value has shrunk, has been somewhat pessimistic.

In fact, Haidilao has experienced a development bottleneck that all catering brands have experienced or will encounter-weak innovation. For Haidilao, whether at the service level or at the food level, innovation will be the best way to break through the bottleneck. The innovation of the head company will be easier and more difficult. The easy is because of the strength of the head company, and the difficulty is because the consumer's vision will be more critical. In any case, we all look forward to a breakthrough in the "reverse mirror". Haidilao.