Everything is going up in price, why is Haidilao so easy to be complained about?

Recently, ## has become a topic of scraping the screen.
The reason is that some consumers have reported that some Haidilao stores have replaced beef cubes with soy-based meat products "flavor companion".
Later, Haidilao's customer service responded that Weimate is currently only piloting in Shanghai, mainly "to deal with the waste caused by customers using unlimited beef nibs".

It seemed that it was just a simple replacement of small materials, but netizens reacted fiercely: "Haidilao loses its soul if it loses beef cubes.
" After all, after the table is served, a bowl of celery and beef cubes is served first, and then the thick tomato soup is poured.
This has become a fixed ritual for eating Haidilao hot pot.

This is not the first time Haidilao has been spit out due to price increases.

At the beginning of last year, Haidilao was on the hot search because of the 6% price increase after the resumption of work.
Later, Haidilao’s management had to issue an apology letter and cancel the price increase strategy in an attempt to save people’s hearts.

Having said that, Haidilao's tipping fee has quietly increased from 6 yuan to 8 yuan, 10 yuan, and even reached 13 yuan in some areas.

On social media, Haidilao has never stopped complaining about "a bowl of rice sells for 9 yuan" and "just ordering a small sour plum soup at the bottom of the pot is 100 yuan".

The same is the price increase, but some consumer products can be blatant, and consumers still pay.

For Hermes, for example, the higher the price, the more it can stimulate the desire to buy, and the longer the front row of the physical store.
Another example is the bright ice brick that insists on not increasing the price for 17 years.

Why can some consumer products easily increase in price, but some are complained as soon as they increase? This article will focus on three issues:

1.

What is the operating status of Haidilao?

2.

What does Haidilao rely on to make money?

3.

Why is Haidilao's price increase so easy to be complained?

01 The most difficult financial report

01 The most difficult financial report

Evaluating whether a Chinese restaurant's business is doing well is not an easy task.

China's catering industry has four main characteristics:

(1) There are many links.

Meat, poultry, egg, milk, firewood, rice, oil and salt.

(2) Heavy labor.

Handicraft workshops still dominate, and consumers also have a complex with rival workshops.

(3) Many flavors.

China's catering industry is a large-scale and long-term industry, but the structure is extremely fragmented, and it is impossible for a few large restaurants to concentrate on cooking for the people of the whole country.

(4) The purchase price mainly depends on the price.

In most cases, small profits but quick turnover, which can save a little is a little.

In this case, opening a hot pot restaurant is a better sub-category of Chinese food: consumers do their own food and clothing, without relying on the chef; the taste is fixed only those kinds; hot pot is usually in groups of three or five, and you can use this Passenger traffic is exchanged with shopping malls for lower rents.
The result of these three tricks is that expansion is easier.

Therefore, to evaluate a chain hot pot restaurant, the simplest criteria are: stability depends on same-store performance and turnover rate; growth depends on the number of new stores.

If you look at Haidilao with this system, you can see it clearly in the past.
But it's a bit difficult lately.

On March 1, Haidilao issued a profit warning, predicting that its net profit for 2020 will fall by about 90% year-on-year, from 2.
347 billion yuan to about 235 million yuan.

Last year when the epidemic was overwhelming, Haidilao’s performance in the first half of the year was even more worrying: In the first half of 2020, Haidilao’s revenue was 9.
761 billion yuan, while profits were in deficit, with a net loss of 965 million yuan, a year-on-year decrease of over 205%.
The profit margin fell to -9.
9%.
The ultra-high rate of turnover that once made Haidilao proud of has also dropped to 3.
3 times a day.

In other words, it is difficult for the same store growth and turnover rate data to accurately reflect the recent operating conditions of Haidilao, and the only indicator left to the outside world is the number of stores.

And Haidilao is the out-and-out "shop-opening madman.
" From 2017 to 2019, Haidilao accelerated its expansion at a rate of 97, 193, and 302 new stores each year, with a year-on-year growth rate of 55.
1%, 70.
7%, and 64.
8%.
In 2019, it is equivalent to opening a new store every 1.
2 days.
.

Entering 2020, even if it is deeply affected by the epidemic and dine-in is closed for more than 45 days, Haidilao still has not stopped its expansion: 167 net new stores were opened in the first half of the year; 368 net stores were opened throughout the year, and the number of stores at the end of the year has exceeded 1100 homes.
At the beginning of this year, only two months after opening, Haidilao opened 99 new stores.

While expanding wildly, Haidilao is also accelerating its sinking to third-tier cities and below.
As of June 30, 2020, the company had 267 stores in Tier 3 and below cities, accounting for 28.
6% of the total number of stores.
The number of stores and the proportion of revenue contributed have been increasing.

As can be seen from Haidilao’s counter-trend expansion, the epidemic is actually a reshuffle opportunity for the catering industry.
With long-term suspension of business and reduced passenger flow, the catering industry is facing the darkest moment, and small players with insufficient strength are forced to clear out.
Many rare storefront resources are vacated and shop rental prices drop.
Leading companies can often further occupy a favorable position.

Haidilao has a strong brand power and abundant cash flow, which also determines that it can "buy the bottom" in the process of reshuffling the industry, get more superior shops, and achieve rapid expansion.

Although the expansion against the trend under the epidemic has shown Haidilao's self-confidence and business strength as a hot pot leader, it may also plant a hidden danger: the increase in store density has diluted the number of customers, which has increased the pressure of single-store turnover.
From 2016 to 2019, Haidilao’s newly opened store turnover rate showed a gradual decline, which were 4.
8, 4.
6, 4.
5, and 4.
1 respectively.

The location of new stores and passenger flow may not be as good as those of old stores, which has lowered the overall level of refurbishment, and has also led to a narrowing of the same store’s contribution to overall revenue growth and a slowdown in operating revenue growth.
Moreover, the impact of the epidemic is also superimposed.
It is not easy to say that Haidilao's turnover rate and the decline in same-store revenue are short-lived, or it has reached an inflection point.

The growth rate of operating income has slowed down, the net interest rate and the turnover rate have fallen, but Haidilao, which is under attack, is still opening stores frantically.
How does this kind of Haidilao make money?

02Social Brand

02Social Brand

There is a very popular saying on the Internet: Haidilao's waiter can do everything for you except that they can't help you pay the bill.

Since the early days of their business, Zhang Yong and his wife have been committed to creating the most considerate service, attracting customers with smiles, discounts on food delivery, and helping with children.
These signature services of Zhang Yong can still be experienced in Haidilao stores today.

Haidilao has established a complete service system from the crispy teeth and corn beans when waiting for seats, to the delivery of towels, adding water, and emptying dishes during the meal, to the small gifts given after the meal is over, Haidilao has established a complete service system.
Haidilao has differentiated with its warm and cordial service and established a brand moat.

In addition, Haidilao is also constantly innovating service forms: manicure, photo washing, non-disturbance services, and birthdays, dancing faces, and dolls and dolls that frequently appear in the circle of friends.
It can even celebrate the breakup and chorus "Happy Breakup".
".

Why does a hot pot restaurant in Haidilao provide such good service? To a large extent, it is because Haidilao is a social brand.

There are three benefits of becoming a social brand:

First, competition in the hot pot market is too fierce, and providing the ultimate service is conducive to differentiation.

Hot pot dishes have a high degree of standardization, a wide audience of tastes, and a higher operating profit margin than other dishes.
It is a high-quality track with a foundation for large-scale expansion in Chinese catering.
In 2017, the scale of my country's hot pot catering market was 707.
1 billion yuan, accounting for 13.
7% of the market share, making it the largest Chinese food segment.

However, the hot pot industry has low barriers to entry, fierce competition, and highly fragmented industries.
In 2018, there were nearly 350,000 hot pot restaurants nationwide.
The top 5 hot pot companies had a combined market share of only 7.
2%.
The industry leader Haidilao only accounted for 3.
4% of the market share, and Xiabuxiabu and Dezhuang both had a market share of 1.
0.
%.

Even in this market that has long been the Red Sea, there are still new brands that break the market gap through differentiation.
For example, the Banu Maodu hot pot, which strives to make its hairy the best, has a unit price of 50 yuan higher than that of Haidilao, but it is still popular in Beijing, Shanghai, Nanjing and other cities, and the queue time is no less than that of Haidilao.

By paying attention to the dishes and ingredients, Banu has gained many fans who pursue quality and taste, and has become a major threat to Haidilao.
Recently, Baru has changed its brand slogan to "not excessive service, pay attention to everything", and the target is Haidilao.

In the fierce industry competition, if Haidilao is to secure its leading position in the industry, it has to build a service moat so that other hot pot restaurants cannot "learn" the Haidilao model.

In order to ensure standardized services, catering companies need to establish a long-term talent training mechanism and provide a lot of financial support.
Haidilao has established Haidilao University and Xiadian internship training, and has set corresponding assessment standards for the service details of each restaurant post.
In addition, Haidilao stores have established a "mentorship system" and a "group system" to ensure the consistency of services.

Haidilao’s employee benefits are higher than most of its peers, and the proportion of labor compensation is also significantly higher than that of its peers.
In 2017, the per capita cost of Haidilao’s employees was 62,000 yuan, which was 1.
68 times the average annual salary of the national catering service and hotel industry.

Since the success of the Haidilao model, there have been countless imitators, but there has never been a catering company that can truly replace Haidilao.
The management mechanism after employee recruitment is also a major reason.

Second, the service itself can increase the turnover rate.
Timely serving, winding up, and asking whether they are satisfied, disguisedly speeds up the guest’s departure time; helping to deliver aprons, pouring water, and serving dishes also speeds up the guest’s meal time.
In addition, the services (drinks, games, etc.
) when queuing can also play a role in retaining residents.

The revenue of a restaurant is the unit price multiplied by the turnover rate.
Haidilao's turnover rate has been much higher than the industry average.
In 2019, the average turnover rate of the hot pot industry is about 2.
3 times/day, and even under the premise of rapid expansion of stores, Haidilao's first, second, and third-tier same-store turnover rate can still maintain at 5.
1, 5.
3, and 5.
2 times/day.
.

Moreover, because Haidilao has a large passenger flow, long business hours, strong brand power, and strong business drainage capabilities, this enables Haidilao to get 50% to 60% off the rent of general catering companies when entering the core business district, and The rent-free period is longer, and the rent advantages in second- and third-tier cities are more obvious.
In 2019, the company's rent accounted for only 0.
9% of revenue, which is far below the industry average.

In general, through word-of-mouth marketing, Haidilao gradually allows customers to develop the "hot pot = Haidilao" thinking habit, relying on the "social brand" approach to overtaking and becoming the industry leader.
However, the expansion of these years has undoubtedly increased the cost of Haidilao.
Increasing prices in various ways may be a way to outline the level of profit.

So, why is Haidilao's price increase so easy to be sprayed?

03 hidden corners

03 hidden corners

In the first half of 2020, Haidilao’s unit price was 112.
8 yuan, an increase of 8% from 104.
4 yuan in 2019.
This price is basically in line with Haidilao’s mid- to high-end positioning.

Zhang Yong once told the media that high-end catering does not make money, and what Haidilao wants to do is "cheap and good, and make more money.
" Therefore, although Haidilao is quietly increasing prices, it is still a mid-end restaurant chain in essence.

From the point of view of the single product price, the price of Haidilao is higher than Xiabuxiabu, which is equivalent to Coucuo, but lower than Banu Maodu hot pot.

From the perspective of customer unit price, the customer unit price of Beijing Haidilao stores ranges from 112 to 183 yuan, while the prices of some high-end Japanese food stores and western restaurants can reach hundreds or even thousands of yuan per person.

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