[Economic Observation] Why did Haidilao "broke the brakes"?

　　On November 5, Haidilao issued an announcement on the Hong Kong Stock Exchange stating that it will gradually close about 300 stores that have failed to meet expectations before December 31, 2021. Some of them will be temporarily closed and reopened at an opportunity. The rest period is the longest. No longer than two years.

In addition, before the company's operating conditions are fully improved, the company will shrink the group's business expansion plan in due course. The average table turnover rate (table re-use rate) has not reached 4 times per day. In principle, it will not open new branches on a large scale.

　　"The current bitter fruit can only be swallowed by ourselves." Haidilao said at the end of the announcement.

　　Once, Haidilao, known for its service, was a role model for the catering industry.

The monograph on Haidilao services, "Haidilao, You Can’t Learn" is a must-read for catering practitioners.

From "Haidilao, you can't learn" to "swallow the bitter fruit by yourself", what happened to Haidilao?

　　This starts with the rapid expansion of Haidilao.

Statistics show that in 2019 and 2020, Haidilao opened 308 and 544 new stores respectively.

In the first half of 2021, 299 new ones will be added.

　　Why large-scale expansion?

The rapid expansion of Haidilao began after its listing in 2018. Industry insiders pointed out that on the one hand, the increase in the number of stores after listing will promote revenue growth. Hong Kong stock investors prefer to watch the continuous increase in revenue and promote the growth of Haidilao's market value; on the other hand, Competition in the catering industry is fierce, and the increase in stores is to cope with the competition.

　　However, Haidilao said that the idea of ​​store expansion is to deploy locations through encryption, that is, the first and second-tier cities are encrypted, and the locations in third- and fourth-tier cities are deployed to increase the coverage of stores and solve the problem of waiting for too long to affect the dining experience.

　　Haidilao has experienced rapid growth in store size over the past two years.

However, the catering industry as a whole is greatly affected by multiple factors including the epidemic, and the development of newly opened stores has not met expectations. This is the direct reason for the closure of some stores.

　　As for the reasons why the newly opened stores did not meet expectations, Zhu Danpeng, a Chinese food product analyst, said that the main reason is that Haidilao’s entire internal management has some problems. To reach the established goal; second, the entire organizational structure cannot match the increasingly intense competitive environment; third, the training of excellent talents is still relatively lacking, and the comprehensive literacy of store managers does not meet the standards; fourth, the landing force of the entire corporate culture is also insufficient .

　　However, it is worth mentioning that Haidilao said that the closure of the store will not lay off staff, and will properly arrange the employees and management of the stores involved.

It is understood that Haidilao will provide other development opportunities for store management, or incorporate it into the "energy storage pool" as appropriate, and conduct intensive training in business and management to improve job management and operation levels; ordinary employees will carry out internal deployment and fully respect The employees' wishes, let them choose to work in other stores.

　　Regarding how to restore performance, Haidilao stated that it will carry out the "Woodpecker" plan, continue to focus on stores with poor operating performance, rebuild and strengthen some functional departments, restore regional management systems, strengthen internal management and evaluation mechanisms, and shrink business expansion. Improve the company's operating conditions.

　　According to industry insiders, Haidilao’s integration approach to business closure this time is "three advances and one retreat", which is intended to stop losses in a timely manner, reorganize and improve quality, and conform to the business law of the company’s upward spiral.

From the perspective of the long-term development of an enterprise, a solid foundation can support a broader growth space.

　　Reporter Yang Zhaokui