Summary of Key Points
Half a year after Zhang Yong returned to his role as CEO of Haidilao, he presented a semi-annual report showing a slight increase in revenue and profits. Revenue grew by 7.9%, while profits only increased by 0.5%. The strategy behind this growth was to "trade price for volume" (lowering prices to attract more customers). Instead of rushing to improve short-term performance, he focused on long-term issues such as the industry's shift from growth to stability, the bottleneck in the main brand's development, and the organization's reliance on individual capabilities. By establishing a "central platform" (unified management standards) and nurturing a new generation of leaders, Zhang Yong is laying the foundation for a company that can operate independently of any single individual, paving the way for his retirement.
I. The Semi-Annual Report: "Passable on the Surface," but the Need to "Trade Price for Volume"
The numbers in the semi-annual report don't seem bad: revenue reached 22.3 billion yuan (up 7.9%), profits increased by 17.6 billion yuan (stopping the decline), and the table turnover rate rose from 3.8 to 3.9. However, upon closer inspection, there are some issues:
- Average customer spending has decreased: The overall average spending per customer dropped from 97.9 yuan to 97 yuan, with a similar reduction in first- and second-tier cities. This is a result of promotional efforts to attract customers.
- Number of directly-operated stores has decreased: The number of directly-operated restaurants decreased from 1,322 to 1,290 (32 closed, 24 opened), with the closures mainly affecting older or unprofitable stores.
- Profit growth has almost stagnated: The core profit margin fell from 11.63% to 11.25%, and the slight increase in the turnover rate was offset by the decrease in average customer spending.
In short, Haidilao is selling more products at lower prices to maintain customer traffic, but the profits have not increased significantly.
II. The Hotpot Industry Has Changed: From "Opening New Stores" to "Competing for Existing Customers"
Haidilao's adjustments are not without reason; the industry environment has completely changed:
- The market size is growing, but the number of stores is declining: The hotpot market will reach 639 billion yuan by 2025 (up 3.5%), but the number of stores has decreased from 510,000 to 424,000 (a 17% reduction in just over a year).
- Average consumer spending has halved: From 87.4 yuan in 2023 to 58.1 yuan in 2026, indicating more frugal consumers.
- The concentration effect among top brands is increasing: The chainization rate has risen from 16.3% to 25%, with smaller stores closing and customers flocking to larger brands.
In the past, Haidilao could grow by opening new stores, but now it must compete for existing customers while controlling costs.
III. Zhang Yong's Core Action: Establishing a "Central Platform"
Zhang Yong did not start with promotional efforts for stores; instead, he designated 2026 as the "Year of Central Platform Construction." What is a central platform? Simply put, it's the company's "central operating system":
- In the past, store managers made the decisions: Haidilao expanded through the efforts of its store managers, who had significant power (managing operations, training new staff, and opening new stores). However, with over 1,300 stores, standards became inconsistent (e.g., pet-friendly stores had hygiene issues), and best practices could not be shared effectively.
- Now, the headquarters makes the decisions: The headquarters standardizes the practices of successful stores (e.g., service processes, menu combinations) and uses AI systems (e.g., smart inspections) to ensure compliance. Stores are responsible for providing excellent service.
Veteran employees are also contributing to this change; Yang Lijuan and Gou Yiqun, who have worked with Zhang Yong for 30 years, have moved from the front lines to the central platform to help build the infrastructure.
- The new board includes four middle-aged executives aged 35-44: They are responsible for frontline operations, creating a balance between experienced and younger leaders.
IV. Transition Planning: The Next Generation Takes the Lead, Laying the Path for Retirement
Zhang Yong is around 50 years old and previously planned to retire at 60-65. He is already making preparations:
- The next generation is quietly taking the lead: His 28-year-old son, Zhang Hanzhi (referred to internally as "Zhang Xiaoge"), has joined the company and participated in decisions such as discontinuing pet-friendly stores and relaxing hairdresser regulations. Although he doesn't have an official position, he is gaining experience.
- Middle-aged executives are taking on key roles: The four newly appointed executive directors all have 8-20 years of experience and are directly in charge of business operations.
- Systems over individuals: Zhang Yong aims to create a system that does not rely on any one person's abilities. For example, the central platform will solidify standards, ensuring that the company can operate smoothly regardless of who takes over.
V. Zhang Yong's Ultimate Goal: Making Haidilao "Automatically Operate"
Zhang Yong's return is not a temporary measure; he is working on three long-term goals:
1. Stabilize the main business: Remove unprofitable and inefficient aspects of the directly-operated stores, focusing on a solid foundation.
2. Establish a central platform: Transform the founder's and managers' expertise into a replicable system to reduce reliance on individual performers.
3. Train successors: Both his son and the middle-aged executives must be capable of leading the company.
His KPIs are not short-term profits but ensuring that Haidilao can continue to operate smoothly even after his retirement—e.g., maintaining a table turnover rate of 3.9% without his direct involvement.
In Conclusion
Zhang Yong is transforming Haidilao from a company driven by individuals to one driven by systems, similar to installing an autonomous driving system in a car. No matter who takes over in the future, the company will be able to operate smoothly. This semi-annual report is just the beginning; the real test lies in whether the new system can be successfully implemented over the next decade.