The turnover rate can be said to be a barometer of the performance of catering enterprises. As early as the end of 2021, Hai Di Lao set a passing line of "overall turnover rate of 4.0 times/day" for itself, stating that "if it fails to meet the passing line, it will not expand on a large scale". On August 27th, Haidilao announced its interim results as of June 30th, 2024. Do you still remember this "passing line"? People who are following Hai Di Lao first focused their attention on the number of overturning rates: the overturning rate reached 4.2 times/day, close to the 4.8 times/day in 2019. The internal and external impacts of the epidemic have completely subsided, and the customers of Haidilao have returned.
In addition to a turnover rate exceeding 420 in the first half of 2024, Hai Di Lao achieved a revenue of 21.491 billion yuan, a year-on-year increase of 13.8%; The core operating profit reached 2.799 billion yuan, an increase of 13.0% compared to the same period last year, and both revenue and core operating profit reached historic highs. It is worth noting that in the first half of the year, the operating revenue of Hai Di Lao Restaurant reached 20.414 billion yuan, also setting a new historical high. In the industry's view, revenue and net profit are the result of various factors such as costs, operations, and multiple business models, but the recovery of turnover rate must come from stickiness. The bus "Lao Ren" at the entrance of the concert, the night market stalls, innovative services such as washing hair for customers, and consistent food safety standards have created a food safety "moat" for customers.
While the main brand forms a product and service moat, Haidilao has also embarked on its second growth curve. In the semi annual report, Hai Di Lao specifically proposed the "Pomegranate Plan" aimed at encouraging the incubation and development of more new catering brands. Camping hotpot, campus hotpot, corporate hotpot, and covering multiple tracks such as barbecue, hotpot, and Chinese fast food, in the eyes of many people, Haidilao is like the "pocket of a robotic cat" that only you can't imagine without it. On the path of continuously investing costs to encourage innovation at Hai Di Lao, "core products and services" make consumers truly willing to "vote" for Hai Di Lao.
The turnover rate exceeds 4, and the number of store expansions is expected to increase significantly in the second half of the year
The turnover rate is a core indicator for measuring the profitability of a store and an important factor for valuation in the capital market. A catering industry insider said that for catering brands, a higher turnover rate means higher store profitability. The higher the turnover rate, the more people queue up in the store. Especially in China, you will find that people prefer to choose stores that queue up, or in other words, the more people queue up in the store. The importance of turnover rate is self-evident
The 2024 interim performance report shows that Hai Di Lao's turnover rate reached 4.2 times per day, close to the 4.8 times per day in 2019. In 2019, Haidilao had 768 global stores. As of June 30, 2024, Haidilao operates 1343 restaurants in Greater China, 1320 of which are located in Chinese Mainland and 23 in Hong Kong, Macao and Taiwan.
Haidilao's historical store quantity and turnover rate data. Respondent provided pictures
Haidilao stated, "To ensure the overall business performance of Haidilao restaurants is good, we maintain the principle of cautious expansion. In the second half of the year, we will continue to adopt a bottom-up approach to opening stores. With further improvement in our management capabilities, we expect a significant increase in the number of stores we open compared to the first half of the year. We will continue to strengthen our regional layout, steadily expand the Haidilao restaurant network, and ensure that every newly opened restaurant can provide high-quality services and achieve excellent profitability
Service innovation, food safety upgrade, and creating "sustainable" competitiveness
In the first half of 2024, the catering industry gradually fell into a "circular price war", with the price of "9.9 yuan" sweeping across fast food, hot pot and other categories from coffee and milk tea. However, in the eyes of industry insiders, "rolling prices" is not a manifestation of long termism. To truly establish a brand moat, it is still necessary to roll products and services.
An interesting phenomenon is that many catering companies now unconsciously "benchmark" with Haidilao in terms of service, and even some companies want to describe themselves as having good service, simply promoting "Haidilao of the XX world". Zhou Yanlong, Secretary of the Party Committee and General Manager of China Quanjude Group, also publicly stated about why Quanjude cancelled service fees, "I have read the book 'Can You Learn at Haidilao' several times, but I still can't learn it. Haidilao's services are implanted in the company and employees like genes, and we cannot do it. Haidilao does not charge service fees, so we cannot charge them
In recent years, Haidilao has continuously innovated in its services because it recognizes that "free, low price" does not necessarily mean "good service". The so-called cost-effectiveness, "sex" comes before "price", the product itself is not good enough, "performance" is not enough, and the price is meaningless.
Based on this concept, Haidilao insists on building a moat at both the service innovation and product levels. In the first half of 2024, Haidilao will still be a frequent visitor to the "hot search". Haidilao can wash your hair now "and" Haidilao and other areas can eat eggs now "have become hot topics among consumers. There is a caring rest area for college entrance examination. During the Loong Boat Festival, Zongzi sachets, wormwood bouquets, Han suits, and lacquer fans are made. Free toys are constantly emerging, and nail styles are becoming more and more exquisite... Some consumers said that when they go to Haidilao for dinner, they love not only the hot pot of Haidilao, but also the emotional value it provides to customers. Not long ago, after the 2024 Wang Yuan "Living Room Carnival" tour in Zhengzhou, a large number of fans who were still unsatisfied boarded the long-awaited "Haidilao Hot Pot Bus" together. During the two-day "Living Room Carnival" concert, nearly a thousand fans from 9 nearby Hai Di Lao hotpot restaurants ordered meals in groups, and more than 10 buses were arranged to pick them up for hotpot.
In addition to continuous innovation in service, Haidilao's commitment to food safety has also been further upgraded this year. In August of this year, the China Cuisine Association, together with Haidilao and other upstream and downstream enterprises in bullfrog breeding and processing, released the "Technical Specification for Bullfrog Breeding and Processing" group standard, which is the first cross-border bullfrog group standard in China. This marks that the bullfrog industry is more standardized and standardized in catering supply, further enhancing consumers' trust in the safety of bullfrog products.
Store management revolves around "customer satisfaction" and "employee effort"
Shao Zhidong, then the rotating COO (Chief Operating Officer) of Haidilao, publicly stated that the challenge faced by Haidilao is to restore vitality on the front line and actively respond to market changes and new consumer demands after the epidemic. Since then, we have steadfastly mobilized the vitality of the front line through the delegation of power. Later on, many innovations that have been talked about by everyone emerged. For example, we washed our customers' hair, drove buses to the concert entrance to pick them up, set up stalls at night markets, and the popularity of subject three dance became nationwide and even globally... These innovations all come from the front line, from the ideas of ordinary employees. Our headquarters' task is to timely motivate everyone and put prizes and bonuses in place
Haidilao has been developing for 30 years, but what remains unchanged is the value of changing destiny with both hands, and what remains unchanged are the two basic points of 'customer satisfaction' and 'employee effort'
In the 2024 semi annual report, the "three tables" of Haidilao were mentioned: in the first half of the year, Haidilao's management at all levels worked around the "three tables" consisting of the operating table, management table, and basic table, further clarifying the functions of the headquarters, regions, and stores, and each department and its job, all centered around "customer satisfaction" and "employee efforts" to continuously optimize and improve store management.
Data shows that the employee cost of Haidilao in the first half of the year was 7.156 billion yuan, accounting for 33.3% of the revenue, compared to 30.5% in the first half of last year, an increase of 24.0% year-on-year. Haidilao stated that the main reason is that the company has increased the comprehensive salary and benefits level of employees and supplemented some positions to better motivate employees and enhance customer experience. That is to say, in recent years, consumers have experienced many "store level innovations" at Hai Di Lao, which are motivated by innovative mechanisms and ignited by organizational structure changes.
In this recently released financial report, Haidilao has launched the "Pomegranate Plan" aimed at encouraging the incubation and development of more new catering brands, and promoting innovation in catering services.
The relevant person in charge of Haidilao stated that after the steady development of the main brand and the restaurant revenue reaching a historical high, Haidilao has opened its second growth curve. The product and service experience moat built on the main brand will also continue to be extended to its sub brands, providing consumers with a delicious and affordable dining experience.