Doing "Hi Lao" and "rescuing people" at concerts, what exactly does Haidilao want to "rescue"?

Haidilao’s new marketing model is more exciting and younger.

Haidilao has been making frequent moves recently.

At the end of September, Haidilao's sub-brand "HiLao Hotpot" opened its first store in Beijing Longhu Beiyuan Tianjie. Haidilao said that "HiLao Hotpot" was incubated by Haidilao's internal team and was based on a deep understanding and insight into the hotpot market segment.

In addition, some netizens recently posted on social media that Haidilao Hotpot has opened a store on the second floor of the cafeteria of Xi'an University of Arts and Sciences. Later, the staff confirmed that this store is indeed Haidilao's first pilot campus store.

Although it is surprising to open a store on campus, it makes sense if you think about it carefully. Haidilao has been doing similar "fancy moves" for almost a year.

From live streaming sales at the beginning of the year, to "rescuing people" at previous concerts, opening night market stalls and camping shops, and establishing the sub-brand "Hi Lao" hotpot.

What new story will Haidilao, which has just recovered from the battle for survival, tell us in 2023?

1. From "Hi Lao" to "rescuing people" at concerts, here are Haidilao's recent tricks

On October 9, Haidilao’s first campus store in the world began trial operation.

It is reported that this campus restaurant is located on the second floor of the Qindeyuan Canteen of Xi'an University of Arts and Sciences. The big red characters on the door are very eye-catching: Haidilao/Campus Hotpot. The price tag is also eye-catching. Except for the double beef set meal, which costs 98 yuan, the other hotpot sets are all around 50 yuan. In addition to hotpot, the store also offers fried rice, Bobo chicken, fried milk and other dishes, all of which are not expensive. A portion of crayfish fried rice costs 9.9 yuan.

Previously, the person in charge of the campus store said that the hot pot sets are mainly for 1-4 people. The ingredients are the same as those in other ordinary stores, but the pot base is smaller. For the same portion of food, the price is 40% to 80% off that of other stores.

In response to this, Haidilao officially stated that this was true and that this was an innovative pilot project conducted by the company based on regional market conditions. It was mainly aimed at the canteen dining needs of college students and launched a campus special menu and exclusive prices.

When everyone was questioning whether Haidilao could make a profit by doing this, Haidilao responded, "We are not focusing on profit at the moment. We are trying to cultivate the consumption habits of college students. The company's requirement is that we don't lose money."

In fact, this is not the first time that Haidilao has done something fancy. Since the beginning of the year, Haidilao has been constantly "doing something fancy" in terms of marketing, products and branding.

In terms of marketing, Haidilao has come up with new ideas through celebrity live broadcasts and extending new scenes.

In March this year, Haidilao invited the top talk show actor He Guangzhi to the live broadcast room to tell his story about Haidilao and "celebrating birthdays". The combination of the celebrity with his own traffic halo and the birthday theme triggered the topic #亥捞是懂生日的# and brought 140 million traffic exposure to Haidilao's official live broadcast room.

With the arrival of summer, major star concerts have become more active. Since June, this scene has appeared at the end of concerts in many places: Haidilao employees hold banners and loudspeakers, and some even drive free buses to invite fans to continue the party in the store. Not only that, some Haidilao stores have also prepared glow sticks, microphones and speakers, and set up fan-only carnival areas, so that young people who haven't had enough "high" can continue to experience and consume.

The excitement of the concert is not over yet, and Haidilao is taking advantage of the popularity of the "night market style" and "camping style" to make new moves.

In August, Haidilao set up a stall in the night market to sell "late-night delicacies". Fennel fried dough sticks at 8 yuan per portion, maoxuewang at 9.9 yuan per portion, and other special snacks were inexpensive, clean and hygienic, attracting many people to check in.

Then, on the eve of the double holidays, Haidilao opened its first camping hot pot restaurant in Shanghai, focusing on "exquisite camping + hot pot", making it a hot topic again.

In terms of products, Haidilao not only adjusted the frequency of new dishes from half a year to monthly, but also held fan tasting sessions to invite fans to create new products. New products such as "Lingnan Yellow Pork Tripe Chicken Soup Base", "Spicy Pepper Flavored Thousand Shredded Beef", and "Summer Matcha Coconut" have become popular in stores. In addition, Haidilao has also created different special dishes for different regions based on regional characteristics, such as Beijing's Tanghulu and Shenzhen's bamboo sugarcane and reed root water.

Then there is the latest big move, the launch of a "sub-brand". Haidilao launched a new sub-brand "Hi Lao" hot pot on September 29. The sub-brand focuses on "beef hot pot + medium and low prices" and is presented in a semi-self-service form, which is completely different from Haidilao itself.

2. What exactly does Haidilao want to “catch”?

As the leader of the hot pot industry, Haidilao can be said to have "lowered its status" and tried every possible way to be fancy. In fact, behind these fancy behaviors, to some extent, they also reflect and demonstrate Haidilao's confusion and exploration.

According to Haidilao's financial reports for the past two years, Haidilao lost 4.16 billion yuan in 2021 and made a profit of 1.37 billion yuan in 2022. In other words, Haidilao just turned losses into profits last year and survived from the survival line. Although Haidilao has achieved profitability due to the improvement of the overall environment and a series of cost reduction and efficiency improvement, it has achieved profitability.

However, how to achieve sustainable and healthy development in the future is still a question that Haidilao needs to think about.

According to the financial report data from 2018 to 2023, Haidilao's main income comes from restaurant operations, accounting for more than 95%, only in 2022 the proportion is slightly lower, at 93.3%. In short, Haidilao's current performance mainly relies on the revenue of Haidilao hotpot restaurants. This also confirms the fact that Haidilao's performance was greatly affected by the fact that the epidemic control in the past two years caused the stores to be unable to operate normally.

This also raises a question: the performance of Haidilao hotpot restaurant business almost determines the development of the entire enterprise.

Therefore, if Haidilao wants to achieve sustained growth in performance, it faces "internal and external troubles": First, from its own perspective, how to consolidate its core business and continuously increase the operating income of hot pot restaurants. Second, from the perspective of the external environment, how to diversify the possible risks of a single business and find a second growth curve. With these confusions and problems, Haidilao began a new exploration.

1. Brand rejuvenation

From the perspective of consolidating the hot pot restaurant business, there are two ways to increase restaurant operating revenue: one is to increase the number of stores, and the other is to increase the revenue of a single store.

In terms of stores, although Haidilao is currently opening and reopening stores closed in the "Woodpecker Plan", it is clear that Haidilao has learned the lesson of blind expansion in the past two years and has become cautious in adding stores. In the first half of 2023, Haidilao opened only 5 new stores nationwide, and with the reopened and newly closed stores, the net increase in stores was only 11.

When rapid expansion is not feasible, increasing single-store revenue becomes another option for growth.

The two most important indicators in the catering industry are table turnover rate and average customer spending. The revenue of each restaurant store is generally affected by other factors such as table turnover rate and average customer spending. Improving table turnover rate or average customer spending can increase the revenue of the restaurant store.

According to the financial report, Haidilao's average customer spending has continued to decline in the past two years. From the highest price of 110.1 yuan in 2020, it gradually dropped to 102.9 yuan in the first half of 2023, a year-on-year decrease of 2.1 yuan. As recently as April this year, Haidilao wanted to increase store revenue by increasing average customer spending.

In April this year, Haidilao raised the prices of condiments, dishes and other products, which aroused widespread doubts from netizens. Subsequently, Haidilao issued an apology letter on its official Weibo account, saying that the price increase was a wrong decision made by the management and that the prices of dishes would be restored to the standards before the store closed. It can be seen that consumers do not buy into this method of increasing the average customer spending.

In this case, Haidilao can only increase revenue by increasing the turnover rate. The turnover rate refers to the reuse rate of the store's dining tables, which is affected by customer flow and operational efficiency. Customer flow has a greater impact. It can be understood that if there are no customers, there is no reuse of the dining tables. In short, Haidilao needs to find ways to attract customers to the store to increase the turnover rate.

According to the "2022 Hot Pot Consumption Insight Report" released by Times Data, people aged 21-30 have become the mainstream hot pot consumers, accounting for 53.1% of the total number of consumers. In other words, with the upgrading of my country's consumption structure and the growth of the "Z generation", the main consumer force in the hot pot market has shifted from middle-aged people to young people.

Obviously, with the changes in the mainstream consumer groups in the market, Haidilao has to change its marketing strategy to cater to young people in order to increase customer flow and table turnover rate.

As mentioned above, whether it is fancy publicity, expanding new scenes, or product innovation, Haidilao's goal is to cater to new consumer groups and make the brand younger. Use the methods that young people like, appear in the scenes they like, and give them the things they like, so as to increase the frequency and stickiness of young people's perception of the Haidilao brand, thereby increasing the number of times they visit the store to consume.

2. Sub-brand "Hi Lao"

From the external situation, first, the uncertainty of the macro environment and the cautious attitude of consumers have exacerbated the risks caused by a single main business. Second, from the perspective of the hot pot industry, Haidilao not only needs to face the competition from peers' "volume" services, but also faces the risk of relative saturation and weakened growth potential in the first-tier hot pot market. Therefore, when the environment, competitors, and market may cause Haidilao's main business to face risks, it becomes urgent for Haidilao to find a second growth curve.

During the epidemic, Haidilao tried to develop the takeaway business as a second growth point. However, the attribute of hot pot suitable for dine-in seems to be incompatible with takeaway. Not only is the business cost of hot pot takeaway high, but it is also not convenient for enterprises to operate, and consumers are not willing to pay. Until the first half of 2023, Haidilao's takeaway business revenue was only 471 million yuan, accounting for 2.5% of the total revenue. It can be seen that it is still difficult for Haidilao to develop the takeaway business into the second pillar.

At the same time, Haidilao is also exploring other ways. In the second half of 2020, Haidilao had already begun to explore the "second brand". From Beijing's "Shibaquan" noodle house, Fanfanlin, Qin Xiaoxian, to Chengdu's "Laopai Youmianer", Xi'an's "Xinqinpai Noodle House", etc., Haidilao has tried many low-priced fast food as sub-brands. Although some brands are still in operation, they have not made much of a splash.

Therefore, when the takeaway business and sub-brands in other industries were struggling to develop, Haidilao had to choose to return to its old business - the hotpot industry as a sub-brand.

In iBrandi's view, there are three logics behind Haidilao's incubation of its sub-brand "Hi Lao" hotpot: differentiated segmentation, chain operation, and coverage of the sinking market.

The biggest problem in the hotpot market is homogeneity. Therefore, if hotpot brands want to break through the circle, they must work hard on differentiation. Haidilao said before that HiLao Hotpot is based on the understanding and insight of the hotpot market segment.

This time, Haidilao entered the segmented track with "beef hotpot", coupled with medium and low prices, focusing on the concept that beef hotpot is delicious and inexpensive, aiming to differentiate itself from Haidilao and make a fuss about the differentiated characteristics of the category.

Secondly, chain operation is still the mainstream way to occupy the market. "Hailao" hot pot products are relatively few and are presented in a "semi-self-service" manner. This "few items + light service" model can bring lighter stores, which may be the preparation for Haidilao's future chain operation.

Finally, Haidilao hopes to capture the sinking market with the greatest growth potential through its sub-brands, and to form complementary advantages with its parent brand, covering a wider price range and mutually enhancing brand influence. This can be illustrated by the pricing of Hailao: the average customer price is around 80 yuan.

In short, when facing the problem of growth and development, Haidilao has explored the transformation of its own brand and the development of a second brand. As for the market results of the exploration, it is still unknown.

3. Conclusion

In general, as the hot pot market grows, brand competition becomes more intense. For the hot pot industry, serious homogeneity and lack of differentiation are still important issues for brands.

Although Haidilao has made many new moves on the road of exploration, these fancy behaviors are not only easy to be imitated by its peers, but also can they serve as its own differentiation features when facing new brands such as Shuang Hotpot that may "provide more exciting and younger services than Haidilao"? Even when young people lose interest in these fancy behaviors, can Haidilao still maintain sustained growth?

Although the sub-brand established by Haidilao in pursuit of second growth has differentiated its features and can share Haidilao's supply chain, management experience, image endorsement and other resources, there are differences in the market segments. "Hi Lao" still faces challenges in market positioning, quality control, and profit model. It remains to be seen whether it can achieve Haidilao's expectations.

Author: YT

WeChat public account: iBrandi (ID: ibrandi)