How can Haidilao, which has “changed its heart”, ask for “change”?

The author of this article introduces the fact that Haidilao requires customers to order hotpot soup base, analyzes the reasons for Haidilao's "change of heart" and how Haidilao can create "differentiation". This article is suitable for readers who are interested in the development of Haidilao.

Recently, the topic #Haidilao requires customers to order the hotpot base# has become a hot search topic.

It is understood that Haidilao stores no longer allow customers to order 4 plain soup pots, which means that they must have a special soup base before placing an order.

In response, Haidilao staff explained: "The ban on ordering plain hotpot is the company's new rule this year. Although there are few customers who order this way on a normal day, there are indeed people who only spend a few dollars on a hotpot meal."

In fact, on platforms such as Xiaohongshu, you can find all kinds of "Eat at Haidilao on a Budget" tips with just a quick search. Posts like "Make your own hot pot for free" and "Break the money at Haidilao for 100 yuan" can be found everywhere.

As the service ceiling in the hotpot industry, Haidilao has always been famous for its "nanny-style" service, with all kinds of free fruit snacks, manicure and shoe-shining services. It can almost be said that it is trying to please consumers at any cost.

But recently I found that Haidilao no longer spoils its customers . Why did Haidilao change its mind? Today I will explain the story behind it.

1. Haidilao, why did you “change your heart”?

From Haidilao’s financial reports and stock price performance in recent years, we may be able to see signs of its "change of heart".

In 2019, Haidilao's net profit was as high as 2.347 billion yuan, but in 2020, this figure dropped to 310 million yuan. In 2021, it suffered a loss of 4.161 billion yuan, which is almost equivalent to spitting back all the profits of the past three years.

Image source: Baidu Stock Market

This is absolutely unacceptable for a listed company of such a large scale, so Haidilao decided to adjust its business strategy.

In 2021, Haidilao launched an internal "Woodpecker Plan" to slow down and slim down, which will adjust the company from four dimensions: closing stores with poor performance, continuing to pay attention to stores with average performance, timely scaling back the group's expansion plan, and rebuilding and strengthening functional management departments.

In addition to reducing operating costs, Haidilao also hopes to further increase its average customer spending. Therefore, it began to compete with the "wool party", requiring customers to order soup bases, prohibiting customers from bringing their own food, and canceling nail services in some stores . These are all recent changes Haidilao has made.

Some customers expressed their understanding of Haidilao's move, but some others were deeply disappointed and felt that Haidilao had betrayed its original intention.

In fact, in the process of business development, it is very common to adjust business strategies according to revenue conditions. In the market, we rarely see hot pot restaurants that allow customers to bring their own dishes instead of ordering the base of the pot.

Although some companies may use some "unconventional" means to attract customers to place orders when they initially seize the market (such as Meituan subsidizing "takeout" and Pinduoduo giving out free red envelopes, etc.).

However, as the business grows and develops, in order to survive, the business strategy needs to be adjusted to a cost-controllable approach, which is a healthy business operation.

The adjustment made by Haidilao this time did not fundamentally "harm" the interests of consumers, but simply restored the normal state of the hot pot industry. And those customers who gave up Haidilao after the new regulations may have just been "spoiled" by it in the past.

2. Service was once the secret to Haidilao’s success

A report from QuestMobile Research Institute shows that Haidilao, Starbucks and Heytea are the top three in the list of popular restaurant chains. A report from iiMedia Research also shows that Haidilao is the most popular hotpot brand among college students.

Once upon a time, when you went to Haidilao to eat hotpot, you were not only eating hotpot, but also the "taste" and "style".

The reason for saying this is that Haidilao has subverted the tradition of the hotpot industry.

In an era when most catering companies only cared about taste and lacked service awareness, Haidilao was the first to understand the needs of customers. While making good dishes, it also provided customers with "far beyond expectations" services and a dining experience that made them feel at home.

Many people initially "fell into" Haidilao because they were attracted by its high-quality service.

For example, while waiting in line, the staff will provide various "additional services", such as manicures, shoe polishing, glasses cleaning, babysitting, etc.; you can also receive free fruits, snacks, and souvenirs before and after meals.

There is a saying on the Internet: "There is a magical hot pot in the world, and there is a group of magical waiters in the world, who can cook in the living room, dance outside, and coax children inside, and they are all-rounders. It is Haidilao."

At the same time, it also caught up with the dividend of the era of rapid development of the hot pot industry.

In 2013, the market size of China's hot pot industry was 281.3 billion yuan. In 2023, this figure is expected to reach a staggering 596.6 billion yuan, more than double that of ten years ago.

Image source: iiMedia Data Center

In that era of "heavy taste and light service", Haidilao created a "differentiated" feature with its own high-quality service, which enabled it to quickly occupy the hot pot market.

However, as the times change, more and more companies are beginning to pay attention to consumer experience. "Service" is no longer a unique label for Haidilao. Faced with competition and division from other brands, the halo brought by Haidilao's "service label" is fading.

Data shows that in 2013, Haidilao's market share was as high as 7.9%. By 2019, this figure had dropped to 2.2% .

Obviously, today's consumers have more choices when dining. Faced with increasingly fierce external competition, Haidilao's performance has declined.

Today, in such a fiercely competitive stock market, it is far from enough for a company to have only one competitive advantage. The "one trick" model is no longer applicable in today's era. To continue to grow and develop, companies need to cultivate multiple competitive advantages.

For Haidilao, it won by "service" in the past. Today, in addition to service, in what aspects can Haidilao cultivate its own competitive advantages?

3. How else can Haidilao create “differentiation”?

Before talking about Haidilao, let’s take a look at what today’s successful “Internet celebrity” hotpot restaurants have done?

Shuang Hotpot, which comes from Chongqing, targets young people as its consumer group. While it is delicious, it also pays more attention to "fun".

Song Hotpot has specially designed a music and dance moment. During the evening meal time, everyone stops their work and dinner at a fixed time and goes to the center of the restaurant to dance. Gradually, music and dance have become the unique "cultural label" of Song Hotpot, making it a pioneer in the fiercely competitive hotpot market.

Zhengzhou's Banu Hotpot, with its slogan "Not excessive service and every detail is exquisite", is competing head-on with Haidilao.

Compared with Haidilao's cheesy service, Banu Hotpot emphasizes product quality. Crispy tripe and delicious mushroom soup are Banu's popular products, attracting countless consumers who pursue individuality to check in.

But in fact, the service quality of Banu Hotpot has not fallen behind. Tripe is just a special label of the company's products.

You see, it is important for catering companies to establish "characteristic labels". It can help brands quickly establish "differentiated characteristics" and find their own target audience.

In the past, everyone was learning service from Haidilao. So today, can Haidilao also put down its airs and learn from these Internet celebrity restaurants, learn from their strengths and improve its own brand.

From the perspective of consumers, Haidilao can actually further develop in the following two aspects:

1. Ability to continuously create “hot products” based on consumer demand

A successful hit product is a "differentiated" label. For example, when you mention Chef Fei, you think of stir-fried pork with peppers; when you mention Yuanqi Forest, you think of sparkling water.

Consumers need a "sufficient" reason to choose Haidilao instead of other hotpot restaurants. For Banu Hotpot, this reason may be tripe. For Laowang, this reason may be pig stomach chicken. In the past, Haidilao's reason to attract customers was "nanny-like service."

But for a catering company, no matter how good the service is, it ultimately comes down to the product itself.

After all, the vast majority of consumers still prioritize taste, and service is just a bonus for the company. Just like a deposit in a bank account, the product is 1 and the service is 0. Only when 1 exists, the more 0s behind it, the better.

As catering companies upgrade their service positioning, Haidilao is losing its biggest advantage. With product homogeneity becoming more and more serious, what Haidilao needs to do is to create a "label product" that can represent the company as soon as possible.

Only by taking a two-pronged approach of products and services can a solid moat be built for the company.

2. Strengthen consumer-driven operations

In the past, Haidilao only provided good in-store services but did not take the initiative to carry out in-depth user operations. They just passively waited for customers to consume like traditional companies.

Statistics show that Haidilao’s number of member fans has exceeded 100 million. Faced with such a huge amount of traffic, it is clear that Haidilao has not made full use of it.

In this regard, Xibei is worth learning from.

As early as 2017, Xibei began to build its private domain. Through high-quality private domain operations , Xibei turned from passive to active, no longer waiting for customers to come to the store, but taking the initiative to create interactive consumption scenarios.

For example, parent-child activities are offline family parent-child activities organized for members. Xibei will invite professional chefs to teach children how to knead dough and make oat noodle fish. During traditional festivals such as the Dragon Boat Festival and the Mid-Autumn Festival, the content of children's games will keep pace with the times and become "making zongzi" and "making moon cakes". In addition, there are also experience officer recruitment and dish collection activities.

Through these interesting offline activities, Xibei successfully attracted member fans to the store, thereby enhancing fan stickiness and increasing users' trust and loyalty to the brand.

In addition, Xibei also regularly shares some cooking methods and food storage knowledge in the group to guide users to learn. Although this knowledge sharing is free, it has won the trust of customers for the company and laid a solid foundation for subsequent "repurchase".

It is precisely relying on this mature operating strategy that Xibei has successfully "turned losses into profits". Its private domain members contributed nearly 90% of the store's revenue during the most severe stage of the epidemic.

As a leading company in the hotpot industry, Haidilao has a number of fans that is no less than that of Xibei, which is also a major advantage compared to other competitors.

If Haidilao can make good use of this, further tap into private domain traffic, and carry out community operations, returning to its peak may really be just around the corner.

Final Thoughts

Times are changing, companies are developing, and brand marketing needs to "keep pace with the times" and find its own "differentiation characteristics."

Just like Haidilao, service was the key to its winning the market in the past. Now this advantage is weakening. Haidilao should return to its products in a timely manner, take the initiative and establish new competitiveness.

Author: Yan Tao

Source: WeChat public account "Yan Tao Sanshou (ID: yantao-219)"