The very long queue of people outside the restaurant.  Image via China Money Network.

Haidilao, which mainly serves spicy Sichuan style hotpot has raised almost $1 billion in its Hong Kong IPO.

Its valuation is higher than all other eateries traded in the Hong Kong stock exchange combined.

So WHY is Haidilao so popular and attractive? Why investors are willing to pay a premium over other eateries?

It isn’t terribly surprising to see long queues outside of Haidilao outlets, even at midnight.

Walk-in customers waiting for a table in their many outlets usually find themselves waiting for up to a few hours, yet many are still relentlessly queuing up for a taste of their signature spicy Sichuan style hotpot – no matter how hungry or exhausted they are.

And now, we are seeing strong investor appetites for its IPO in Hong Kong!

The company has successfully raised nearly $1 billion, with company stock soaring as much as 10% during its first trading day on the 26th September this year.

The IPO was priced at HK$17.8 per share. As of  3rd October, it closed at HK$17.76 per share.

Haidilao raised nearly $1 billion in its Hong Kong IPO. Image via CGTN.

Co-founder Zhang Yong, once a high school dropout, first opened his restaurant in Sichuan in 1994 with just four tables.

Today, Haidilao has over 196 outlets in over 60 Chinese cities and more across the globe in Los Angeles, Tokyo, Singapore, and Seoul.

The company will utilise funds raised from its IPO to expand its business into markets including the United Kingdom and Canada.

How did a restaurant serving such traditional and ubiquitous Chinese dish become such a success?

The reasons are manifold. It’s because Haidilao understands both its employees’ and its customers’ needs, and by going of its way to fulfill them, paved its path to success.

1. Superior Dining Experience and Services

How do you differentiate your brand in highly competitive markets, especially when your competitors promptly copy anything that works?

Learn from Haidilao.

Haidilao offers manicures service to customers. Image via The Straits Times.

In a hyper-competitive hot pot industry with low entry barriers, Haidilao’s extraordinary drive to not only accommodate their customer’s desire but also exceed their expectations.

The Chinese hot pot chain is well-known for its staff’s keen ability to mollify and provide free services and entertainment such as manicures, massages and board games offered to irritable customers who have long waited for a table.

In fact, the company has made queuing a part of Haidilao brand experience.

The Noodle Master performs “Noodle Dance” which winning lots of “wows” from customers. Image via WSJ.

Also, the restaurant’s signature Sichuan Opera Face and “Noodle Dance” made right in front of the customer has become the highlights in their dining experience.

Haidilao considers their customers’ overall experience, not just the food, but creating the best dining experience.

This has been the critical competitive advantage that has clearly set them apart from its competitors.

2.    Respecting and Valuing Employees

Haidilao understands that loyal employees make happy customers, so they motivate their employees by providing better compensation and welfare.

So much so, how Haidilao “treats their employees like human beings” is a lynchpin to its success.

In an interview, Zhang Yong was famously quoted as saying “you need to respect them not as your employees, but as equals.”

•  Treat employees as family members

The way Haidilao shows respect to its employees is more than just money.

Most of their employees come from the more rural areas in China, and the majority of them have not received higher education.

Hence, they will equip hired employees with basic knowledge suited for city living, such as using the ATM or banking services or how to ride the subways around the city.

The company’s management deems it important to help them acclimatise to life in the city before asking them to work for the company, stating that it’s just like how one would take care of family members who came from rural areas.

This acclimatisation is then followed by a more specific and personalised one-to-one training to cultivate their workers’ skills and to fully explore their potential.

In essence, they inject customer-centric thinking across their organisation to support successful and sustainable customer service.

Excellent customer service starts with a smile.  Image via Jiasuhui.com.

• Offer competitive compensation for employees

Haidilao finds itself motivating employees by providing better living conditions; such as relatively luxurious and free apartment with air-conditions, Wi-Fi, washing machine, TV and even nannies.

Those who have worked as an assistant manager or higher-level managers for more than six months can apply to have their parents receive a ‘parental subsidy allowance’.

Obviously, Haidilao’s commitment to building a family-like environment has created a sense of belonging for its workers, which further reinforces its employees’ loyalty and their work enthusiasm towards the company.


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