Author: Wen Yu, Editor: Xiao Shimei
Capable people never complain about the environment, and great companies are born in winter.
While most companies are still attributing the economic situation to the economic situation, Haidilao has quietly made history. In 2023, the Company's revenue from continuing operations (i.e., the remaining business after excluding Tehai's international business) is expected to be no less than RMB4140 billion yuan, and the net profit is expected to be no less than 440 billion yuan, compared with 2019, revenue and net profit increased by 659% and 718%, an all-time high.
[Shrink the front, improve quality and reduce costs].
Turnover rate, customer unit price, number of stores, the growth story of all catering brands is inseparable from this set of formulas.
In 2020, the company opened stores on a large scale against the trend (net new stores for the whole year by 530 stores), but the results were quickly falsified, and the turnover rate fell seriously (from 5 days in 2018 to 3 days in 2021), and profits and stock prices fell sharply at the same time.
The crisis forced reform, and in 2022, founder Daniel Zhang voluntarily abdicated, and Yang Lijuan, the head of the "Woodpecker Project", took over. With this as a sign, Haidilao has entered a new period of strategic adjustment, the core of which is to shrink the front, improve quality and reduce costs, and change the pursuit of store expansion to the growth of the turnover rate.
The strategic intent is gradually being realized.
On the one hand, it still maintains restraint in expansion, with only 9 new stores opened in 2023, and nearly 30 hard-core stores will resume business, offsetting some of the stores that closed during the year with poor operating conditions, and the net increase in stores last year was very limited.
On the other hand, the turnover rate has effectively increased, and it has recovered to 3 in the first half of 20233 days, and the second half of the year continued to improve, the turnover rate in the third quarter increased by more than 25% year-on-year, and in the fourth quarter, there was a significant increase month-on-month, and gradually approached the level of the turnover rate in the same period in 2019.
In particular, core costs such as manpower, rent, and raw materials were reduced during the period.
At the manpower level, the number of employees in a single store will shrink to 76 in 2022, a year-on-year decrease of 30, driving the proportion of the company's labor costs to decline by 3 year-on-year19pct to 33%. Last year, with the recovery of store operations, the number of employees in a single store increased, but due to the increase in the proportion of part-time employees, the proportion of employee costs continued to decline, reaching 305%。
In terms of rent, due to the layout of more low-cost points in the three years of the epidemic, and some stores have been depreciated but are still operating, the proportion of rent and depreciation and amortization has declined. Rent-related expenses as a percentage of revenue in the first half of last year were 11%, down 01pct, other depreciation and amortization as a percentage of income 80%, a significant decrease of 34pct。
At the raw material level, Haidilao mainly reduces costs by improving the first-class chain and localized procurement capabilities. In 2022, the company will build a smart kitchen in Shanghai to support the direct distribution of store dishes in Jiangsu, Zhejiang, Shanghai, and Anhui provinces, and the proportion of raw materials and consumables will decrease by 2% year-on-year2pct to 416%。In 2023, Haidilao will continue to reduce the cost of raw materials by increasing the proportion of prefabricated dishes, and the proportion of raw material costs will further drop to 40 in the first half of the year7%。
All of this is combined and projected onto the financial statements, which is a significant increase in profit and profit margin levels.
According to the calculation of 4.4 billion yuan of net profit corresponding to 41.4 billion yuan of revenue in 2023, Haidilao's net profit margin reached 1063%, well ahead of the same period in 2022 by 442%。
Cost reduction can amplify profits, but it cannot expand revenue, and the key to generating increments is to release organizational vitality, which is also the second reform focus of Haidilao.
[Make it with power, move it for profit].
Before 2021H1, Haidilao's organizational structure was relatively flat, adopting a mentoring model, which was divided into four levels: headquarters, coaches, family heads, and store managers. During this period, the focus of the company's strategy was external expansion, so the store manager was fully given the power of store expansion and operation management, and at the same time, a mechanism was developed for the master to enjoy the profit commission of the apprentices and grandchildren to enhance the store manager's motivation to expand the store.
Woodpecker Project", the company's strategic focus has changed to improve governance capabilities and operational efficiency, and the profit-driven mechanism has also changed.
The profit dividend ratio of the store manager's self-operated stores has been increased, and at the same time, it is also necessary to bear the responsibility of part of the operating losses of the apprentices' and grandchildren's stores, so as to guide the store manager (master) to focus on the improvement of the operation and profitability of his own stores. The salary structure of front-line employees has shifted from "high base salary + low bonus" to "low base salary + high bonus" in the past, and certain equity incentives will be given accordingly.
In the first half of last year, Haidilao further optimized its structure and changed the regional system divided by family to 19 districts according to regions (provinces and regions). The core of changing from the regional system to the regional coaching system lies in shortening the management radius, refining the granularity of management, and emphasizing independent and intensive cultivation of the territory.
The whole process of organizational reform seems complicated, but in fact, there are two core points:
First, the production is delivered to the household, self-financed, and those who are able work more and get more for more work.
Second, delegate power to the grassroots and believe in the wisdom of the people.
As a result, the subjective initiative of employees has been brought into full play.
In 2023, Haidilao will launch a total of more than 300 new products, most of which are regionally limited flavors, such as yellow bell pepper hot pot in Shanghai, coconut tom yum pot base in Kunming, hot pot oysters in Shenzhen, and seafood workshops in Qingdao, beef workshops in Shenzhen, and mutton workshops in Tianjin, ......These new products adapted to local conditions have effectively improved Haidilao's ability to attract customers locally.
Another example is the variety of services.
Haidilao in Qingdao's Licun business district directly went to the night market to set up stalls to sell hot pot, and the order exploded almost every day, and then this model was soon promoted to Shanghai, Zhengzhou, Xi'an and other cities across the country; In 2023, the performance economy will be hot, and Haidilao will not only open an exclusive bus shuttle service for fans, but also be responsible for providing microphones, stereos, and light sticks, and go directly to the hot pot group meal ...... after the concert
If the vitality of Haidilao is released, then the market is felt.
[Judge the situation and follow the trend].
In 2020, due to the pressure of ingredient costs, logistics costs, and rental costs, Haidilao will increase the price of some dishes after resuming business.
From a rational point of view, this choice is not difficult to understand, on the one hand, the rise in the cost of the first chain is a common problem faced by the whole society, and most catering brands will raise prices to pass on the cost; On the other hand, Haidilao has always shown people with a high brand premium in the past, and the sensitivity of target consumers is not high, so it should be acceptable.
The result was diametrically opposite, and in the end this incident even became a hot spot in society, and it was only calmed down under Haidilao's rapid self-correction.
Perhaps it was this rollover that inspired the management, Chinese society is entering the era of cost-effective consumption, and most people prefer delicious and inexpensive food to brand upgrades. Based on this perception and judgment of reality, Haidilao did not hold on to the defects, but took the initiative to integrate into the situation.
An intuitive data is the customer unit price, in the first half of 2023, the customer unit price of Haidilao has dropped to 1029 yuan, compared with 112 in the same period in 20208 yuan has dropped significantly.
On September 26 last year, Haidilao launched a sub-brand "Hi Lao Hot Pot" to further reduce the unit price of customers. For non-dinner needs on weekdays, 29$8 butter and 198 yuan clear oil two pot bottom options, both can spell tomato three fresh pot bottom (Haidilao Mandarin Duck Pot** is 88-165 yuan), small material fee 4 yuan per person (Haidilao is 8-10 yuan), the overall customer unit price is 30% lower than Haidilao to 70-80 yuan.
The birth of Hi Lao hot pot has two meanings: first, the lightweight store is an important attempt for Haidilao to get rid of the traditional single business model of large store gatherings, and open up the way for diversified development; Second, the cost-effective hot pot model actually carries the group's willingness to explore affordable catering, and the previously established first-class kitchen system is to some extent preparing for efficient and low-cost sinking.
Although the brand recognition and image are not fully mature, the business model of Hi Lao Hot Pot has been proven to be valid by the market, and the first-line research data shows that its stores turn over more than 4 times a week on average, and the turnover rate can reach 6-7 times on weekends. Considering that Xiabu Xiabu has opened hundreds of stores in third-tier cities and below by virtue of its cost-effective attributes, Hi Lao is fully capable of replicating this path and opening up imagination space in the sinking market.
Reviewing the entire self-rescue process of Haidilao, the most commendable point, and the key point for the company to turn around against the wind today, is to seek truth from facts and be down-to-earth. This may be related to Yang Lijuan's experience at the grassroots level, the management has not announced any grand words from beginning to end, but has established a general direction, long-term plan, short-term arrangement, dynamic adjustment according to the needs of the situation at any time, liberating human nature, conforming to the law, and respecting common sense.
So much for. Disclaimer of Warranties
The content of this article related to listed companies is the author's personal analysis and judgment based on the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to temporary announcements, periodic reports and official interactive platforms, etc.); The information or opinions contained herein do not constitute any investment or other business advice, and Market CapWatch disclaims any liability for any actions resulting from the adoption of this article.
end——