Haidilao's American business experience

Haidilao, a thriving hot pot chain, has recently decided to open its first US branch in Arcadia, Los Angeles in September this year, following the opening of its first overseas branch in Singapore last year. Haidilao is very popular in China, with 75 stores across the country, and its revenue in 2012 was about 3.1 billion yuan, a year-on-year increase of 54%.

In China, Haidilao has always stood out in the fiercely competitive catering industry with its thoughtful service. It can be said that many of Haidilao's special services are familiar to people. While waiting for a seat, customers can surf the Internet, play cards, and do manicures to pass the time. Children have special toys or activity areas. Customers in some stores can also fold a thousand paper cranes.

During meals, customers can order food with iPad and enjoy free snacks, If you order noodles, you will definitely be able to watch Haidilao's special "lo-mian dance", and there are often magic, face-changing and other performances. The waiters take great care of customers. They will prepare glasses cloth, rubber bands, mobile phone covers, etc. for customers to ensure that customers keep their meals clean, and change hot towels and refill drinks at any time.

Haidilao is unique among many catering counterparts in China with its meticulous and personalized service to customers. It has developed from a small-scale hot pot restaurant in Sichuan to a hot pot chain all over the country.

As for Haidilao's entry into the United States, Lei Xiaoshan, managing director of Shanghai China Market Research Group, said that Haidilao's entry into overseas markets is expected to be like Benihana's promotion of Japanese cuisine to the United States in the 1980s. to the continental United States.

In the U.S. market, Yum Brands Inc. has opened 12 stores in the U.S. after acquiring the hot pot chain Little Sheep, plus 50% of Arcadia’s population is Asian, it can be said that undersea Loo already has a certain customer base in the United States, and will not encounter the risk of no customer base. Moreover, Zhang Yong, CEO of Haidilao, said that the best thing about Americans is that they are extremely curious. Haidilao can attract the attention and curiosity of American customers with its special service and reputation in China.

Although Haidilao has rich experience in market expansion, due to the huge differences between China and the United States, Haidilao will still encounter many challenges in entering the United States. The first is the high cost of the United States, including catering labor costs, raw material imports, etc. The high labor costs are particularly prominent for a service-oriented company like Haidilao. However, Haidilao has long foreseen this challenge, and said that it has prepared for losses in the early stage, expecting at least two to two and a half years of profit expectations, and does not plan to expand on a large scale in the United States, because they entered the United States this time. Designed to gain a deeper understanding of the market.

In addition, Haidilao will face various differences between China and the United States, but they seem to be ready to adjust. In terms of menu settings, Tao Yiting, head of Haidilao media, said that Haidilao's direct-sale stores in the United States will be innovative in business ideas. Although they still focus on hot pot, the menu settings will be repositioned, including the cancellation of some North American consumption. Organ meat products that are unacceptable to consumers, change the taste of the bottom of the pot, etc. In terms of dining methods, CEO Zhang Yong said that he will provide American customers with single-use pots instead of large pots used by Chinese, because Westerners pay more attention to diners' personalized choices and hygiene and safety. Specialties may not always be available, and manicures at restaurants are unlikely to be approved by U.S. food safety regulators. However, Haidilao, which has always been creative, may design other unexpected special services according to the characteristics of the American market.

At the same time, Haidilao continues to use the Internet in the Chinese market, and plans to design a private online dining room with two huge flat-screen monitors. This kind of private room is specially designed for business people. Customers can chat on Skype while eating hot pot. In this way, customers can conduct business meetings across regions.

However, Haidilao also has a fundamental difference to consider. Haidilao takes "customer first" as its purpose and is very popular. However, the European and American catering industry pays more attention to moderate service, and Americans pay more attention to personal privacy and social distance. Therefore, Haidilao waiters gossip with customers while helping customers get food. Homely, hot towels and beverages are constantly exchanged during the meal. The considerate and attentive services in the eyes of the Chinese may be too enthusiastic in the eyes of Americans, that is to say, the special services may not be applicable in the American market.

Finally, there is the issue of price positioning. Haidilao sets the per capita consumption in the US market at 40-50 US dollars, focusing on the mid-to-high-end market. Li Zijie, director of the Department of Management of the International Business School of the University of International Business and Economics, said that more than 80% of the general Chinese catering consumers overseas are Chinese, and the per capita consumption is about 20-30 US dollars, mainly in the low-end market. Therefore, the disparity in consumer prices is also a crucial test.

Despite facing multiple challenges, it remains to be seen whether Haidilao can make a big difference in overseas markets with its unique management and business strategy. More importantly, at a time when most Chinese companies entering overseas markets are focused on energy and manufacturing, can Haidilao's overseas expansion open the door for Chinese consumer companies to expand overseas?