The hotpot economy is booming, with Haidilao's table turnover rate approaching 4 in 2023!

According to the information from Zhitong Finance APP, on March 26, Haidilao International Holdings Limited (06862) (hereinafter referred to as "Haidilao") released its 2023 annual performance report. The announcement shows that as of December 31, 2023, Haidilao's total revenue was RMB 41.453 billion, an increase of 33.6% year-on-year. The net profit for the year was RMB 4.495 billion, an increase of approximately 174.6% year-on-year.

Due to the recovery of the overall consumption environment and the increase in the number of consumers dining out, Haidilao's restaurant turnover rate has significantly increased. In 2023, the overall turnover rate of Haidilao restaurants was 3.8 times per day, a year-on-year increase of 26.7%. The turnover rate of 950 same-store restaurants was 3.9 times per day, an increase of about 30%.

In 2023, Haidilao slowed down the expansion speed of its restaurant network. The annual report data shows that as of December 31, 2023, Haidilao operated a total of 1374 stores in Greater China. Among them, there were 232 stores in first-tier cities, 538 stores in second-tier cities, 581 stores in third-tier and below cities, and 23 stores in the Hong Kong, Macao, and Taiwan region. Haidilao stated that its primary goal in 2023 is to improve the profitability and operational efficiency of its operating stores.

Due to the increase in net cash flows from operating activities, Haidilao's cash and cash equivalents increased from RMB 6.3 billion as of December 31, 2022, to RMB 6.48 billion as of December 31, 2023. In addition, Haidilao also holds RMB 2.85 billion in time deposits.

Consumption recovery, Haidilao received nearly 400 million customers throughout the year

2023 was a "year of consumption boost", and the hotpot economy also "boiled" in that year. The latest data released by the National Bureau of Statistics shows that in 2023, the national catering revenue was RMB 5.289 trillion, a year-on-year increase of 20.4%, reaching a historical high; the revenue of catering enterprises above designated size was RMB 1.356 trillion, a year-on-year increase of 20.9%.

The strong promotion of consumption policies and the continuous recovery of the tourism market are driving the rapid recovery of the catering market. Haidilao experienced dining peaks during several holidays in 2023. During holidays such as May 1st, Dragon Boat Festival, Mid-Autumn Festival, and National Day, the flow of customers increased significantly year-on-year, especially in popular tourist cities.

Financial data shows that Haidilao restaurants received nearly 400 million customers throughout the year, an increase of 43.7% compared to the previous year.

Popular tourist cities attract tourists from all over the country, and "culinary tourism" has become a new driving force for cultural and tourism consumption. Haidilao has explored regional personalized development by launching many regional landmark specialty foods, such as Henan stores offering spicy soup, Wuhan introducing hot dry noodles, Chengdu presenting pea noodles, etc. City-specific limited edition items like Shanghai's yellow lantern pepper hotpot and Kunming's oyster hotpot also showcase regional characteristics.

The annual report data shows that in terms of product innovation, Haidilao launched 29 new nationwide products in 2023 and upgraded 13 nationwide dishes. Over 300 local dishes were newly developed or optimized, including over 30 specialty soup bases such as Sichuan clear oil and spicy hotpot, colorful potatoes, and a platter of all beef slices that have a high order rate In product development, Haidilao insists on putting customer needs at the center and co-creating delicious food with consumers. Data shows that in 2023, Haidilao's spring and summer new product tasting events were held in 78 stores across 28 cities in 19 provinces, receiving tens of thousands of valid customer suggestions. In addition, Haidilao has integrated the co-creation concept into its supplier management system. It is understood that in 2023, Haidilao upgraded its supplier management mode, with its product management department collecting new product development directions from consumers, regional managers, frontline employees, and inviting suppliers to participate in product submission, jointly conducting product research and upgrades, effectively leveraging the advantages of integrated supplier research and production.

New business formats create new vitality, diversified dining experiences enhance customer satisfaction

Currently, the upgrading of catering consumption is accelerating, and companies are focusing on meeting new consumer demands and creating diversified dining experiences. The "2023 China Catering Consumption Trend Report" shows that satiety and taste are no longer the only demands of the new generation of diners, and dining + experience will better satisfy consumers. In 2023, Haidilao focused on customer needs, tried new business formats, incubated new brands, and created new services to meet current consumer demands in terms of dining scenes, product types, service experiences, and more.

In September 2023, Haidilao's first camping hot pot restaurant officially opened in Shanghai, where consumers can not only enjoy Haidilao's classic hot pot dishes but also engage in fishing, karaoke, team building, and relaxation. As a brand beloved by college students, Haidilao launched its first campus hot pot restaurant in Xi'an in October 2023, offering special menus and exclusive prices to get "closer" to the college student community. As of March 26, 2024, there are 20 operating Haidilao campus hot pot restaurants. New business formats such as night market stalls and starry bubble houses have attracted many young consumers, while themed stores like Beef Workshop, Seafood Workshop, and Lamb Workshop provide consumers with more regionally distinctive dining experiences in new forms.

In addition to new business formats, Haidilao has also enriched its brand matrix. The annual report shows that in 2023, Haidilao established an Innovation and Entrepreneurship Office at the headquarters level to adjust the strategic planning of entrepreneurial brands. In addition to the main brand, Haidilao has also incubated brands such as Hailao Hot Pot, Miaoshixiong Fragrant Pot, Wugu Sancan, Yanqing Barbecue Shop, and Hanshe, realizing multiple operating formats including hot pot, fast food, barbecue, and Chinese-style meals.

"We insist on putting customers at the center, creating products based on customer needs, and providing customers with diversified dining experiences," Haidilao stated in the annual report. According to the annual report data, Haidilao's revenue mainly comes from Haidilao restaurants, but the proportion of revenue from other restaurants increased from 0.5% in 2022 to 0.9% in 2023.

In addition to providing excellent store services, Haidilao continues to explore various ways to reach customers. In 2023, the company expanded its Haidilao delivery services beyond traditional hot pot takeout to include Haidilao Delivery Happy Banquet and Haidilao Rice Hot Pot dishes, providing customized banquet services and premium single-serving fast food, implementing layered operations for users, allowing customers to enjoy Haidilao anytime, anywhere. In addition, Haidilao Delivery actively explores innovative service scenarios such as snowfield stores and amusement park stores To enhance customer satisfaction, Haidilao has reinstated the mystery guest system. The annual report data shows that in 2023, Haidilao invited nearly 40,000 consumers to evaluate its nationwide stores. The reports from the mystery guests' inspections are publicly disclosed internally, and the scores are included in the quarterly store evaluation system. In addition, Haidilao's store manager group meetings were opened to the public for the first time in 2023, inviting over 600 senior members to engage in face-to-face communication with the senior management, achieving timely grasp and response to customer feedback.

Behind the Scenes of Going Viral: Bottom-up Innovation Vitality

In 2023, Haidilao unleashed a strong wave of innovation from the inside out, with fancy services blooming across the country, receiving praise from consumers and creating many "viral scenes," such as providing buses for customers after concerts and assisting with driving tests.

Haidilao emphasized in the announcement that the above cases were all spontaneously organized by frontline stores, showcasing the excellent qualities of enthusiasm, innovation, and kindness among Haidilao employees. These activities not only increased brand exposure and brought significant traffic value to the company in the internet era but also deeply rooted the concept of "customer-centricity" and bringing happiness to customers.

It is understood that Haidilao, based on the management concept of "linking interests and locking management," implements a low base salary and high bonus compensation system for management personnel, and adopts a piece-rate wage system for other employees, advocating the concept of more work, more pay.

"Under an effective incentive system, our employees can promptly and accurately understand customer needs and provide feedback, creating good service innovation cases. Based on this, we have opened up learning and sharing channels within the company, encouraging healthy competition at the regional and store levels, allowing excellent service innovation cases to quickly spread to all Haidilao restaurants." Haidilao stated in the announcement.

Zhou Zhaocheng, Vice Chairman of the Haidilao Board of Directors, stated that in the past year, Haidilao focused on customer satisfaction, meeting consumers' more diverse consumption needs through new formats and brands. By using new technologies to improve store operational efficiency and enhance lean management levels. In 2024, as Haidilao celebrates its 30th anniversary, we will also open up franchising and explore new business models in that year. Business development needs to be "renewed," and customer service needs to be "heartfelt." We will adhere to the development concept of "focusing on employees with one hand and focusing on customers with the other," to bring customers a more comprehensive and delicate dining experience