On the evening of March 23, "hot pot giant" Haidilao released its 2021 performance report.

Screenshot of Haidilao's 2021 performance report

The report shows that in 2021, Haidilao realized a revenue of 41.11 billion yuan, an increase of 43.7% compared to 2020; a loss of 4.16 billion yuan, which is the first time that Haidilao has suffered a loss since it was listed in September 2018.2018-2020 profits for the same period were 1.64 billion yuan, 2.34 billion yuan, and 309 million yuan respectively. billion yuan, and 309 million yuan.

Misjudged the trend, expansion failure

Haidilao's "turn a profit into a loss" reason "in addition to the impact of the epidemic, but also can not be separated from the impact of the rapid expansion in the past two years and internal management problems on its operations. " An industry insider said.

Once the capital market to measure the growth prospects of food and beverage companies an important indicator, is its ability to quickly and sustained expansion. But in this regard, Haidilao made a wrong demonstration. Zhang Yong, founder of Haidilao, once said at a communication meeting in 2021, "I was wrong about the trend, last year (2020) in June I further made plans to expand stores, and now I see that it is indeed blind faith."

The data show that in 2021, Haidilao opened 421 new stores, at the same time, closed 276 stores, equivalent to a net increase of 145 new stores. From the effect of expansion, Haidilao obviously underestimated the uncertainty of the epidemic to the impact of store operations, but also overestimated the consumers, especially the sinking market consumers in the epidemic under the spending power. Expansion not only failed to make Haidilao "bottoming out" success, but fell into the quagmire of "increasing revenue without increasing profits". And due to the 2021 store closure plan to dispose of long-term assets, one-time losses, impairment losses, and management to take a prudent approach to the provision of impairment losses of more than 3.65 billion yuan.

In addition to the loss due to "expansion failure", the turnover rate and per capita consumption of Haidilao declined in 2021.

The performance report shows that in 2021, the turnover rate of Haidilao is 3 times / day, this figure, the lowest point in the listing of Haidilao. 2018-2020, the average turnover rate of Haidilao is 5 times / day, 4.8 times / day, and 3.5 times / day, respectively.

In 2021, Haidilao's per capita spending, on the other hand, was 104.7 yuan, while in 2019 and 2020, it was 105.2 yuan and 110.1 yuan, respectively.

As for the business performance in 2021, Haidilao said that 2021 is a challenging year, in terms of the external environment, the new coronavirus outbreak is recurring, and there are still many uncertainties in the future. Data from the National Bureau of Statistics shows that in 2021, the national catering revenue of 46,895 billion yuan, compared with the previous year, turned from negative to positive growth of 18.6%, a two-year average decline of 0.5%, has not yet recovered to the level of 2019 before the epidemic.

Nevertheless, in terms of the number of stores, Haidilao is still in the "leader" position in Chinese catering. Data show that as of December 31, 2021, Haidilao global store number reached 1,443, of which 1,329 are located in mainland China, 114 are located in Hong Kong, Macao, Taiwan and other 11 countries.

In terms of internal governance, Haidilao believes that its rapid expansion strategy over the past two years has led to a rapid expansion of the company's volume and increased management difficulties. To this end, in November 2021, Haidilao launched the "Woodpecker Plan", adopting initiatives such as shutting down some stores, advancing and polishing the store management system, rebuilding and strengthening functional departments, as well as emphasizing the corporate culture and improving employee training.

On March 1, 2022, Haidilao announced the appointment of its management team. Yang Lijuan, the 43-year-old deputy CEO and COO, was reassigned to the position of chief executive officer, responsible for overseeing the group's management and strategic development, as well as continuing to be in charge of the implementation and advancement of the "Woodpecker Plan".

"Woodpecker Plan" effect is beginning to show

In the store management system, Haidilao "Woodpecker Plan" proposed to restore the large area management system, at present, Haidilao **** has 15 regional managers are responsible for the operation of stores in various regions at home and abroad, and are responsible for coordinating the expansion of stores in the jurisdiction area, engineering, pricing, store ratings, etc. The regional managers have a family head responsible for the operation of stores at home and abroad. Under the regional manager, there is a family head responsible for the stores under his jurisdiction, and the original district manager position and the family head position are merged. In addition to shouldering the responsibility of selecting and training the store manager and transmitting the corporate culture, the family head is also responsible for supervising and guiding the management and operation of the stores within the family.

For the establishment of talent echelon, Haijilao said in the organizational restructuring, the duties of each position and incentive system has been sorted out for the development of employees to provide a clear and clear guidance, based on the master-apprentice system to clarify the front-line service team, stores, the family and other members of the system's responsibilities and obligations. Meanwhile, in terms of strengthening the functional departments, each functional department has sorted out their respective job descriptions and scope of responsibilities, and negotiated with the head of the family and the store manager on the measures to be taken, thus generating synergistic effects at the front and back ends. According to Haitong Securities research report, the effectiveness of the strategic contraction of the sea salvage has begun to show, 12M21, 1M22 turnover rate continued to improve, 2M22 turnover rate increased significantly.

Morgan Stanley also pointed out that, compared with November and December 2021, Haidilao stores in January and February this year, the operating conditions continue to improve, attributable to the "woodpecker program" brought about by the consolidation of stores and operational efficiency improvements. The recent executive appointments reflect Hai Di Lao's further efforts to continuously improve operational efficiency through the monitoring and supervision of store operations by experienced management.

Actively exploring multi-brand operation

The greatest competitiveness of a catering company comes from the quality of its food products, and starting from New Year's Day 2022, Hai Di Lao has changed its previous practice of launching new products in a piecemeal manner in single stores, and gradually expanding to the whole country from the whole country and the region, and has promoted the launching of new products in the whole country and region, with all-around innovations in terms of pot bases, dishes, snacks, and experience, etc., and has maintained a national biannual launch program. The new product is launched from the national and regional dual system to promote product renewal from the pot base, dishes, snacks and experience and other innovations. It can be seen as one of the ways to seek change and change the operation of the unmet expectations.

Secondly, in order to attract young customers, in 2021, Haidilao also put forward the concept of "everything can be Haidilao", launched a series of lipstick, earrings, toys and other peripheral products. This method of play is apparent "circle powder" young people. 2022 March 20, Haidilao held the third Haidilao powder festival, announced that the number of online registered members of more than 100 million.

In order to cover a wider range of consumer groups and meet different catering needs, Haidilao is also actively exploring multi-brand operation. As of December 31, 2021, in addition to Haidilao's restaurants, the Company also owns a number of self-operated restaurants with brand names including, but not limited to, Hanshe Chinese Cuisine, Eighteen Boil Noodle House, Gokguk Sanjian, and Miaoli Fried Chicken.