Haidilao: Still Trapped In The Hidden Trouble Of Store Expansion And Management

On July 26, Haidilao catering Co., Ltd. (hereinafter referred to as "Haidilao", 06862. HK) announced its expected mid-term performance in 2021. According to the announcement, the company's net profit in the first half of the year was about 80 million yuan to 100 million yuan, and the net loss was about 965 million yuan in the same period last year. In the first half of 2021, the revenue was about 20 billion yuan, which was about 9.8 billion yuan in the same period last year, an increase of 104%. The company said, "compared with the first half of 2020, the company turned from loss to profit in the first half of this year, but such performance did not meet the company's management expectations."

CICC pointed out that "Haidilao's profit is lower than the market and our expectation." This is mainly due to the fact that the turnaround rate is lower than expected, the climbing period of the new store is lengthened, the start-up expenses are incurred, the domestic epidemic situation is repeated, and the staff cost is rising in a short time.

Tan ye, a senior observer of the catering industry, said in an interview with the 21st century economic reporter that the domestic hot pot industry may enter the stock market, with the turnover rate basically stagnating or even falling“ However, there is no hot pot brand to occupy Haidilao's space. As a listed company, the market value of Haidilao is nearly 500 billion yuan in the peak period. The capital has higher expectation on its performance, and the corporate governance will be affected by market fluctuation to a certain extent. "

It is worth noting that in addition to the problems caused by the expansion of new stores, Haidilao said, "the internal management and operation of the company need to be corrected and improved." Previously, Haidilao chairman Zhang Yong at the investor exchange meeting also attributed the most important reason for the company's performance decline to internal management issues.

From the point of view of his "apprenticeship system", Tan Ye believes that "master apprenticeship" is an important reason for Haidilao to successfully enter the market and realize rapid expansion. If it is difficult to realize new interests by opening new stores, then the corresponding profit distribution mechanism is out of the question. In the past, the more stores opened in the past, the revenue can be improved, but the income of new stores opened at present may not meet the expectation, and even there is the risk of revenue decline. "

By the end of 2020, Haidilao stores will reach 1298. People's vision

Fast expansion of stores

In the incremental market stage, how to quickly reach consumers and open channels is the core of industry competition. From this point of view, Haidilao's expansion development is reasonable, and its quality is also in the forefront of the industry. According to the data of prospective industry research institute, from 2013 to 2018, the market scale of domestic hotpot industry showed a year-on-year growth trend, with an average annual compound growth rate of 11.34%.

According to Guoxin Securities Disclosure, in the first quarter of this year, Haidilao opened 170 to 200 new stores. By the end of 2020, its stores have reached 1298. From 2017 to 2020, Haidilao has added 99, 193, 302 and 530 stores each year, that is, it has expanded at an annual growth rate of about 60% to 70%.

"In the past, Haidilao was a unique branch, and many brands launched an impact on it, such as Banu hot pot in Zhengzhou, Henan Province." Tan Ye pointed out that although the unit price of banuke is higher than Haidilao, its store opening speed is not as fast as Haidilao, and it is difficult to compete with the latter in terms of market share.

"But the growth bottleneck it faces is not as obvious as undersea fishing." Tan Ye added that there are many players in the hot pot market, and they are basically facing the dilemma of performance growth. After rapid growth in recent years, Tan ye said, "the hot pot industry has gradually approached the category ceiling since last year."

While observing the average growth rate of domestic hotpot industry, the declining trend of growth rate is also worthy of attention. According to the data of prospective industry research institute, the growth rate of hotpot industry dropped from 12.19% to 10.29% between 2015 and 2017.

At present, there is no market scale data of hotpot industry in 2020 in terms of public information, but some deduction can be made through the industry income trend. According to the statistics of China Hotel Association, the total revenue of domestic hotpot industry will reach 960 billion yuan in 2019, with a year-on-year growth of 9.63%. It is estimated that the industry's income will drop to about 888 billion yuan in 2020. However, if the epidemic situation and other factors are excluded, the forecast will only reach about 1 trillion yuan in 2020, with an increase of about 4%.

"The turnover rate of the whole industry is basically stagnant, and some are even declining." As a leader in the industry, Haidilao may have foreseen the development trend of the industry, and started to incubate other brands from last year, trying to promote category innovation. The company has lowered the incubation authority to various regions, and the managers of Haidilao stores are basically responsible for the incubation. The products involve potato flour, rice noodles, dumplings, etc“ But after this year, we have not really made a competitive brand or product. " Tan Ye pointed out after investigation that "in terms of diversified category development, Zhengzhou is a region with more new brands incubated by Haidilao. However, since June this year, some of the original shops have begun to be transferred, and some well decorated ones have basically given up business. Haidilao's incubation strategy should be adjusted. The company may have to gather resources and focus on its main business. "

Main business focus: management first?

It is worth noting that in addition to the problems caused by the expansion of new stores, the company also realizes the hidden dangers in the management mechanism. In summing up the reasons for the lower than expected performance growth, the announcement said, "the company's internal management and operation need to be corrected and improved." Earlier, Zhang Yong said at the investor exchange meeting that "the most important reason for the decline in Haidilao's performance is internal management problems, which are embodied in institutionalized management, process operation, tracking supervision and data-based assessment." Zhang Yong also said frankly that there are difficulties in the governance of the above aspects.

However, in terms of continued expansion and management adjustment, Zhang Yong said, "if we can get through this time and integrate these stores well, similar difficulties will happen in the future. Because after the integration of more than 1000 stores, we will continue to expand, and we will not make major adjustments in management because of the current situation. "

Specifically, apprenticeship is an important reason for Haidilao to successfully enter the market and realize rapid expansion. Tan Ye further explained that "the Senior store manager guides the Deputy store manager or reserve store manager, which is a little similar to the distribution mechanism. If the trained person opens a new store, his or her master will also enjoy the income of the new store. This management skill and benefit distribution mechanism are different from the competitors in the same industry and have certain advantages."

However, management is to ask for internal benefits. There is a contradiction between standardized management and apprenticeship management. The "mentoring" mechanism of apprenticeship can add benefits and emotional factors, instead of relying on the system to promote development. Tan Ye believes that "if it is difficult to achieve new interests by opening new stores, then the corresponding profit distribution mechanism is out of the question. In the past, the more stores opened in the past, the revenue can be improved, but the income of new stores opened at present may not meet the expectation, and even there is the risk of revenue decline. "

In addition, from the domestic catering industry as a whole, under the trend of hot pot industry entering the stock market, the fast food category has been widely concerned by capital. Tan Ye pointed out that "hotpot is the first major category in the catering industry, and fast food is the second category. However, with the declining trend of disposable income, the number of low and medium-sized customers' unit price is rising rapidly, while the hot pot belongs to the high middle customer price, and the overall customer price of fast food is far lower than that of hot pot."

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