May Day is a holiday for workers. As one of the countless migrant workers, I believe everyone is curious about what it takes to go from a grassroots migrant worker to the helm of an enterprise, what hurdles to cross, and how long it takes. To this end, "City Boundary" specially launched the "Best Workers" feature during the May Day holiday, witnessing their business stories with you, this is the third article, which tells the story of Haidilao CEO Yang Lijuan who was ordered to rectify Haidilao in a big way and let the company regain its upward momentum.
Haidilao CEO Yang Lijuan, after taking office for one year, handed over a satisfactory performance answer, and he has become the envy of everyone because of his rich returns.
On April 26, Haidilao announced its latest annual report: in 2023, Haidilao's revenue will increase by 33.6% to 41.45 billion yuan, and its net profit will increase by 174.8% to 4.5 billion yuan. Yang Lijuan, who holds 3.68% of the shares, will receive a one-time dividend of 149 million yuan, and at the same time, she will also receive an annual salary of nearly 15 million yuan in 2023.
Previously, due to the radical judgment of boss Daniel Zhang, Haidilao suffered a huge loss of more than 4 billion yuan in 2021. In a critical situation, Yang Lijuan was ordered to take over the stall and quickly started the "internal rectification" of Haidilao.
From 2021 to 2023, 358 poorly managed Haidilao restaurants announced their closures, which dragged down the company. At the same time, Yang Lijuan encouraged employees to use all available means to solicit customers in the store, such as free buses for concerts, stalls in night markets, and more than 300 dishes updated in a year......
In the face of budget-conscious consumers, Haidilao is also trying to retain consumers with cheaper prices, with overall per capita consumption falling from 110.1 yuan in 2020 to 99.1 yuan in 2023, reaching the lowest level in nearly seven years.
01, the "fire captain" was ordered in danger
2020 is a dormant moment for many catering people. It is the wisest choice to reduce all expenses to survive.
Haidilao is an outlier. Boss Daniel Zhang applied Buffett's idea of "others are afraid of me and greedy", believing that this is a good opportunity to buck the trend and buy the bottom, not only did not recuperate, but opened stores on a large scale. According to the financial report, in 2018, the number of Haidilao stores worldwide was only 466, and in 2021, it will soar to 1,443. There were 977 more stores in three years, more than double the total number of stores opened in the previous 20 years.
Opening a store means a corresponding investment in rent, utilities, raw materials, manpower, etc., and due to the sparse customer flow - according to official data, from March to May 2022, the company suspended dine-in dining in an average of more than 200 stores every day, and all expenses were wasted, and the damage to profits can be imagined. In 2020, Haidilao's net profit shrank from 2.3 billion to 300 million. In 2021, Haidilao suffered its first loss since its listing, with a huge loss of 4.16 billion yuan, almost losing all the profits earned in the previous three years.
After learning from the pain, Haidilao launched the "Woodpecker Plan" with the main purpose of closing stores, and appointed Yang Lijuan as CEO on March 1, 2022, as the executor of the plan, which is equivalent to Haidilao's firefighting captain.
Yang Lijuan calculated and screened one by one through the three dimensions of external customer flow, surrounding store density and financial data, and under her drastic reform, 276 Haidilao restaurants were closed in 2021, 50 in 2022, and 32 in 2023.
After the closure of the store, a large number of related costs disappeared from the books. According to the statistics of "City Boundary", in 2022 alone, rent, water and electricity, raw materials, and depreciation expenses will save more than 5.4 billion yuan a year. As the number of restaurants decreases, so does the number of employees. Within a year, Haidilao reduced its number of employees from 146584 to 107592, which caused employee costs to plummet by another 3.7 billion yuan.
In the second half of 2022, catering consumption picked up, and Haidilao launched the "Hard Bone Plan" to restart picking up customers from some stores that had entered the cold palace. In 2022, 48 previously closed restaurants reopened, and in 2023, 26 more.
At this point, the pace of Haidilao's blind expansion has completely changed its style under the leadership of Yang Lijuan and has become cautious.
On the one hand, it is internal cost reduction, and on the other hand, Haidilao has taken the word "fishing" to the extreme. The company brought fans who watched the concert to the store to eat hot pot, and tried to launch shopping mall tasting, summer supper, camping hot pot, campus hot pot and other dining methods, trying to penetrate into all aspects of young people's consumption scenes.
In November 2023, Haidilao employees interacted with customers in the form of a "subject three" dance, and the video received more than 60 million likes and more than 5 billion views on the Douyin platform, attracting a large wave of traffic to the company.
Under a series of moves, Haidilao's revenue and profit will not only rise sharply in 2023, but also the turnover rate, which best reflects the prosperity of the catering business, will also increase from 3 times per day in 2021 and 2022 to 3.8 times per day in 2023.
Corresponding to the lower prices, from the region, the sinking market of third-tier cities and below has become a new nugget for Haidilao.
By the end of 2023, there are a total of 1,374 Haidilao stores, with 232 stores in first-tier, second-tier, and third-tier cities in addition to 23 stores in Hong Kong, Macao and Taiwan, with the annual revenue contribution of first-tier cities being only 18.3%, while the revenue contribution of second-tier cities, third-tier cities and below is close to 40%.
Some catering people pointed out that Yang Lijuan's process of saving Haidilao actually follows the most basic and simple logic, reducing costs, reducing prices, and increasing passenger flow. Although the method is simple and crude, the result is the most effective. This is inseparable from her grassroots experience.
02. Daniel Zhang is assured, and employees are convinced
In the restaurant industry, Yang Lijuan's story is quite inspiring. She is known as the most bullish waiter and the big apprentice brought out by Daniel Zhang. Born in 1978, she is now 46 years old, and only had a primary school diploma at first, but she has taken a path from a waitress to a CEO with an annual salary of 10 million. The premise is that she has dedicated 29 years to Haidilao.
In 1994, the first Haidilao hot pot restaurant in China was officially opened in Jianyang, Sichuan. At that time, Yang Lijuan was only 16 years old, which was the age to learn knowledge, but because she had to help her brother pay off her debts, she was forced to drop out of school and work as a waiter in a restaurant in Jianyang City. Without the visit of Haidilao founder Daniel Zhang, Yang Lijuan's future life is likely to be fixed in that track full of ordinary and poor colors.
Daniel Zhang noticed that although Yang Lijuan was not old, he worked neatly and was smart, and during the casual chat, he learned that Yang Lijuan's monthly salary was only 120 yuan, so he offered a higher figure of 160 yuan. Yang Lijuan did not agree immediately, and the following year, the hotel owner wanted to leave Jianyang to go to other places, so Yang Lijuan did not continue to work, and instead joined Haidilao as a waiter, that year, she was 17 years old.
The family's debt has not been alleviated because of her higher salary of 20 yuan, but the creditor's door-to-door debt collection has made the situation worse. Once, Yang Lijuan cried urgently for an urgent debt of 800 yuan, Daniel Zhang used the company's money to help her solve this matter, and at the end of that year, the funds were still issued, not less than Yang Lijuan's dime, Yang Lijuan immediately made up her mind, "From now on, Haidilao is my home."
Since then, Yang Lijuan has completed the transformation from a grassroots waiter, foreman, and store manager. In 1998, Daniel Zhang gave her an important task to open a store in Xi'an.
There is a big difference between the south and the north in terms of food tastes and service methods. In a different place, and it is the first store in a different place, this is a big challenge for Yang Lijuan. She taught herself how to type and use the computer system to run the store, put up small advertisements on telephone poles and pull people on the street to increase customer flow, and worked with her colleagues to develop a spicy pot base with clear oil to adapt to the taste of the locals, so that Haidilao could gain a firm foothold in the Xi'an market and take the first step towards opening up to the whole country, and also allowed Yang Lijuan to truly advance to the status of a manager.
Often, executives who rise from the grassroots level have a common characteristic, pragmatism. Rather than pragmatism, which is good at talking on paper, the pragmatist management style focuses more on results than forms. Yang Lijuan is such a role, Daniel Zhang is at ease with her, and the employees are also very convinced of her. In an interview with a Chinese entrepreneur, a veteran employee once described it this way, "Sister Yang's appeal and prestige have been precipitated bit by bit over the past 20 years. Basically, there is no one who can compare. ”
In 2018, Haidilao went public, and it was none other than Yang Lijuan who rang the bell with Daniel Zhang. At the age of 39, she appeared in the prospectus as the chief operating officer. According to the market value of 94.4 billion Hong Kong dollars at the close of Haidilao on the same day, the value of Yang Lijuan's shares is about 3.4 billion Hong Kong dollars (about 3 billion yuan).
▲ (Left: Daniel Zhang, right: Yang Lijuan)
In 2020, Yang Lijuan ranked 451st in the "2020 Hengchang Burnt Fang Hurun Report" with a wealth of 12.5 billion yuan. On March 1, 2022, an important personnel appointment of Haidilao shook the catering industry, and Yang Lijuan replaced Haidilao founder Daniel Zhang as CEO. In the introduction of senior management in the annual report of the same year, Yang Lijuan's position jumped to second place, ranking behind Daniel Zhang, and the annual salary was 7.535 million yuan, an increase of 960,000 yuan from the previous year.
According to the 2023 annual report released on April 26, Yang Lijuan's salary has doubled to 14.978 million yuan. This is not the end, based on the group's operation in 2023, Haidilao intends to pay a cash dividend of HK$0.824 per share (equivalent to RMB 0.748), with a total dividend of about RMB 4.05 billion. Yang Lijuan holds 3.22% of the equity, and also holds 0.46% of the equity through the trust beneficiary, a total of 3.68%, based on this calculation, Yang Lijuan can share 149 million yuan in cash dividends.
03, in the future, it will depend on young people to break through
In more than a year, Yang Lijuan briefly saved Haidilao. However, at present, the shadow brought to Haidilao by the expansion mistake has not completely dissipated. The company's share price hovered below HK$20, less than a quarter of 2021, and the company's market capitalization reached more than HK$400 billion at its peak, and now it is only about HK$100 billion.
▲ (Haidilao stock price chart.) Source/Straight Flush)
In 2023, although it has achieved a turnover rate of 3.8 times/day in desperate solicitation, there is still a gap from the "4 times/day" goal mentioned by Yang Lijuan, let alone return to the level of 5 times/day in 2018.
The premise for the company to earn a net profit of 4.5 billion yuan in 2023 is that the revenue will reach 41.45 billion yuan, and it will be able to achieve the average profit margin of 10% on the hot pot track by squeezing costs.
Regarding the phenomenon of increasing revenue but not increasing profits, Daniel Zhang once responded at a performance communication meeting that the catering industry is not like Internet companies, the larger the business scope, the lower the cost. "Our catering company makes money by opening two stores, and we may lose money by opening three stores. It's good to open more stores to increase revenue, and it's even more likely that there won't even be an increase in revenue. ”
A person who focuses on the field of consumer investment also told "City Boundary" that catering is an anti-scale business, and rent and labor are rigid expenses, which will not decrease with the increase in the number of stores. Often, with the increase in the difficulty of store management, the soaring cost, and the increase in revenue but not profit, problems such as listed catering companies come one after another. "The more you expand, the shorter your life expectancy becomes, which seems to be the fate that the catering industry can't escape. ”
It can also be seen from Haidilao's financial reports over the years that once its stores expand significantly, net profit will show a cliff-like reverse decline, or even negative growth. This dilemma has blocked Haidilao's way to increase income by expanding in disguise.
To this end, about one year after Yang Lijuan took office, Haidilao suddenly announced the implementation of the franchise model, which attracted widespread attention.
On the page of submitting the franchise application, it can be seen that Haidilao's franchise fee is really expensive, and the minimum asset set for the questionnaire of the intention to join is 10 million.
Many voices believe that the real intention of Haidilao's opening up to franchise is to pass on the operating costs to franchisees. "There are two major problems behind this, one is that Haidilao's earning ability has touched the ceiling, and the other is that new categories of hot pot are frequently emerging, and the competition is fierce, and Haidilao is in a hurry. The above-mentioned consumer investor said.
But he also said that once the franchise is opened, it is unknown whether the franchised stores can maintain the core competitive advantage of good service and how to do the performance incentive system for franchisees. He also said, "It is an indisputable fact that the premium of Haidilao's service is gradually failing and the brand is aging." ”
A survey by Sanlian Life Weekly corroborates this idea. In the 18,000-person vote launched by the media on "why don't people like to eat Haidilao", more than 8,000 people voted for "small portion, low cost performance", more than 6,000 people voted for "the taste is average, there are so many hot pot restaurants, it is not necessary", and nearly 1,000 people voted for "the service is too thorough, and the social fear refuses".
Haidilao has never given up on the exploration of the second growth curve. According to incomplete statistics, in recent years, Haidilao has launched no less than 10 sub-brands through acquisition and self-incubation, with a variety of categories, including Hi Lao Hot Pot, Eighteen Boils Beijing Flavor Lo Mein, Qiao Qiao's Noodles, Meng Xiaojiang Rice Noodles, Luo Sister-in-law Dumplings, Five Grains and Three Meals, Miao Senior Brother Xiang Pot, Flame Please Barbecue Shop and so on. But some brands are just a flash in the pan, and the rest don't make much of a splash. In 2023, the revenue from "other restaurant operations" will only account for 0.9%, less than the 2.5% of the food delivery business.
Looking ahead, Haidilao has summarized its development measures into three parts: first, to continue to improve Haidilao's dining experience, second, to continue to explore diversified business strategies, such as brand mining and franchise business exploration, and third, to strategically seek to acquire high-quality assets. Such a strategy is stable for Yang Lijuan, who has just brought back the blood of Haidilao. However, there is also a lack of imagination.
In March 2022, Yang Lijuan was promoted at the same time as Li Yu and Wang Jinping, two post-80s executives, the former as the chief operating officer of Haidilao Chinese mainland, and the latter as the chief operating officer of Hong Kong, Macao, Taiwan and overseas. The company's management team is getting younger and younger, which is closely related to the "succession plan" drawn up by Haidilao in April 2020. In the plan, Daniel Zhang decided to retire in 10 to 15 years, and Haidilao should establish a point system for the selection of successors. Daniel Zhang and Yang Lijuan and others will find out the group with the highest points, observe them for a long time, and select the best.
Yang Lijuan took over Daniel Zhang's baton qualifiedly, and the next road may depend on young people to break through.
(Author |.) Chen Chang, Editor | Han Zhongqiang)