Text | Xie Zefeng
Edit | Yang Xuran
Haidilao's overseas business, Tehai International, which has been listed in Hong Kong, is planning to go public in the United States.
As the most representative Chinese flavor, hot pot is the first choice of many Chinese people when they have dinners, and it is also a model category of Chinese food going overseas. With the popularity of social media such as Tiktok overseas, hot pot has gradually broken the circle, and eating hot pot in Haidilao has become an excellent material for UP owners, and many foreign tourists also want to take a look at the noodles and taste the spicy taste when they come to China.
There are many types of Chinese food, and the complexity is high, and it is difficult to achieve unified standards and management, even if two restaurants on the same street are adjacent, the taste of the same dish will even be very different.
The inability to standardize has led to the failure of catering giants like McDonald's and KFC to be born in the Chinese food industry. Compared with the dazzling cuisines and cooking skills, hot pot is easy to standardize and more convenient to replicate and expand, and has become the most successful subdivision of Chinese food standardization, and it is also becoming a strong force in the overseas army.
Riding the wave of Chinese cultural export, Chinese food is facing a new round of globalization opportunities. Based on the increasing number of overseas Chinese, supplemented by the improvement of local tastes to develop local diners, Chinese food has a huge blue ocean market in the world.
Tehai International has made a lot of explorations in the globalization of Chinese food - all of them are opened in the form of self-operated stores, ensuring the quality of services and dishes, and building a localized supply chain. The high attention of the hot pot format overseas is becoming a business card of China's commercial and cultural export.
Daniel Zhang, founder of Haidilao
01 A new story of going to sea
"Where there is the sun, there are Chinese, where there are Chinese, there are Chinese businessmen, and where there are Chinese businessmen, there are Chinese restaurants."
More than 60 years ago, Jiang Sunyun founded the high-end Chinese restaurant "Fu Lu Shou" in San Francisco, bringing authentic Chinese food to the mainstream of American society.
Elegant furnishings, exquisite dishes, attracting many celebrities to check in, Michael Jackson, Lennon, Pavarotti are all guests of Fu Lushou, Jiang Sunyun is known as the first person to promote Chinese food, she also won the American catering "Oscar" James Beard Award for Lifetime Achievement.
99-year-old "Queen of Chinese Food" Jiang Sunyun
After that, her son Jiang Yifan founded P.F. Chang's, which became the first Chinese restaurant to be listed on the NASDAQ. However, the company was privatized in 2012 by private equity fund Centerbridge for $1.1 billion.
Jiang's mother and son can be called the leaders of the first generation of Chinese food to go to sea, but with the closure of Fu Lushou and the privatization and delisting of Huaguan, their story has also come to an end.
In 1983, Cheng Zhengchang founded Panda Express in the United States, formerly known as his family-run Jufengyuan. Unlike Jiang Sunyun's insistence on Chinese catering culture, Cheng Zhengchang has greatly innovated Chinese food. Not only the brand image is a blend of Chinese and Western, but also the store decoration atmosphere is a combination of Chinese and Western. In order to adapt to the local dining habits, chopsticks and forks were also invented, so that Americans could try chopsticks and use the forks they were used to.
In terms of dishes, the taste was adjusted to the sweet and sour taste that Americans love, and popular dishes such as tangerine peel chicken and improved kung pao chicken were made. At the same time, the implementation of the chain + standardized business model, the raw materials are processed by the supplier in a unified manner, the seasoning is prepared in advance according to the recipe, and the production process is extremely detailed.
At present, Panda Fast Food has more than 2,000 stores around the world, with an annual revenue of more than 20 billion yuan, becoming the first brand of overseas Chinese food.
Entering the new century, Chinese food has begun to write a new story when it goes to sea.
In 2003, Little Sheep opened its first store in Los Angeles, USA, and since then, brands such as Da Longyi, Xiao Longkan, Mixue Bingcheng, Zhang Liang Malatang, and Liu Yishou have gone abroad one after another.
Haidilao's internationalization is not "the first person to eat crabs", but its strategic deployment is more solid. In 2012, Haidilao opened its first overseas restaurant in Singapore, and has since set up in North America, East Asia, Europe, Australia and other regions.
By the end of 2023, Tehai International had a total of 115 self-operated restaurants, of which 70 were located in Southeast Asia and 18 in North America. In order to ensure the service level, dish quality and supply chain management level, Tehai International has always adhered to the direct sales model. As a result, it is not very fast to open a store.
With strong service and brand barriers, Tehai International has captured many fans overseas, and successfully made a profit in 2023, ranking among the third largest Chinese restaurant brands in the world, and it is also the Chinese restaurant company with the largest number of self-operated restaurants covering countries.
Unlike Jiang Sunyun's insistence on Chinese culture and Chinese cooking technology, and unlike Panda Fast Food's use of American chains to create a fast image, Haidilao has led Chinese food to sea into a new dimension.
02 Make-or-break supply chain
If you want to take root and grow thousands of miles away, Chinese food cannot bypass the harsh test of the supply chain.
Jiangnan rice and fish, Saibei meat and cheese, Chinese food culture has a long history. The variety of ingredients and cooking techniques are extremely varied, which is unimaginable to overseas consumers. Therefore, building a flexible and resilient supply chain is the key to the success of catering companies going global.
According to some data, the purchase cost of raw materials in the catering industry accounts for 42% of the total cost, which is the highest among all cost items. In this environment, overseas enterprises should pay special attention to the construction and optimization of the supply chain.
In order to ensure the quality of ingredients, Mixue Bingcheng has set up 4 operating companies in Hong Kong, Vietnam and Indonesia, and its wholly-owned subsidiary, Dajia Venture Capital, has cooperated with Xiduoduo Food to invest in coconut fruit and coconut milk processing and production bases in the Philippines, providing a solid guarantee for its entry overseas.
The requirements of hot pot restaurants are higher, on the one hand, the dishes are rich, and hairy tripe is one of the must-order items. But the U.S. farming and slaughtering industry is highly intensive, and meat processing plants are more expensive to dispose of offal than killing pigs, so they process them directly into fertilizer. The industrialization of food has kept a lot of offal away from the American table.
On the other hand, as the soul of hot pot, hot pot base is the key point of differentiation and competitive strength in the hot pot market. Therefore, the stable supply of ingredients and ingredients is a compulsory course for hot pot brands to go abroad.
When the first overseas store opened in Singapore, Haidilao founder Daniel Zhang emphasized: "Internationalization is not a top priority, but a process and institutionalization. ”
To this end, Haidilao has set up a central kitchen in Singapore, which covers the manufacturing and processing of ingredients, including processing seasoned meats, washing and cutting vegetables, etc. For other markets, the model is based on sourcing directly from local suppliers.
As of the end of last year, Tehai International had a total of 1,615 overseas suppliers, of which 912 were in Southeast Asia and 321 were in North America. 70% of the funds raised from the proposed listing in the United States will be used to open stores globally, and 10% will be used to improve supply chain management and build more central kitchens.
To this end, Tehai International has formulated detailed principles for introducing new suppliers, selecting local well-known brands or the world's top 5 or top 10 suppliers as much as possible, formulating different control standards for bulk food, non-food, vegetables and fruits, conducting monthly assessments for Class A suppliers, and providing technical guidance and on-site training to long-term cooperative manufacturers.
In Haidilao's business empire, the supply chain has built a strong moat. As early as 2016, Daniel Zhang said in an interview: "Our strongest place is the supply chain. If you take a look at our central kitchen and distribution center, you'll be blown away, I wouldn't say the best in the world, but absolutely world-class. ”
Daniel Zhang admires companies such as McDonald's and Sysco, benchmarking the former he created Haidilao, benchmarking the latter he established Shuhai International. It is on the basis of Shuhai that the establishment and expansion of Haidilao and U Dingmao have a foundation, and Daniel Zhang's huge business ambitions have been created.
Haidilao has developed its skills in the infinite involution of domestic catering, and Haidilao has developed its skills in supply chain management in overseas markets.
03 Localization challenges
Today, Chinese F&B brands with more than 10 restaurants in the international market account for only 13% of the international market, and less than 5% of companies can cover two or more countries.
Panda Fast Food, the largest overseas revenue, with an annual revenue less than 1/10 of McDonald's, and among the world's most valuable catering brands selected by Brand Finance, only Haidilao and Luckin Coffee are among the Chinese companies shortlisted, and there is huge space for Chinese food to go overseas.
In 2023, Tehai International will achieve revenue of US$686 million, a year-on-year increase of 22.95%; And achieved the first profit, and the net profit attributable to the parent reached 25.65 million US dollars, an increase of 162.19% year-on-year.
Due to the fact that it did not start early and adopted a strict self-management model, the number of Haidilao's overseas stores was not dominant, and the expansion was cautious and the speed was not fast.
Due to the large differences in eating habits in different countries, each restaurant needs to be inspected and identified individually, and it takes 1-2 years from signing the contract to opening.
In addition to the supply chain, localized operations at other levels are a great test for Chinese food going overseas. Last year, Haidilao launched new pot bases and dishes for Southeast Asia, Europe and the United States, such as spicy milk pot, coconut chicken hot pot, 8 seconds strong oil bean skin, and bamboo sunflower shrimp slippery.
Once upon a time, Chinese restaurants were mainly for wandering Chinese to satisfy their stomachs and nostalgia for their hometown, and the relatively low proportion of local customers was the main factor restricting the development of Chinese food.
In Tehai International's restaurants in Asia, non-Chinese customers account for more than 70%. In Europe and the United States, the proportion of non-Chinese customers is only about 40%. In order to promote the localization strategy, Tehai International aims to achieve more than 60% of the local customers in the non-Chinese community.
Due to the high standard of service and the quality of the dishes, the unit price of Tehai International is relatively high, with the average customer spending about US$24.8, and as high as US$45.3 in North America, which is more than three times that of the mainland. North America accounts for 20% of revenue with 16% of the number of stores, making it the region with the strongest value creation capacity.
Last year, the overall turnover rate of Haidilao's overseas restaurants increased from 3.3 times per day to 3.5 times per day, the average turnover rate of the same store was 3.6 times per day, the average daily revenue of stores increased by 5.84% year-on-year, and the operating profit margin of stores increased significantly from 4.1% to 9%, driving the overall operating profit margin from 0.2% to 6.3%.
At present, Tehai International has 4.4 million members, and these supporters are shouting social media such as Tiktok, which helps Haidilao gradually break the circle.
In the face of difficulties such as language differences, eating habits and customs and cultures, Tehai International is quickly familiar with it. By 2023, Tehai International has achieved profitability for the first time.
04 Write at the end
For Haidilao, it must not be regarded as a simple hot pot restaurant, it is already a huge industrial group and capital empire.
Haidilao at the store level, Yihai International, which supplies base materials, Shuhai International, which is responsible for the supply chain, Shuyun Oriental, which is responsible for store decoration and renovation, and Weihai Consulting, which provides human resource management, commodity pricing, and brand marketing services...... In every track, hundreds of billions of companies may be born.
Haidilao has been in a leading position in the local catering field. It is not so much that Haidilao is exporting food culture overseas, but rather exporting the capabilities and advantages accumulated over the years.
With the strong export of Chinese culture, McDonald's and KFC, which gave birth to the Chinese food industry, are no longer so far away. Haidilao occupies a favorable position, but in this big market, it is impossible to have only one big player in Haidilao.