Hotpot restaurant chain Haidilao serves up franchise model
CHINESE hotpot chain Haidilao International Holding announced on Monday (Mar 5) that it will launch a franchise model to further support the expansion of its restaurant network.
In a filing with the Hong Kong Exchange, Haidilao said it has set up a franchise department to formulate the details of the franchise model and the business cooperation process.
Franchised restaurants will be provided with central and back-office services, such as staff training, supply chain system, management experience, food safety control, brand marketing services and performance appraisal by the group, to ensure food safety as well as customer experience, the company said.
Wang Ming, a franchisee in Zhengzhou, told Caixin that he is interested in joining Haidilao’s franchise network, but not clear what the company’s requirements might be.
He currently operates several hotpot chain franchise restaurants as well as bubble tea chain franchise stores. Another franchisee operator said he expects Haidilao would have strict requirements.
Founded in 1994, Haidilao restaurants are best known for providing extraordinary customer service, such as offering free manicures for waiting customers, as well as free photo printing services and leather shoe care for diners at the stores.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
As of June 30, 2023, Haidilao operates 1,382 restaurants in Greater China, all company-owned. About 17 per cent of its restaurants are in first-tier cities, with 40 per cent in second-tier cities and 40 per cent in smaller cities.
In the first half of 2023, the average daily same-store sales were 77,000 yuan (S$14,370). In the same period, the company reported operating revenue of 17.94 billion yuan and a net profit of 2.26 billion yuan.
Haidilao expected to annual operating revenue of at least 41.4 billion yuan and no less than 4.4 billion yuan of net profit for 2023, a significant increase from 1.64 billion yuan in 2022.
SEE ALSO
The company believes that the introduction of the franchise model will strengthen its operating capabilities, introduce high-quality resources and improve its operational efficiency while maintaining its management standards and customer experience and allowing expansion in more regions, according to the exchange filing.
The restaurant industry in China faces fierce competition as operators are eager to expand quickly through franchising.
According to a report of the China Franchise Exhibition, Chinese restaurant franchisees increased by 178 per cent year-on-year in 2023.
Meanwhile, higher operating and labour costs in first and second-tier cities are making chains eye expansion in smaller cities.
From 2018 to 2022, the ratio of restaurant chains in first and second-tier cities has slightly contracted, while the ratio of stores in third-tier to fifth-tier cities has increased significantly, according to a report jointly released by China Chain Store & Franchising Association and food delivery giant Meituan. CAIXIN GLOBAL
Share with us your feedback on BT's products and services
