This case was prepared by Xiaoming Zheng and Ziqian Zhao of Tsinghua University School
of Economics and Management as the basis for class discussion rather than to illustrate either
effective or ineffective of an administrative situation.
Copyright © Tsinghua University School of Economics and Management. No part of this
publication may be duplicated, transmitted or used in any form or by any means without the
permission of Tsinghua University School of Economics and Management.
Xiaoming Zheng, Ziqian Zhao
Haidilao 2018: Demystifying Restaurant
Haidilao (HDL), one of the leading Sichuan-flavor hot pot restaurant chains in China,
servicing over 100 million customers per year, went public in September 2018. The explosive
news pervaded every business section of the Chinese press. HDL seeking a public listing aroused
considerable attention, as HDL had been compared with the franchise chain Little Sheep, the
so-called “First-ever Chinese hot pot stock,” which had been delisted and privatized by the Yu m
Group in 2014 after six years of being a public company.1 Haidilao’s growth had explosively
accelerated before pursuing the public listing. By the time of its listing, HDL’s market
capitalization was eight times that of the second place in hot pot catering chains, Xiabu Xiabu.2
HDL adopted the direct operations model, featuring passionate waiters and highly personal
service that usually exceeded customer expectations. A book about HDL’s service and personnel
became a bestseller in 2011 and in later years the company gained a reputation through word of
mouth for delivering good service that “went against nature.”3 However, ever since HD started in
1994, the company had been facing a serious growth challenge due to its apparent lack of
sophisticated restaurant managers. HDL’s co-founder, Zhang Yong, consequently experimented
with a new incentive system for restaurant managers and achieved huge success. Thus, the
operations in 2017 delivered great progress, with the number of new outlets and the overall
financials both showing breakthroughs (see Exhibit 1). Zhang was very satisfied with the growth
speed, but he also knew that the company had to strengthen its management to prevent food
1 “From Public Listing to Delisting! Reasons Why Hot Pot Legend Little Sheep Stumbles,” QQ.com, May 30, 2016,
accessed November 7, 2018, http://stock.qq.com/a/20160530/009391.htm.
2 Xiabu Xiabu served Taiwanese mini hot pot in a bar-style environment rather than HDL’s traditional roundtable style
with shared food and condiment pots.
3 Yong Chengjie, “HDL’s Incomparable Service Went Against Nature, Have You Experienced It?” Sohu.com, March
30, 2018, accessed April 28, 2019, https://www.sohu.com/a/226794608_100108393.
This document is authorized for use only in Prof Shivganesh Bhargava's OB & HR-I at Shailesh J. Mehta School of Management (SJMSOM) from Nov 2019 to May 2020.