Haidilao, which has encountered difficulties, needs a change that breaks the wrists of a strong man.

Many people didn’t expect that Zhang Yong would hand in the baseball CEO in advance.

On the evening of March 1, Haidilao (06862. HK) issued a personnel announcement. Yang Lijuan, the deputy CEO and chief operating officer known as the “best waiter”, was transferred to the post of CEO, while Zhang Yong continued to serve as the chairman of the board of directors and executive director.

However, this personnel change also indicates that as the founder of Haidilao, 52 year old Zhang Yong will temporarily retire to the front line of operation. For Haidilao, which is at a trough, the management of the company hopes to blow a “young storm” to reactivate its growth potential.

The CEO change of Haidilao will inevitably lead to heated discussion. Some people say that before Haidilao fell to the altar, Zhang Yong chose to take the initiative to jump down; Some people also said that he made progress by “retreating” and made the bottom fishing unbreakable.

However, it is undeniable that Haidilao, which faces various tests, has reached the stage of “drastic” reform. Both the previous implementation of the “woodpecker plan” and the appointment of the “best waiter” as the CEO show that the hot pot giant is undergoing a structural “operation”.

Trapped

“In June last year (2020), I made further plans to expand the store. Now it is really blind self-confidence.”

In June 2021, a summary of the meeting between Zhang Yong and investors was circulated on the Internet. In this investment exchange meeting, Zhang Yong frankly said that he “hates the deification of undersea fishing”. At the same time, he also admitted that he made a wrong judgment on the trend.

Why was Haidilao deified?

In addition to stirring up the hot pot industry with label service and rapid store expansion mode, its value in the capital market has indeed created the “ceiling” of the hot pot industry.

Last February, Haidilao, which has been listed for two years, had a total market value of more than HK $440 billion in Hong Kong stocks, and the wealth effect of Zhang Yong and his wife reached the peak. But soon after, the operating data released by the company tore open the scar behind the prosperity.

On March 1, 2021, Haidilao released a performance forecast, which shows that the net profit in 2020 is expected to decrease by about 90% compared with that in 2019. In 2019, the company made a profit of 2.347 billion yuan (RMB, the same below).

The 21st Century Business Herald reporter noted that in this performance forecast, Haidilao’s wording for opening a store was “the group is also actively opening new restaurants and continuing to promote Haidilao restaurant network”.

This expression disappeared in the announcement of the interim performance forecast of that year.

In fact, the company maintained a positive attitude of opening stores in the first quarter of 2021, and showed signs of strategic adjustment in July. The details of the transformation process may be as Zhang Yong said at the investor exchange meeting, “when I realized the problem, it was January this year (2021), and when I responded, it was March.”

It is undeniable that adhering to the rhythm of rapid store expansion during the epidemic has indeed brought a positive effect on thickening the revenue scale of Haidilao.

In 2020, the company’s total revenue rose to 28.702 billion yuan, a year-on-year increase of 7.83%. Until the first half of 2021, the total revenue of Haidilao continued to grow to 20.163 billion yuan, a year-on-year increase of 105.92%. Even, compared with the same period in 2019 before the epidemic, its revenue increased by 72.07% year-on-year.

However, the management believes that “such performance can not meet expectations, which reflects that the company’s internal management and operation need to make efforts to correct and improve.”

In reflection, Haidilao bluntly attributed one of the main reasons to “more new stores and increased related expenses”.

Dissatisfied with the capital market. When announcing the interim results of 2021, Credit Suisse Securities once published a study that Haidilao “needs to release a clear signal of operational recovery or new growth momentum to prove its higher market value”.

In fact, Haidilao’s share price had continued to fall before the announcement of its interim results.

From 440 billion market value to below 100 billion. Under the background that the whole hot pot industry is facing a sudden change in the competition pattern in the post epidemic era, Haidilao has encountered a harsh moment.

In February this year, Haidilao released a performance forecast. With a revenue of more than 40 billion yuan, the company expected a loss of 3.8 billion yuan to 4.5 billion yuan in 2021.

change

“Haidilao has encountered development problems recently. On the one hand, after the economy entered the downward cycle, the consumption boom was low, which put the overly optimistic expansion in the early stage of Haidilao into crisis; on the other hand, the continuous recurrence of the epidemic has always destabilized the already fragile catering consumer market. Therefore, Haidilao is facing an unprecedented test.” Shen Meng, executive director of Xiangsong capital, said in an interview with 21st Century Business Herald.

Haidilao, which has encountered difficulties, needs a change that breaks the wrists of a strong man.

On November 5, 2021, Haidilao announced on the Hong Kong stock exchange that it would gradually close about 300 stores whose operations did not meet the expectations before December 31, 2021, and some of them would temporarily rest and reopen at an opportunity, with a rest cycle of no more than two years.

Previously, in an interview with the 21st Century Business Herald reporter, relevant people of Haidilao said that closing the store was because Haidilao “ran too fast and the shoelaces were loose. We should stop and fasten the shoelaces”.

21st Century Business Herald reporter noted that since November 2021, “woodpecker plan” has become a rescue measure vigorously publicized by Haidilao.

This plan includes four major measures: first, continue to pay attention to stores with poor business performance, including overseas stores, and take decisive measures; Second, rebuild and strengthen some functional departments and restore the regional management system; Third, on the premise of scientific assessment of all departments, continue to vigorously promote the implementation of the core values of changing fate with both hands, and continue to vigorously advocate the dedication on the premise of love and trust; Fourth, timely shrink the business expansion plan of the group. If the average turnover rate of Haidilao restaurant of the group is less than 4 times / day, in principle, no new Haidilao restaurant will be opened on a large scale.

Yang Lijuan, the newly appointed CEO, is the person in charge of the plan.

At a media communication meeting last November, Yang Lijuan spoke about the 21st century economy