A hot pot brand remains in a hot spot

On Chinese social media, especially Sina Weibo, Haidiao Hot Pot is a national favourite among brands associated with trending search topics. Almost every month, regardless of whether the news is good or bad, Haidilao is listed among the hot topics. But is the social temperature becoming too hot for China’s No.1 hot pot brand this summer?

On June 25, comments by Haidiao’s founder Zhang Yong that “the taste [of the chain's food] is not good” (#张勇回应海底捞不好吃#) became the No.1 topic on Sina Weibo. Just this morning the topic reached 530 million readers. 

At a recent shareholders meeting, when Zhang was asked about Haidilao's flavour, he indicated that the issue was one of marketing, divulging that the brand does not spend money on it. 

Question: The service of Haidilao is good, but the taste is mediocre. What do you think of the taste? 

Zhang Yong: There is a difference between the catering industry and the rocket/space industry. The rocket flight has specific standards, while the catering industry has no standards. It is just that some enterprises emphasize the [marketing] of taste, but we do not much pay attention to it. Take a look at the financial report, and our marketing expenses are zero.

In fact, the word “marketing” is only mentioned four times in the company's 362-page 2020 annual report. Haidilao's brand image has indeed rested on its high standard of customer service and mostly word-of-mouth among consumers.

As a top chain restaurant, the Haidilao Hot Pot official Weibo account only has 310,000 followers. Its rising new condiment products account has more at 350,000 followers. 

When asked further about his attitude to marketing, Zhang said, “My marketing is good. Personally, I do not spend money to occupy the headlines for a long time when others want to be on the top. I'll just use a few stores to test out new products that make headlines. It's embarrassing…. For professional marketing, I prefer to listen to the opinions of my fellow colleagues. It is a science."

Haidilao's expansion

In March, Campaign Asia-Pacific published a Haidilao 'brand health check' by asking the question: Will Haidilao’s expansion pay off?

At the same shareholder’s meeting, Zhang also responded to the same question and admitted his earlier expectations were wrong. 

Question: Is the countertrend expansion strategy in line with expectations?

Zhang Yong: In June 2020, I think the epidemic will end in September.... I was wrong about the trend. Last June, I made further plans to expand, which now looks like blind confidence. It was January of this year when I realized the problem, and it was March when I responded.

Zhang further explained the present situation by quoting a Chinese proverb: “Sometimes misfortune is a blessing in disguise” ("塞翁失马焉知非福"). His meaning is that when business is not good, it is a test for lots of store managers on how to make money in a bad time. Zhang has placed much value on great managers, calling them Haidilao's greatest treasure. 

Other issues

Last year, Haidilao made an impressive debut on Asia’s Top 1000 Brands List but has since attracted more than its share of negative attention.

At the same event, Zhang also spoke openly about the internal management problems like institutionalized management, process-oriented operations, tracking supervision and assessing data.

In reply to the negative comments and news on social media, such as price increases, Zhang simply said, “there is a lot of negative news about me on the Internet, which is out of my control. I will try my best to do my job well.”

He also mentioned that the focus of his job has not changed. He will continue to pay attention to organization, supply chain, and new technology, he said.