92 | FORBES ASIA OCTOBER 2018THEODORE KAYE FOR FORBESFORBES ASIA
HAIDILAOFUP FROM
ZHENGZHOU
Zhang Xiaojun, 32, is a clas-
sic example of Haidilao’s
ladder up. He started with
Haidilao 15 years ago bus-
sing tables in Zhengzhou,
capital of Henan Province,
and has rotated through six
dierent markets, taking on
larger restaurant roles. After
being bumped up to foreman
in Tianjin, he became floor
manager in Shenzhen. He
now oversees both Hong
Kong locations.
Like most of Haidilao’s
hires, Zhang came from a restaurant’s immediate vicinity
and had few formal credentials. The company would be his
mark in life.
Because Haidilao doesn’t rely on kitchen meals, there are
no seasoned chefs. Rather, spurs are earned in the front of
the restaurant. To identify high potential, the company oers
a leadership program. Young Zhang stood out but still had
to pass through ten posts as a mentee before his shifu—
manager level—could put him in a supervisor slot. Shifus
bear the financial burden of the training if their mentees
wash out.
Expansions are a function of hiving o talent. A Haidilao
manager can open new restaurants but usually in the home
province. Only apprentices who’ve achieved A-ratings twice
a year are qualified to expand outside their region, as in
Zhang’s case. Mentors, meanwhile, are motivated to identify
talent as they share a higher percentage of profits from
their apprentices’ restaurants than their own.
Zhang’s enthusiasm and can-do attitude has landed him
far from home as operations director in the Tier 1 city of
Hong Kong. “If I didn’t make the decision to join Haidilao
when I was 17, I would probably still be farming in my home
town today,” he reflects.
Now a married father of three, Zhang draws the picture
even wider: “Joining Haidilao after junior high changed the
fate of three generations for the better: myself, my parents,
and my children.” —P.A.anything else,” he says modestly. He oten spent the night in his
irst restaurant on a metal foldaway bed. His most painful memory
was breaking a $100 aquarium he had saved up for to display fresh
seafood oferings. (Haidilao means deep-sea ishing, or literally
“scooping the bottom of the ocean.”)
hree friends helped with seed money, but he ran the place. “I
personally made sure that any guest who came through my doorwould return,” using discounts and free snacks but also taking
customer feedback seriously. He also kept his partners close. he
founding foursome are today two married couples; the other hus-
band, Shi Yonghong, remains executive director of Haidilao with
a $3.5 billion stake. (Zhang’s spouse, Shu Ping, is one of several
nonexecutive directors.)
Behind the company’s people-irst approach is a set of stream-
lined procedures, beginning with the routine ater each guest
party is seated. A Harvard Business School case study back in 2011
compared the cook-it-yourself food preparation to Ikea’s assemble-
your-own-furniture model.
Zhang and his partners have set up separate companies to
handle warehousing and supply of food ingredients, as well as
renovation work and security videos for Haidilao and other restau-
rants. Another irm of theirs provides HR management.
Haidilao has rapid rollouts down to a science. New locations
break even within one to three months. How so reliably? he com-
pany has developed an artiicial intelligence platform with Alibaba
Cloud to improve site selection. An algorithm screens targets by
population density, commercial opportunities, nearby eateries and
nightlife venues such as karaoke bars. Many Haidilao locations are
open 24/7.
Other considerations include the reputation of the real estate
developer and accessibility to public transportation. Lee heatre
Plaza, in the busy Causeway Bay area that attracts many mainland
tourists, emerged as the top choice for Hong Kong island. his is
the just-opened site—Hong Kong’s irst was in Kowloon’s Yau Ma
Tai. (he eight restaurant closures that did happen in the last four
years, Zhang says, stemmed from changes in local zoning and
commercial building codes.)
he AI platform also igures out centralized inventory man-
agement. Deep-learning programs based on table-turnover rate
patterns and consumption trends plot supply needs, while also
maintaining a safety watch for fresh ingredients such as lamb
sourced from Inner Mongolia and New Zealand.
But can even the hot pot king get ahead of itself? he $963
million raised in the IPO is supposed to provide for doubling
Haidilao’s global presence.
Some investors worry that the growth target will be diicult to
achieve, given that Tier 1 cities are reaching the saturation point.
he CEO, proudly sporting a gold company logo on his lapel, tells
Forbes Asia his intentions aren’t grand. “It’s better to scale fast and
be everywhere instead of having a single towering presence,” he
says. Haidilao isn’t interested in the premium sector. It wants to
serve more afordable meals in lower-tier cities.
Just a year ago, however, Zhang said on TV that he wouldn’t be
listing his company because “restaurants are labor-intensive, not
capital-intensive.” And that taking Haidilao public would not help
the restaurant expand in the U.S. and U.K. So why risk the ickle
equity exchange? “Companies will certainly tap capital markets
when they reach certain scale” is the onetime factory welder’s
buttoned-down response. “I didn’t do this before because I was
searching for a way for Haidilao to scale irst, and I have already
found it. Haidilao won’t change the rhythm it does things ater it
goes public. We will keep doing what we did before.”Zhang Xiaojun: from farm life
to front of the house.