The Haidilao Company

Abstract

If you had to wait for two hours before you can get a table at a certain restaurant, would you still choose to dine there? Even though a long wait does not appeal to anyone, you might be surprised to find that the front lobbies of Haidilao Hot Pot restaurants are frequently filled with groups of friends and families waiting for one or two hours to dine. Why do they choose to wait here patiently while there are alternative restaurants nearby?

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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Resources

Exhibit 1 Customers Waiting in the Lobby

Source: Haidilao Restaurant

Figure

Exhibit 2 Changes in China's Per Capita Consumption of Dining between 1978–2007

(RMB)

Data Source: The Report on the Development of China's Service Industry

Figure

Exhibit 3 Changes in the Scale of China's Dining Industry between 1978–2007

Data Source: National Statistics Bureau

Figure

Exhibit 4 A Comparison of the Development of the Dining Industry in Eastern, Central, and Western Regions of China in 2008

Number of Provinces

Retail Sales

(Billion RMB)

Percentage of National Retail Sales

Growth Rate

Nationwide

33

1540.39

100.00%

24.70%

Eastern

11

861.08

55.90%

25.10%

Central

8

377.39

24.50%

24.60%

Western

12

301.92

19.60%

24.20%

Data Source: National Statistics Bureau

Exhibit 5 The Haidilao Hot Pot and Its Unique Services

Source: Haidilao Company

Figure

Exhibit 6 Key Business Data of a Typical Haidilao Restaurant

Cost Structure

Figure

Assets Structure

Data Source: Haidilao Company

Note: by Dec 31st 2010, this restaurant has 217 employees. Table Turnover Rate = 4.37

Table Turnover Rate Formula: No. Tables Served ÷ No. of Tables

Figure

Exhibit 7 Haidilao Restaurants, Logistics Centers and Manufacturing Bases in China

Data Source: Haidilao Company

Figure

Exhibit 8 Haidilao's Annual Growth

2007

2008

2009

2010

Number of Restaurants

23

32

39

48

Annual Revenue

(in million RMB)

201.4

515.9

896.9

1449.2

Annual Profit

(in million RMB)

14.4

53.7

124.4

194.2

Data Source: Haidilao Company

Exhibit 9 Haidilao's Beijing Logistics Center

Data Source: Haidilao Company

Figure

Exhibit 10 A Comparison of the Organizational Structure Before and After Reform

Organizational Structure Pre-Reform

Figure

Organizational Structure Post-Reform

Data Source: Compiled and Organized by the Case Author According to Company Details

Figure

Exhibit 11 The Growth of the Little Sheep Chain Restaurants between 1999 and 2010

Data Source: Compiled by the Case Author Using Public Data

Figure

Exhibit 12 The Little Sheep's Income and Cost Structure

The Little Sheep's Income Structure (in thousand RMB)

2007

2008

2009

2010

Restaurant Dining Business

750,867

1,010,690

1,223,382

1,476,204

Food Sales

170,479

239,858

313,773

417,728

Special Business

26,375

18,886

30,887

30,848

Management Services

1,453

2,089

1,658

720

Total

949,174

1,271,523

1,569,700

1,925,500

The Little Sheep's Cost Structure (in thousand RMB)

2007

2008

2009

2010

Cost of Inventories Sold

377,073

524,390

650,545

850,500

Employees

165,886

257,342

308,795

353,128

Depreciation and Amortization

32,096

40,591

54,561

74,612

Space Rental

96,904

119,534

142,911

155,823

Gas & Public Utilities

41,892

55,752

66,381

78,307

Other Operational Costs

94,895

131,947

165,114

200,912

Finances

20,610

6,603

408

2,343

Data Source: The Little Sheep's Annual Reports

Exhibit 13 The Little Sheep's Balance Sheet

The Little Sheep's Balance Sheet (in thousand RMB)

2007

2008

2009

2010

Current Assets

408,928

681,515

588,214

750,337

Non-current Assets

366,113

482,308

682,715

829,498

Current Liabilities

273,787

206,667

224,344

360,369

Non-Current Liabilities

196,939

7,260

8,763

60,486

Data Source: The Little Sheep's Annual Reports

Exhibit 14 The Little Sheep's Business Data

The Little Sheep's Business Data (in thousand RMB)

2007

2008

2009

2010

Guest Seating Rate

1.40

1.35

1.34

1.42

Number of Employees

N/A

N/A

13,957

14,498

Percentage of Earnings Abroad

N/A

N/A

9.55%

7.01%

Guest Seating Rate Formula: Total No. of Guests ÷ Total No. of Seats (in a day)

Data Source: The Little Sheep's Annual Reports

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

2024 Sage Publications, Inc. All Rights Reserved

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