Haidilao International Holding is undoubtedly one of the best catering enterprises in China. It was listed on the Hong Kong Stock Exchange in September last year. Today, it has a market capitalization of more than 180 billion yuan and a price-to-earnings ratio of more than 80 times. The market capitalization of its incubated hot pot company, Yihai International, is 50 billion, which adds up to 230 billion.

As a result, Haidilao International Holding became the largest catering enterprise in China by market capitalization and became the business legend of founder Zhang Yong.

Recently, Zhang Yong, founder of Haidilao International Holding, came to the lakeside classroom to share his story and management experience with the students of the fifth phase of the lakeside.

In China, a gourmet country, countless catering brands have sprung up. Like Zhang Yong in 1994, there are countless Sichuan hot pot restaurants with four tables, and there is no shortage of top chefs and experts among catering operators. Why, in 25 years, only Haidilao International Holding beat 99.9% of the catering enterprises and finally reached the top?

Looking back at Haidilao International Holding's growth data from 2010 to 2019, lakeside students found that Haidilao International Holding's growth rate remained roughly 50% from 2010 to 2013, but dropped to 20% to 30% from 2014 to 2016. after 2016, the growth rate rebounded to 60% and 80%.

So what happened between 2014 and 2016, and what kind of thinking did Zhang Yong have, so that Haidilao International Holding did not become mediocre, but accelerated again?

01

Both hands change fate.

Mission, vision, values

"our values are to change fate with both hands, our mission is to change fate with both hands, and our vision is to change fate with both hands. Why "both hands change fate"?

Zhang Yong said that the first thing to change fate with both hands is to earn money. Born in 1970, like most people at that time, Zhang Yong's childhood was full of vivid memories of hunger and poverty, which had a profound impact on his life.

Zhang Yong said

My family is in a small county town, opposite my home is an agricultural machinery station, at that time a kind of organization that provides agricultural machinery services to farmers.

At that time, I often played with the children of the agricultural machinery station workers. One of them was younger than me. When he was 6 years old, he got sick and took streptomycin. He may have played too much and became a fool. He only grew up without intelligence, but we always had a good relationship.

In 1994, I had already founded Haidilao International Holding. One day I thought of him and gave 20, 000 yuan to my mother. I told her to take the money to my childhood playmates.

My mother said, "what have you been doing? now I think of it." "I have a bad feeling in my heart.

The truth is, later, when the agricultural machinery station went bankrupt, his father lost contact in the name of working in Shenzhen. I don't know if he had an accident or deliberately abandoned their mother and son. At that time, his mother could not help it, so she set up a cigarette stall at the door of the agricultural machinery company.

They lived on it for many years. Later, the agricultural machinery company went bankrupt and the store was contracted to the self-employed. I was not happy when the self-employed came. I paid the rent. Why should you set up a stall here? You can imagine their situation. They must have borrowed money from a lot of people, but they can't afford it. Everyone is tired of their mother and son.

Later, his mother bought two packets of rat poison, one of which was soaked in instant noodles for her son to eat, and the other for himself. He went to the mountain and committed suicide. He had been dead for half a month when he was found. This matter has touched me very much all my life.

Every time someone asks me to start Haidilao International Holding, what strategic vision do I have? I really didn't. I just wanted to change the fate of poverty and live a better life than ordinary people.

02

Fairness is more work, more pay.

Piece pay system

In Zhang Yong's view, although the catering industry is complicated, there is no big problem for so many years. It is just that the sanitation is not well cleaned today and the guests are not served well tomorrow. He has solved these problems for more than 20 years.

After capital and technology are no longer so scarce, labor becomes very important, and we must realize that every employee is a living individual.

In 2009, Haidilao International Holding's business was booming, and the overturning rate was far higher than that of his peers.

When other restaurants turn the stage only once or twice, while Haidilao International Holding has to turn the stage five or six times, the workload of the staff increases greatly, but the income of the staff does not increase significantly.

In Zhang Yong's view, this is a kind of "unfair". In the long run, employees will inevitably slack off and run away.

To this end, after Zhang Yong's long-term thinkingHaidilao International Holding began to implement a piece pay system for employees in 2015.

Every task (including service and food preparation) from the time the customer enters the restaurant to the time it leaves the restaurant is included in the employee's workload and is directly linked to the salary.

For example, the receptionist can earn 3.3 yuan for each guest, and the receptionist can earn 0.2 to 0.4 yuan for each dish, so that during the peak serving period, more idle dishwashers and snack bar staff can serve dishes. Haidilao International Holding's salary is much higher than the industry average.

In 2018, Haidilao International Holding's employee cost accounted for 29.6% of total income, and the per capita employee cost was 72600 yuan. By contrast, the number of quack feeding, the second largest among China's top 20 hot pot, was 44500 yuan.

Zhang Yong said

Before putting forward the idea of "changing fate with both hands", we also proposed to create a fair and just working environment. In 2010, I saw a movie called "Let bullets fly". When I arrived in E City, Jiang Wen said: "I only do three things when I go to E City. The first thing is fair, the second thing is fair, and the third thing is still fair." "with that, he took out his gun and fired three shots. In the film, in order to challenge his concept of fairness, the landlord framed his nephew, saying that his nephew ate two bowls of powder and gave only one bowl of powder money.

I simply understand:Fairness is the money for one bowl of powder for one bowl of powder and two bowls of powder for two bowls of powder."Let the bullets fly" told me, but it was only then that I found out that Haidilao International Holding did not do it. At that time, Haidilao International Holding's turnaround rate was very high. I asked the staff hypocritically, "are you happy?" "

They said, "very happy".

Later, I thought, no, my turnaround rate is 5-6 times per day, while that of the store next door is 1-2 times a day. Their employees earn 500 yuan, so it is reasonable for our employees to earn at least 1000 yuan. But as a matter of fact, I only give $600,000 to 700 yuan. Is that fair?

Business is good, the happiest is me, the employee should be a little happy, but not so happy, he earned an extra 100 yuan, but paid several times more labor, which is wrong.

This is the theoretical basis of the piece rate system in my mind.However, when I realized the problem, I didn't find a solution.

It wasn't until 2014 that we officially started doing it.

03

Church disciples, don't starve to death.

Master and apprentice system

For chain operators, after solving the problems of business model, supply chain and standardization, the biggest bottleneck lies in talents. In particular, enterprises like Haidilao International Holding, which are good at service, how to ensure that hundreds of stores maintain the same "taste" and service quality and management level?

The manager is a key role, and it is difficult for the manager to recruit directly from the outside, and the new manager had better be selected from the old store, but this means that the capable staff trained by the old manager who takes time and effort can easily be transferred away to open a new store.

This is a contradiction of "church apprentice, starve to death master". If it is not solved, it will be impossible to break through the bottleneck of opening a shop.

As a result, Zhang Yong designed a "master-apprentice" benefit-sharing mechanism:

The manager of a grade A store (which will be mentioned later in the store evaluation system) is qualified to be a "master", and master nominates an excellent "apprentice" store manager.

The training of apprentices can be divided into several steps:

Master has nominated → training and examination → for at least 10 positions in the restaurant → Haidilao International Holding University plans to train →, → upgrade lobby manager, to become manager of the reserve store.

After the apprentice was successfully promoted to the store manager, master's personal income was directly linked to the business performance of her apprentice and Tian Sun restaurant. Haidilao International Holding offered the following two salary packages to master's store manager:

A basic salary + 2.8% of the profits of the restaurant managed by yourself

B basic salary + 0.4% of the profits of the restaurant managed by the apprentice + 2.8% or 3.1% of the profit of the restaurant managed by the apprentice (depending on the location of the restaurant) + 1.5% of the profit of Tu Sun Restaurant

The design of this mechanism has greatly enhanced the enthusiasm of store managers to train excellent reserve managers. Haidilao International Holding's IPO description in 2018 revealed that Haidilao International Holding had 363 store managers and about 400 reserve managers, which made full preparations for Haidilao International Holding's next expansion.

Zhang Yong said

When we first opened a branch, we told you that we were going to open a third branch in Xi'an. At that time, there was really thunderous applause and everyone was very excited. Even if we had to send our capable staff to the Xi'an branch, everyone was very happy.

But when we opened the Shanghai branch, everyone applauded as soon as the news was announced, but the applause at this time was different from the applause a few years ago.
Because every time they open a branch, they have to take their best people away, which is not good for him. This is the root of the idea of "master-apprentice", which I found after 2000.

After the implementation of the master-apprentice system, a master can get about 5% of the after-tax profits of his own store plus his apprentice and apprentice shop.

95% belongs to the company and 5% to the manager. For me, this is a very cost-effective condition, and for the manager, they will be happier.

Master has no right to manage the apprentice shop. We think that every store manager has the ability to recognize what is called a good Haidilao International Holding store and what is meant by employee effort.

04

Manage the store in a family way

Family system

At first, Haidilao International Holding also adopted the traditional regional system. With the expansion of stores, there were more and more managers, too many levels and rigid organizations.

In 2016, Haidilao International Holding carried out a thorough organizational change, replaced by a flattened management mechanism, with only four parts from top to bottom: headquarters, coach, hugging group (family) and stores.

The day-to-day operation of the store is handed over to the store manager, who has great autonomy to decide the employment, termination, promotion, discount and personalized service of the store staff, and the store reports directly to the senior management of the headquarters.

However, when the number of stores reaches a certain level, the headquarters cannot manage it. If you choose to let the master take charge of the apprentice shop on the basis of the master-apprentice system, it is bound to return to the state of the small-area system. Haidilao International Holding's solution is "family system".

These families are made up of 5 to 18 stores, based on the relationship between master and apprentice, and the head of the family is usually the head of master's store.Share information and resources within the family, have the ability to solve local problems together, effectively achieve a certain degree of self-management, and improve the transparency and efficiency of local management.

Each patriarch should work out a long-term development plan for his family, which involves the development of new local stores, talent training, and the fission of the next generation of organizations. The move aims to encourage patriarchs to better define their business goals and help form the basis of the company's long-term strategy.

More importantly, the patriarch does not have the right to manage other shops in the family. The whole family has a common honor and implements "continuous sitting" under certain circumstances.

Haidilao International Holding has set up 41 families, covering more than 350 stores, according to the prospectus in September 2018.

Zhang Yong said

I realized a long time ago that in a company, the vice president class is very frightening. they have a more correct attitude in front of the boss and the board of directors, but at the grass-roots level, they enjoy the treatment of "people around the emperor" and have whatever they want. They will earn the management of the whole company in the name of service.

Just like when our store manager has a lot of power, they may abuse their power.

In such a mechanism as a large district, anyone who can tell a lie like the truth can be promoted in a company without suspense. In the end, I will get very sophisticated and cunning executives, because everyone will find a position and performance that is best for them in the organization.

I don't think Haidilao International Holding can go down this road, so I tried my best to find a way, and finally found some way.

I always sayConnect the interests and lock the management.When connecting the development of the enterprise with everyone, it is necessary to lock up the management.

What is lock management?

First, institutionalized management, second, process operation, third, data assessment, and fourth, follow-up supervision.

The method of family system combines the traditional Chinese management mode. For thousands of years in China, there has been no way of management, and this place can be managed by a single ancestral temple, because they share the same honor, common goals, and the same moral standards.

We refer to this way and connect them in terms of honor and status. But the punishment in honor should not be excessive, according to the size and severity.

05

KPI is the nemesis.

Haidilao International Holding's store assessment mechanism

For catering chain enterprises, store assessment has always been a difficult problem. Haidilao International Holding's assessment dimensions and indicators have also gone through many iterations and are still in the process of exploration.

At present, Haidilao International Holding appoints mysterious guests (the guests who accompany them) to each restaurant every quarter and rates their experience. The details include:

1. Quality of service
2. The degree of dedication of the waiter
3. Food quality
4. Restaurant environment.

The mystery guest does not need to rate these dimensions, but is completely subjective. And the mystery guests are all third parties.
As of June 30, 2018, Haidilao International Holding had gathered a total of 9200 mystery guests, including 8800 for Chinese restaurants and 400 for overseas restaurants.

At the same time, Haidilao International Holding's performance evaluation coach will consider other criteria:

1. The results of surprise inspection, with emphasis on the safety and hygiene of dining room areas such as kitchens that are inaccessible to customers, at least once a month.
2. Comments from the restaurant review website
3. Staff turnover rate
4. Investigations, reports and studies carried out by external consultants
5. Business and financial performance.

Every quarter, Haidilao International Holding obtains the final rating of each restaurant according to the rating of the mystery guest and the above-mentioned other criteria.

The results of store assessment are divided into three grades of ABC, which represent excellent, good and unqualified respectively. This rating is linked to that of the store manager.

Zhang Yong said

What on earth is KPI? I don't know. This thing is mysterious.

We have set a standard, guests must put on a mobile phone bag, do not deduct a little bit of points. As a result, some guests do not want to condom, the waiter will also take advantage of others inadvertently, "click wipe" to force the condom.

And then we found outAny good KPI indicator is a nemesis who will be waiting for you around the corner and will give you a stifling stick when you come over.

People's requirements are different, there is no need to make detailed rules. We are now taking the approach, which can be roughly divided into ABC, but it is not a completely scientific KPI. So getting C will not deduct money, and there are more ways of punishment on honor.

06

Past achievements and future challenges

Zhang Yong's ambition

By the end of June this year, Haidilao International Holding had 593 stores, with an average turnover rate of about 5 times a day, much higher than the industry average. With revenue of nearly 17 billion yuan in 2018, it ranks first among Chinese hot pot brands in market share.

Haidilao International Holding has maintained a very stable quality, customer satisfaction is as high as 99.3%, of which 98.2% will patronize again. After listing, Haidilao International Holding accelerated the pace of opening stores and also had plans to sink to the third-tier market.

It is worth noting that the turnover rate of Haidilao International Holding employees was less than 10 per cent in 2018, compared with an industry average turnover rate of 38.46 per cent in the same year.

Challenges also exist.

At present, Haidilao International Holding's growth mainly depends on the continuous opening of stores, and the growth of the same store is a problem that Haidilao International Holding has to solve now.

Overseas stores are also in the exploratory stage, and the difficulty lies in the inability to find suitable managers and waiters, and what is more difficult is whether this domestic incentive scheme is still applicable to move overseas. In addition, Zhang Yong also believes that overseas stores have not yet caught the local mainstream customer base, and the speed of opening stores is not comparable to that at home.

Zhang Yong said

My ambition has never changed.

No one will ask me about Haidilao International Holding's plans for next year. Even if I have asked, there is no pressure on me to increase the growth rate.

Why is it developing so fast? it naturally develops with the establishment of apprenticeship and family system, piece rate, coach, budget, and supply chain construction.

We always spend a lot of time making false propositions.

What is employee satisfaction? The employees will be satisfied with working less and getting more money.

What is customer satisfaction? The customers must be satisfied if they don't pay for the meal.

But this is clearly impossible. But we can try our best to improve efficiency so that customers can eat better products for less, and at the same time, we can also improve the treatment of employees.

To change fate with both hands is to earn money for employees.

Therefore, as an entrepreneur, we should open our eyes and take a good look at where we should set our goals.

We must create a platform on which every employee and every class must have the ability to change or create their own prosperity and future.