Hai di lao manicure design

MET AD 741 Team 3

​Metropolitan College

The Importance of Customer-centric Experience

HaiDiLao Hotpot Inc. The Innovation Process: Developing New Products and Services (MET AD741 D1)

Team 3

Final Paper

Professor: Barry Unger

Merissa Liu (Sasa) | LitongChen (Kyla)

WanqingZhang (Davina）| Yue Bian(Monica) | Yue Wu (May)

Boston University | 11/08/18

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MET AD 741 Team 3

​Content

1. Abstract…………………………………………………………………………………………... 3

2. Introduction ………………………………………………………………....……………………3

2.1 Brief Introduction……………………………………………………………………..………3

2.2 Business Model………………………………………………………………………………3

2.3 Haidilao current status and oppotunities…………………………………..…………………3

2.4 First Blush………………………………………………………………….…………………4

3. Analysis…………………………………………………………………………..……………….4

3.1 Value Network：Value Network：From Sustaining to Disruptive…...……...………………4

3.2 DICEE-Whole Product/Service………………………..………………………...……………5

3.3 Shifting basis of competition………………………...…..…………………………...…..……5

3.4 User Experience…………………...……………………………………………………..……6

3.5 Partnerships………..………………..…………………………………………………………6

4. Recommendation………………………………………………………………………………….7

4.1 Be disruptive and build up standard management system and strict supervision

system……………………………………………………………………………………....7

4.2 Innovation on the diversity of design and dishes………………………………………....7

4.3 Stay competitive: apply market research techniques and find good locations……………...7

4.4 Fan marketing and standarized services to enhance the user experience

………………………………………..….8

4.5 ​Add new partners​………………………………………………………………….8

5. Exhibit…………………………………………………………………………………………….9

6. Reference………………………………………………………………………………………...12

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MET AD 741 Team 3 1. Abstract

Haidilao is a famous hot pot listed company in China. This article takes the importance of user experience as the entry point of Haidilao and discusses it on five levels. (a) What company is Haidilao, (b) How does Haidilao run the business, (c) the current opportunities of Haidilao, (d) detailed analysis of what helped the success and the problem of Haidilao, (e) Recommendations for what should Haidilao do to optimize its corporate? 2. Introduction 2.1 Brief Introduction

Si Chuan ​Haidilao International Holding Ltd​, is a hot pot restaurant chain with 318 restaurants in more than 100 cities in mainland China, Taiwan, and other countries, including Singapore, South Korea, with more than 50,000 employees.

In 1994, Haidilao started from a 4-table booth in Si Chuan, offered hot pot called “Malatang.” To distinguish itself from other competitors, Haidilao introduces unique complimentary services including birthday surprise, shoes shining, free snacks and drinks, manicure, kids playroom, massage. For better control the food qualities and food logistics, Haidilao built up the standardized lean supply chain, with own vegetable base, central kitchen, and Shu Hai logistics. In 2002, Haidilao started its expansion in China. To branch out its business from only focus on in-store, Haidilao launched hot pot retail product and outstanding delivery service in 2010. In 2012, Haidilao opened its first overseas store in Singapore and opened its second one in the United States. Nevertheless, the Haidilao oversea expansion failed to localize. In 2017，with the lack of management, a severe hygiene issue of a rat-infested kitchen at a Haidilao’s restaurant brought to public attention. As of 2018, this hotpot chain has priced its US$963 million Hong Kong IPO. 2.2 Business Model

HaiDiLao targets the customers in more developed regions of the country where customers value “service” as much as the food itself. On average, a diner spends approximately ($16~$23) at the restaurant, making Hai Di Lao sit at the premium end of the hot pot business with 20~30% higher than the market average. (​Cai 2015​) The food material cost，employee cost and other operating costs account for nearly 40%, 30% and 8% of the total revenues of the company respectively, leaving 22% net profits margin for the company.

The high margins give the company enough budgets to improve operations. Haidilao adopted a strategy to open more small stores located closer to major residential communities to give potential customers interactions. Haidilao manages all its branches directly to guarantee its service and food quality. Haidilao has distribution centers where ingredients can be processed, packed and delivered directly to the customer’s table, leaving no cooks in the kitchen and great decreasing the labor cost. (Yao 2015) 2.3 Haidilao current status and opportunities

Haidilao is currently performing well. In 2017, Hot-pot has the highest proportion in the Chinese food industry, earned 437 billion yuan, achieves 13.7% in Chinese restaurants. Haidilao earned 10.637 billion yuan in revenue and 1.194 billion yuan in net profit. (​Snowball 2018)

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MET AD 741 Team 3

From 2013 to 2017, the hot pot market grew by 11.6%, other categories of Chinese restaurants grew by 9.9%. Most brands are single-store businesses, while only 0.32% of hot-pot brands have more than 100 stores. Haidilao had a market share of 2.2%. 60 yuan-200 yuan per person cost in the high-end hot pot accounted for about 28%. High-end hotspots are growing fast, with a compound growth rate of 13.9 percent between 2013 and 2017. The growing popularity of hotpot, the dispersion of hot-pot industry, the higher liv