The origins of the Chinese term haidilao can be traced back to an ancient poem about fishing and ‘catching the moon’. It is still used by mahjong players to refer to a rare situation when a player wins with the last tile.
Naming his hotpot chain Haidilao has also proven to be a masterstroke for Zhang Yong, who is now China’s richest restaurant owner.
Born in 1974 in Sichuan’s Jianyang to a poor family, Zhang didn’t finish high school. He worked as a welder at a state-owned tractor factory for six years before failing in a business venture to operate lottery machines. After that he started a little restaurant with four tables in his hometown, naming it Haidilao.
Hotpot restaurants are as common as mahjong tables in Sichuan which means the competition is fierce. And while Zhang was not particularly outstanding at preparing the spicy broth, he made up for it with outstanding service for his customers, including offers to polish their shoes and babysit their kids.
Helped by a name that every Sichuanese could recognise, Haidilao quickly became a popular eatery in Jianyang. In 1995 Zhang registered the trademark and began to expand his hotpot chain into nearby cities.
Haidilao made its breakthrough as a household name in China after the SARS outbreak in 2003. Staring at bankruptcy because few were daring to dine out, Haidilao launched a delivery service which turned out to be very popular.
The company’s innovative strategy attracted the attention of state broadcaster CCTV, which invited Zhang to share his experience as a role model for Chinese business. With his reputation going national, Zhang’s eateries began to expand into first-tier cities such as Beijing in 2004, and became a truly nationwide chain.
Haidilao now operates more than 300 restaurants, including outlets in Hong Kong, Taiwan and the United States. It became the first local Chinese restaurant chain to pull in more than Rmb10 billion ($1.5 billion) in revenue last year, and it went public in Hong Kong in September.
At one point its market value surpassed HK$100 billion, meaning the 68% stake held by Zhang and his wife was worth close to $10 billion.
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Haidilao continues to champion its superior customer service. Diners waiting for tables can get free shoulder massages or manicures. Solo diners can even be offered a teddy bear as a temporary companion.
However, it is debatable whether these extra services (and the customer loyalty that they are trying to encourage) can justify Haidilao’s current valuation, which is now more than 60 times its 2017 earnings.
In comparison, Café de Coral, a Hong Kong-headquartered restaurant chain that operates a branch network of a similar size, is worth just a tenth of Haidilao’s current value.
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