Haidilao’s Developmental Trajectory and the Context of China’s Catering Industry

In October 2023, outside the Haidilao hot pot restaurant at Singapore’s Marina Bay Sands mall, waiting customers did not sit on plastic chairs scrolling through their phones. Instead, they received complimentary nail art, shoe polishing, and fruit snacks, while children were given free toy sets. For customers with pets, store staff provided temporary pet care services. This scene, now a common sight at Haidilao locations across 15 countries and regions, stands in stark contrast to the restaurant’s origins 29 years earlier: a 4-table store in Jianyang, Sichuan, with an initial investment of less than 10,000 RMB, where founder Zhang Yong’s only “special service” was polishing shoes for customers after they finished their meals. From a small local shop with no brand recognition, no standardized processes, and no professional culinary expertise, to a global chain with over 1,400 stores and annual revenue exceeding 41.5 billion RMB as of 2023, Haidilao’s growth trajectory represents a subversive重构 of the long-standing operational logic of China’s catering industry.

China’s catering market is one of the largest and most dynamic in the world, with total revenue reaching 5.29 trillion RMB in 2023, accounting for more than 10% of total social consumer goods retail sales^[1]. Despite its massive scale, the industry has long been trapped in a low-efficiency, low-margin, and high-fragmentation development model. According to data from the China Cuisine Association, the national chain rate of China’s catering industry was only 21% in 2023, far below the 54% in the United States and 49% in Japan^[2]. This low chain rate is not caused by a lack of market demand, but by three long-standing structural pain points that have plagued the industry for decades: difficulty in standardizing services, high employee turnover, and inconsistent customer experience. These three pain points form a vicious cycle that restricts the scalable development of most catering enterprises: high employee turnover leads to unstable service quality, which leads to inconsistent customer experience, which erodes brand reputation, reduces operating income, and further limits the ability of enterprises to increase employee compensation and welfare, thereby exacerbating employee turnover.

The first structural pain point, difficulty in standardizing services, stems from the inherent attributes of the catering industry itself. Unlike manufacturing products that can be produced in centralized factories and inspected before leaving the factory, catering products and services are produced and consumed simultaneously. The quality of a meal depends not only on the standardization of ingredients and cooking processes, but also on the attitude, skills, and emotional state of front-line service staff during service. Academic research on service operations management points out that services have four core characteristics: intangibility, inseparability, perishability, and variability^[3]. Among them, variability refers to the fact that the quality of the same service provided by different service personnel or the same service personnel at different times may vary greatly, which brings huge challenges to the standardization of service quality. For the catering industry, this variability is more prominent: a front-line service staff’s greeting tone, response speed to customer needs, and even facial expression may directly affect the customer’s dining experience. For a chain catering enterprise that expands across regions, the difference in service quality between different stores is often more obvious than the difference in product taste. Many catering enterprises have tried to solve this problem by writing thick service manuals, but in practice, these manuals are often just decorative documents, because front-line employees either do not understand them or are unwilling to implement them, and there is no effective mechanism to supervise and激励 their implementation.

The second structural pain point, high employee turnover, is a common problem in the global catering industry, but it is particularly severe in China. According to the 2023 China Catering Industry Talent Development Report, the average annual turnover rate of front-line employees in China’s catering industry is as high as 62%, and the turnover rate of front-line waiters in hot pot restaurants, which are relatively high-paying in the industry, also reaches 58%^[4]. The high turnover rate is caused by a combination of factors: first, the work intensity of front-line catering employees is extremely high, with an average daily working time of more than 10 hours, and they need to stand for most of the time; second, the salary level of front-line employees is low, with an average monthly salary of only 3,200 RMB in 2022, far lower than the average of 4,500 RMB in the manufacturing industry and 5,800 RMB in the express delivery industry^[5]; third, the career development path for front-line employees is vague, and most enterprises only provide very limited promotion space for front-line employees, and many employees will not have any salary increase or position promotion after working for several years. High turnover not only brings high recruitment and training costs, but also makes it impossible for enterprises to accumulate experienced front-line service teams, which further exacerbates the problem of inconsistent service quality.

The third structural pain point, inconsistent customer experience, is the direct result of the first two pain points, and also the core factor that restricts the building of brand loyalty for catering enterprises. For most catering enterprises, the dining experience of customers may vary greatly each time they visit, even in the same store. A survey by the China Consumers Association shows that 68% of consumers have had the experience of “unstable service quality” when dining at chain catering brands, and 42% of consumers will choose not to revisit a brand because of a bad service experience^[6]. For the catering industry, which is highly dependent on repeat customers, inconsistent customer experience means that enterprises cannot build stable brand loyalty, and can only rely on continuous promotion and discount activities to attract customers, which further squeezes profit margins.

It is against this industry background that Haidilao’s success is particularly valuable. For a long time, the industry has believed that the three pain points are “unavoidable”: service standardization requires high investment in training and management, which will increase operating costs; improving employee welfare to reduce turnover will further increase costs; and ensuring consistent customer experience requires a large amount of investment in brand building and operation management. Many catering enterprises have chosen to sacrifice service quality and employee welfare in exchange for lower costs and higher profit margins, which has led to a “race to the bottom” in the industry. Haidilao’s practice proves that the three pain points are not unavoidable, but can be solved through systematic institutional design. Its core competitiveness is not “over-service”, but a service ecosystem built around three core pillars: a complete standardization system that covers all aspects of service, supply chain, and operation management; an employee empowerment mechanism that gives front-line employees sufficient authority and incentives to execute standards and actively innovate; and an organizational culture that takes “customer first” and “employee first” as its core values, binding the interests of customers, employees, and enterprises together.

This ecosystem is not a simple stack of three independent modules, but a mutually reinforcing organic whole. Standardization is the foundation of the ecosystem: by sorting out and固化 all core service links into clear, executable standards, Haidilao