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Haidilao: How Zhang Yong Built a Hot Pot Empire from Four Tables in Jianyang Using a Mentor-Apprentice Expansion Model

Founded: Zhang Yong, Shu Ping, Shi Yonghong, Li Haiyan · Haidilao International Holding Ltd.

JOURNEY

Key Fields

FIELD STAMPS
IndustryFood & Beverage
RegionMulti-region
ScaleGiant
ChannelOther

Origin

In 1994, seeking to improve his life through entrepreneurship, Zhang Yong, along with Shu Ping, Shi Yonghong, and Li Haiyan, pooled about 8,000 yuan to open a hot pot restaurant in Jianyang, Sichuan. At the time, competition in Jianyang was fierce. Lacking culinary expertise and capital, Zhang Yong’s initial hot pot base was mediocre, learned on the fly. He was forced to adopt a differentiation strategy based on service—offering shoe shines, manicures, and hot towels to waiting customers. This 'exceeding expectations' service compensated for product shortcomings, unexpectedly building a reputation and a loyal customer base, and carving out a path in the Chinese catering industry where service is the product.

Milestones

1994
Inception Turning Point
In 1994, Zhang Yong and his three partners opened the first Haidilao hot pot restaurant in Jianyang, Sichuan, with only four tables and about 8,000 yuan in startup capital. Lacking a secret recipe, the initial taste was average, and customers were scarce. However, by proactively offering services like shoe shines, hair ties, and snacks, he compensated for the product's limitations and gradually built a reputation. This service-led differentiation strategy became the prototype for Haidilao's organizational culture and brand moat.
2004
Cross-regional Expansion Transition
Haidilao expanded beyond Sichuan, opening its first store outside the province in Zhengzhou, followed by Xi'an in 2004, validating the 'mentor-apprentice' replication model. Store managers trained apprentices to open new stores and shared in the profits, allowing for rapid incubation that far outpaced competitors. This facilitated expansion from third- and fourth-tier cities to core hubs like Beijing and Shanghai. Entering Beijing in 2006 and Shanghai in 2009, the company established a national network, laying the organizational foundation for large-scale growth.
2018
IPO Growth
In 2018, Haidilao listed on the Main Board of the Hong Kong Stock Exchange, raising approximately 7.5 billion HKD, with a market capitalization exceeding 94.3 billion HKD on its first day. Capital fueled rapid expansion; by 2019, the store count surpassed 768, with a high table turnover rate of 4.8 times per day, making it one of the world's largest Chinese restaurant chains. The IPO also facilitated the independent listings of Yihai International (supply chain) and Super Hi International (overseas business), forming a matrix of three listed companies under Zhang Yong's control.
2020
Over-expansion Failure Failure
During the pandemic, Zhang Yong misjudged the recovery pace, aggressively opening about 544 new stores in 2020 and another 421 in 2021, bringing the total to nearly 1,440. However, the table turnover rate plummeted from 4.8 in 2019 to about 3.0 in 2021. Most stores operated at a loss, leading to a net loss of approximately 4.16 billion RMB in 2021—the first annual loss since listing. The stock price fell from a high of about 85 HKD to under 20 HKD, wiping out over 80% of market value. This period (2020–2021) is considered a major strategic misstep.
2022
Woodpecker Plan Turning Point
Facing massive losses, Haidilao launched the 'Woodpecker Plan' in November 2021, led by Deputy CEO Yang Lijuan, closing about 300 underperforming stores and optimizing management. Following this, the table turnover rate recovered to over 3.3. The company returned to profitability in 2022 with revenue of about 34.7 billion RMB and a net profit of about 1.37 billion RMB, followed by 41.4 billion RMB revenue and 4.5 billion RMB profit in 2023. However, expansion slowed significantly as the organization shifted from a 'sprint' to a 'refined' model, leaving behind heavy sunk costs from previous store fit-outs and equipment.
2026
Zhang Yong's Return Transition
After a 1,414-day absence from the CEO role, 55-year-old Zhang Yong resumed the position in January 2026. The previous four years saw three CEO changes, including Yang Lijuan and Gou Yiqun, leading to management instability and internal friction. Upon his return, Zhang proposed a 'food stall' model and accelerated overseas expansion, promoting four young female managers to key positions. However, new brand incubation has been limited; as of early 2026, new brands accounted for only about 2.9% of total revenue, and overseas stores made up less than 10%, leaving the second growth curve still in a difficult exploration phase.

Turning Points

  • 2004: Expansion beyond Sichuan to Zhengzhou validated the mentor-apprentice replication model, transforming Haidilao from a local brand into a national chain.
  • 2018: Hong Kong IPO raised about 7.5 billion HKD, with Zhang Yong controlling three listed companies, providing capital for further expansion.
  • 2021: A net loss of about 4.16 billion RMB forced the launch of the 'Woodpecker Plan,' closing about 300 stores and ending the era of aggressive expansion.
  • 2026: Zhang Yong returned as CEO after 1,414 days, betting on food stalls and overseas markets, ending the period of management instability.

Failures & Pitfalls

  • Misjudging the pandemic recovery pace (2020–2021) led to opening nearly 1,000 stores, resulting in a 4.16 billion RMB loss in 2021.
  • The 'Woodpecker Plan' necessitated the closure of about 300 stores, resulting in heavy sunk costs in renovation, equipment, and labor.
  • Frequent CEO changes over four years caused severe management instability and internal friction, undermining decision-making execution.
  • New brand incubation progress is far below expectations; as of early 2026, they account for only 2.9% of revenue, failing to establish a second growth curve.

关键成功要素

  • The mentor-apprentice system is the core engine of Haidilao's organizational expansion, where store managers train apprentices and share in profits.
  • An extreme service-differentiation strategy created strong brand recall in the highly homogeneous hot pot market.
  • The independent operation of the supply chain company, Shuhai, provided the infrastructure for standardized store expansion.
  • Zhang Yong's return focuses on overseas markets and the 'down-to-earth' food stall model to find a second growth curve.
  • The spin-off and listing of Yihai International and Super Hi International created a matrix of stores, supply chain, and overseas operations.

Lessons

  • Counter-cyclical expansion must be cautious; misjudging the recovery pace can lead to massive losses.
  • The mentor-apprentice system is a driver during rapid expansion but becomes a burden of organizational redundancy and rigid interests during contraction.
  • Frequent leadership changes after a founder steps back are less effective than a decisive return; management instability hurts morale more than strategic errors.
  • The hot pot sector is highly homogeneous; relying on service premiums rather than product moats risks being disrupted by new entrants.
  • Going global is a growth option but not a panacea; it requires overcoming the dual challenges of localizing supply chains and building brand awareness.

Core Data

  • 1994 Initial Investment：Approx. 8,000 RMB (Public data, not independently verified)
  • 2018 IPO Market Cap：Approx. 94.3 billion HKD (Public data, not independently verified)
  • 2021 Net Loss：Approx. 4.16 billion RMB (Public data, not independently verified)
  • 2022 Revenue：Approx. 34.7 billion RMB (Public data, not independently verified)
  • 2022 Net Profit：Approx. 1.37 billion RMB (Public data, not independently verified)
  • 2023 Revenue：Approx. 41.4 billion RMB (Public data, not independently verified)
  • 2023 Net Profit：Approx. 4.5 billion RMB (Public data, not independently verified)
  • Woodpecker Plan Store Closures：Approx. 300 stores (Public data, not independently verified)
  • 2023 Year-end Global Store Count：Approx. 1,370 stores (Public data, not independently verified)
  • New Brand Revenue Share (Early 2026)：Approx. 2.9% (Public data, not independently verified)
  • Days Zhang Yong was absent as CEO：Approx. 1,414 days (Public data, not independently verified)

Competitors / Peers

Haidilao's main competitors in the Chinese hot pot market include Xiabuxiabu (HK-listed, with Xiabuxiabu and Coucou brands, focusing on individual pots and mid-to-high-end social dining), Banu (focusing on 'product-ism' with tripe as a core item to counter Haidilao's 'service-ism'), and Sichuan-Chongqing chains like Xiaolongkan and Shu Daxia. Additionally, retail-based hot pot ingredient supermarkets like Guoquan Shihuai are entering the dining-in market, while new brands like Zhuguangyu and Nan Hot Pot are rising rapidly through social media traffic and product innovation. Since Zhang Yong's return in 2026, Haidilao faces not only traditional chain competition but also the erosion of dining-in demand by pre-prepared meals and home-consumption trends.

Sources

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⚠️ This entry draws on self-reported accounts and public reporting, not independently verified, and is not investment, startup, or legal advice; revenue figures are case-specific and not representative of typical results.