I think everyone in China must know Haidilao. Am I right?
Haidilao hot pot (海底捞hǎi dǐ lāo) just had its IPO (initial public offering) and is finally on the market as of 9:30 am on September 26, 2018.
It lasted 24 years from its inception in 1994 before it became a public company.
Haidilao opened its shares and the company's market value topped HK $100 billion, surpassing the US $12.1 billion domino's pizza and becoming the world's fifth-largest restaurant company.
Three startups failed
What's the path from technical school to a billionaire?
Haidilao founder Zhang Yong was born in Sichuan in 1971. His father was a cook in a factory. His mother was a primary school teacher. He brings the typical founder story: no background, no degree, no money.
All he could do was work hard on his own and have full control over his fate.
In July 1988, at 17-year-old, he graduated from a technical school and entered the factory as a worker, which was considered a good job at the time due to its stability. During the 6 years working at the factory, he often used his spare time to travel across China, inspecting the market and looking for business opportunities.
Poker machine game
When he went to Chengdu, he saw many people playing a poker machine game. Zhang Yong felt extremely excited about it: "I should get a machine like this, then money will come!” he thought.
Zhang began to turn over the newspaper. He found an advertisement for a poker machine.
The only problem was… the price tag was RMB 6000! The Fujian seller saw his hesitation and told Zhang Yong something that he would remember for more than 20 years: “Young man, I think you’ll be able to achieve great work in the future. So I’m gonna sell it to you for RMB 5000!”
Zhang Yong excitedly went home to save up and collect RMB 5000.
Unfortunately, the appearance of a fake gold watch cheater led Zhang Yong to lose most of his money. This marked his first business failure.
selling oil tickets
Zhang soon began thinking about other businesses he could start. Back in those days, gasoline was still a planned commodity in China and had been supplied with an oil ticket, which was issued only for drivers of government and state-owned enterprises.
"If I can get the tickets from the government drivers and resell them to private drivers, I can make money," Zhang thought.
Zhang found a piece of cardboard and looked for a property along the road where he could set himself up. But things did not turn out so well for Zhang, as after several days of patient waiting, no cards stopped. No orders were placed.
Zhang went home disappointed… His second business plan fell short.
Little hot pot
After two unsuccessful ventures, Zhang Yong began to understand that he could make money if he did a good job in a business that satisfied people's appetite.
He has previously found out about a small popular hot pot in Chengdu, where restaurants burn the spicy hot pot in a string, and customers cook it themselves.
Zhang Yong felt optimistic about this business opportunity. He found a more than 10 square meters of the street shop and with RMB 180 per month as rent, he started his third business.
After half a year, a string of 20 cents of spicy hot pot brought RMB 200,000 in revenue, and Zhang Yong cashed in RMB 10,000 in net profit!
However, love would soon fail him again and have him close down his small hot pot restaurant. But on the bright side, the woman he had met eventually became Mrs. Yong.
After the small hotpot shop closed, Zhang Yong thought: I didn’t go to university, I have no experienced background, so there’s really only one way to go: work hard! And with that in mind, Zhang Yong was ready to reopen his shortly successful hot pot restaurant!
Zhang Yong's girlfriend, his classmate and classmate's girlfriend showed their full support and helped to collect RMB 8,000 to open a shop together. Four people, each owning a 25% share of the hot pot restaurant.
Haidilao was formally established in 1994 when Zhang Yong was only 24.
But the competition for hotpot cooking in Sichuan is so fierce that he thought the road to success could be reached in only one way: to attract customers with an impeccable customer service and experience that would go beyond the ordinary person’s imagination.
How do you do that? When a dinner guest complained about his stomach hurting from the night before, Zhang Yong served him a pot of millet gruel. When a customer complimented their chili sauce, Zhang Yong offered him several cans to take home.
It’s the little things that make the biggest difference. And it’s this kind of service that made Haidilao so successful and reputable.
But as the company grew, one big question arose: how could Zhang make tens of thousands of employees buy into his vision and ensure that each of them would provide the best customer service possible?
Talking about money is the best respect for employees
The hot pot business is very (very) competitive and isn’t very tech-heavy. Anyone can do it.
So why is Haidilao so unique?
Haidilao has a term, "dowry". As long as a store manager has been in his position for more than one year, he or she will give a dowry of RMB 80,000. (many of Haidilao's store managers are women in their 20s.)
Zhang Yong said that because the Haidilao workload is too tiring if you can work above the store manager, it all contributes to Haidilao. Everyone has a share of the credit and hard work, so whatever the reason they quit, we should give what they deserve.
If the community manager (about 5 branches) leaves, pay RMB 200,000. If the regional manager quit, they will give a hotpot restaurant to the manager which is about RMB 8 million.
An enterprise that truly guides its employees to fight for the enterprise's ideal is sure to first address their money needs.
How much can a manager at Haidilao earn? From RMB 20,000 to 80,000 a month, even tens of thousands of yuan depending on how successful their branches are.
Haidilao has designed a perfect rising channel and salary system.
Let the employee live with dignity first, then pursue happiness.
Haidilao treats its employees as real brothers and sisters. Waiters live in regular homes with nice facilities, and the dormitories must be within 20 minutes of walking to work.
Haidilao’s training not only covers work content but also general life skills. This company is helping its employees blend in with the rest of society in the cities it operates in.
Another manifestation of Haidilao's respect for its employees is Zhang Yong's bold authorization.
Zhang Yong's signature in Haidilao is more than RMB 1 million; The deputy general manager, chief financial officer, and the regional manager shall be responsible for the amount below RMB 1 million; The minister of bulk purchase, the minister of engineering and the manager of the community have the signature right of RMB 300,000; The store manager has the right to sign for RMB 30,000.
The most junior waiters are given the biggest authority: no matter what the reason is, as long as the employees think it is necessary, they can give the guests a free meal.
For a career person, this lifetime, encounter high salary, encounter high position, it is not uncommon, the strange is to encounter the boss's respect and understanding.
one person can make money look very desirable, but a group of people can truly go anywhere with it. Therefore, he is also willing to share profits with his own employees.
Congratulations to Zhang Yong and the Haidilao family for going public!
Anything can happen once your employees believe in your mission and are treated with the utmost respect.
Often times, business owners become too greedy and aren’t the happiest about sharing their money with the rest of their company fairly.
But Haidilao has operated differently ever since its inception in 1994, and it’s all the more gratifying to see Zhang Yong’s generous efforts pay off.
At last, this business venture is guaranteed to continue on its successful path for a long time.