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China Food & Drinks

Hotpot Chain Haidilao Is Shutting Down Over 300 Restaurants

After adding 544 stores in 2020, Haidilao will close 300 locations this year.

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News that China’s most popular hotpot chain is closing down over 300 restaurants became a top trending topic on Chinese social media site Weibo on Friday.

Haidilao (海底捞) made the announcement on Friday evening through a social media post, saying the company will gradually shut down about 300 of its stores. The restaurants that are to be closed are those with relatively low customer traffic and lower-than-expected business performance.

Although the stores will be shut down before December 31 of this year, some of them will potentially reopen at a later date after reorganization. The company also said it would not lay off its staff for now.

Haidilao has approximately 1600 restaurants, of which many were opened in 2020, when the chain added an astonishing 544 new restaurants. In the summer of 2021, Haidilao had a total of 131,084 employees.

It has been over 25 years since Zhang Yong, the owner of Haidilao, set up his first hot pot restaurant in Jianyang, Sichuan, with a mere investment of 10,000 yuan ($1470). It later became the dominant hot pot chain in the country.

Hot pot restaurants, where fresh meat and vegetables are cooked at the table in the simmering broth, are extremely common across China. But Zhang Yong chose to market Haidilao and its authentic Sichuan hot pot with an innovative strategy: high-service, high-tech, and high-quality.

The restaurant is known for giving its customers a free manicure along with snacks and drinks while waiting for a table. The staff is thoroughly trained in providing the best customer service, and Haidilao has introduced new concepts throughout the years to enhance customer experience. People who dine alone, for example, will get a teddy bear to join them. The restaurant also introduced robot waiters and is known for its noodle dancers and staff singing birthday songs whenever there is a birthday celebration.

Want a bear to join you for hotpot? Haidilao’s got you covered.

Over the past two years, however, Haidilao’s table turnover rate shrunk dramatically. The average table turnover rate in 2019 was 4.8 per day, but that number fell to 3 times per day in 2021, with some restaurants only doing 2.3 per day, leading to significant losses for the company’s net profit.

Due to the Covid19 crisis and lockdowns, Haidilao closed its doors in late January of 2020. By mid-March, it started to gradually reopen some of its locations, although they initially offered fewer seats and introduced an increased distance between dining table, that were allowed to have no more than three guests.

Due to the restaurant’s limited tables and increased labor costs, its menu prices went up, much to the dismay of many netizens, who already thought the prices at Haidilao were steep before the pandemic.

In October of this year, the story of a Haidilao customer in Zhengzhou discovering that the 200 grams of tripe he ordered for 72rmb ($11) was actually only 138 grams also went viral on Weibo, stirring discussions on the Haidilao menu prices.

While news about Haidilao closing so many of its stores attracted over 260 million views by Friday night, many commenters agreed that the company should scale down. “The more stores you open, the less you focus on service, the surroundings of the newly opened stores are not up to par, while prices are only rising,” one person wrote on Weibo.

“They’re not making enough money, while their prices were already being pressed down, and still I can’t afford to eat there,” another commenter wrote.

Others also wondered how Haidilao could claim they would not sack their staff while closing down so many stores. “Does that basically mean they’ll wait for them to leave for themselves?”

“When there’s a pandemic, there’s bound to be bad luck [in business],” another commenter writes: “There’s really not much to do about it.”

By Manya Koetse

Spotted a mistake or want to add something? Please let us know in comments below or email us. First-time commenters, please be patient – we will have to manually approve your comment before it appears.

©2021 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

Manya Koetse is the founder and editor-in-chief of whatsonweibo.com. She is a writer, public speaker, and researcher (Sinologist, MPhil) on social trends, digital developments, and new media in an ever-changing China, with a focus on Chinese society, pop culture, and gender issues. She shares her love for hotpot on hotpotambassador.com. Contact at manya@whatsonweibo.com, or follow on Twitter.

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1 Comment

1 Comment

  1. Jin Wang

    November 6, 2021 at 10:31 am

    with the increase of labor cost in China, only profitable restaurant will be open.
    Restaurant with financial problems will be closed.

    (great website)

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China Food & Drinks

Would You Like Coffee with Your Sneakers? Chinese Sports Brand Li-Ning Registers Its ‘Ning Coffee’ Brand

Li-Ning enters the coffee market: “Will they sell sneaker-flavored coffee?”

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An unexpected competitor is joining China’s coffee market. With over 7000 stores in the country, Li-Ning has the potential to become the biggest athletic coffee chain yet.

Another player is joining mainland China’s growing coffee market. It’s not an American coffee giant, nor a coffee house chain from Hong Kong – it is China’s leading sportswear brand Li-Ning Sports (李宁体育).

Li-Ning registered its coffee brand under the ‘NING COFFEE’ trademark. As reported in an article written by ‘Investment Group’ (@投资界) and published by Toutiao News (@头条新闻), Li-Ning has confirmed on May 6 that it will provide in-store coffee services to enhance customers’ shopping experiences in the near future.

The move means that Li-Ning could potentially become a big player in China’s coffee market, competing with major brands such as Starbucks, Luckin Coffee, Costa and Pacific. If the in-store coffee cafes would roll out in most of its shops, there could be over 7000 Ning Coffee cafes in China in the future. By the end of 2021, Li-Ning Sports had a total of 7,137 stores in China.

Starbucks has 5,400 stores in China. Leading domestic coffee chain Luckin Coffee expanded to over 6000 stores last year. Costa Coffee, although closing some of its China stores in 2021, announced that it aims to have a total of 1,200 stores open in China later this year. Looking at Li-Ning’s presence across China, its in-store coffee cafes could be serious competition for the leading coffee chains in the country.

Over the past few years, various Chinese sportswear brands, including Anta Sports and Erke, have seen a rise in popularity, but Li-Ning is still China’s most famous brand name for athletic apparel and shoes. The company was founded in the early 1990s by Chinese Olympic gymnast and business entrepreneur Li Ning (1963) and was generally seen as a Nike copycat – the original logo was even similar to the Nike swoosh. Although Li-Ning looked like Nike, the brand is more appealing to many Chinese consumers due to the fact that it is cheaper and made in China.

Li-Ning markets itself as being “deeply and uniquely Chinese” (Li Ning official website 2022), which has made it more popular in an era of “proudly made in China” (read more about that here). Moreover, it also promises to offer high-quality sportwear at a price that is cheaper than the American Nike or German Adidas.

Li-Ning’s success is also owed to its marketing strategies. Besides being the official marketing partner of many major sports events, including the NBA in China, the brand has also contracted with many household athletes and famous global ambassadors.

Over a decade ago, marketing observers already noted that despite the remarkable success of Li-Ning in China, the brand still had a long way to go in order to strengthen its image as a long-term brand, recommending Li-Ning to “create excitement around the brand” by building more associations related to lifestyle and coolness to better resonate with younger Chinese customers (Bell 2008, 81; Roll 2006, 170).

With its latest move into the coffee market, it is clear that Li-Ning is moving its brand positioning more toward the direction of lifestyle, trendiness, and luxury. Although purchasing a coffee at Starbucks or Luckin is part of the everyday routine for many urban millennials, coffee is still viewed as a trendy luxury product for many, relating to both cultural factors as well as economic reasons. As noted by Cat Hanson in 2015, the price of a single cup of coffee was equal to a month’s worth of home broadband internet (read more).

Previously, other fashion brands have also opened up coffee stores in China. As reported by Jing Daily, international luxury brands Prada, Louis Vuitton, and FENDI also opened up coffee cafes in mainland China.

Another unexpected coffee cafe is that of China Post, which opened its first in-store ‘Post Coffee’ in Xiamen earlier this year. On social media, many netizens commented that the brand image of the national post service clashed with that of a fairly expensive coffee house (coffee prices starting at 22 yuan / $3,3).

“The postal services are located in cities and in the countryside and are often used by migrant workers, and generally this demographic isn’t buying coffee,” one person commented, with another netizen writing: “This does not suit the taste of ordinary people, it would’ve been better if they sold milk tea.”

Post Coffee, via Jiemian Official.

On Weibo, Li-Ning’s journey into the competitive coffee market was discussed using the hashtags “Li-Ning Enters the Coffee Race” (#李宁入局咖啡赛道#) and “Li-Ning Starts Selling Coffee” (##李宁开始卖咖啡##).

Like with China Post, many commenters say the combination of sportswear and coffee is not something they immediately find logical. “Will they also sell sneaker-flavored coffee?” one person wondered, with others thinking selling coffee – seen as a product from western countries – does not exactly match with Li-Ning as a ‘proudly made-in-China’ brand.

“How would you feel about trying on some clothes at Li-Ning while sipping on Li-Ning coffee? I understand Li-Ning is jumping on what’s popular, and this time it’s coffee,” one Weibo user writes, with others also writing: “I think it has potential.”

“I’m willing to try it out,” various commenters write. For others, they want to see the menu first: “It all depends on the price.”

For more about the coffee and tea market in China, check our other articles here.

By Manya Koetse

Get the story behind the hashtag. Subscribe to What’s on Weibo here to receive our weekly newsletter and get access to our latest articles:

References

Bell, Sandra. 2008. International Brand Management of Chinese Companies. Heidelberg: Physia-Verlag.

Roll, Martin. 2006. Asian Brand Strategy: How Asia Builds Strong Brands. New York: Palgrave Macmillan.

Spotted a mistake or want to add something? Please let us know in comments below or email us. First-time commenters, please be patient – we will have to manually approve your comment before it appears.

©2022 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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China and Covid19

Weibo Has Still Blocked ‘Shanghai Buy Groceries’ Hashtag

“It’s easier to get a Shanghai license plate than groceries around here.”

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While Shanghai is promising to improve food supplies for locked-down residents, many households are still struggling to get their groceries and complain about high prices for basic food items. Over the past week, Weibo has blocked a hashtag page about the issue.

On April 8, during the seventh day of Shanghai’s phased citywide lockdown, the Chinese social media platform Weibo removed the ‘Shanghai Buy Food’ or ‘Shanghai Groceries’ (#上海买菜#) hashtag while many in the city were facing difficulties in getting food delivered to their house and were venting their anger online. Getting daily necessities has become a problem for millions of residents not allowed to leave their homes due to the city’s coronavirus prevention measures.

The hashtag censorship coincided with state media news reports about Shanghai ensuring life supplies for residents and improving delivery capacities at a time when most stores, restaurants, supermarkets, and wet markets have shut down normal operations. Shanghai has registered over 253,000 Covid-19 infections since March 1st of this year, reporting another daily record of 26,330 confirmed cases on Wednesday.

Some joked that just censoring the problem was also a way of dealing with it. “Oh great, they solved the grocery shopping problem,” popped up as a recurring joke on Weibo after the hashtag page was removed.

The hashtag ‘Shanghai Buy Groceries’ first started trending on Chinese social media on March 23, when Shanghai residents started worrying about an impending lockdown amid spiking Covid19 cases.

Although Chinese state media reported on March 24 that Shanghai health authorities reiterated they had no plans to impose a citywide lockdown – and two people accused of spreading rumors about an alleged citywide lockdown were even placed under police investigation -, the city announced its phased lockdowns three days later and scenes of panic buying at local supermarkets ensued.

But around April 8, the moment when the hashtag’s popularity surged, many residents faced food shortages as their home supplies ran out and grocery orders did not come through. While some residents started receiving food boxes issued by the local government, most compounds and buildings also set up their own community WeChat group to place bulk orders at certain food vendors which then deliver the group purchase to the community, where it is distributed by volunteers or property management employees.

Earlier this week, Shanghai implemented a new measure that divides residential units into three risk categories depending on whether or not there have been any cases of Covid in their communities for a stretch of two weeks. For at least 15 million residents, their locked-down status remains unchanged – and for those in the ‘precautionary’ communities, their status could also be downgraded to the ‘locked down’ level the moment a positive case pops up again.

E-commerce and food delivery platforms such as Ele.me and JD have been sending more staff to Shanghai from other parts of China to help ensure quicker and smoother sorting and delivery processes. On April 13, many households also received their first (free) food boxes.

By Wednesday, hashtags such as “Shanghai Residents Are One by One Receiving Supplies” (#上海市民陆续收到物资#) and “Delivery Drivers Increased to Help Shanghai” (#多地快递小哥增援上海#) were circulating on social media. But on Weibo, the hashtag page for “Shanghai Groceries” still comes up with no results.

For some Shanghai residents, the pace of food delivery, even with improved delivery logistics, hasn’t been quick enough to alleviate their current food shortages. Others are also complaining about the costs of their ordered groceries, some spending 285 yuan ($45) or more on some basic groceries including noodles and vegetables.

One Weibo user asks: “Please, where can I buy reasonably priced meat, eggs, and green onions?”

“It’s easier to get a Shanghai license plate than groceries around here,” another netizen complained.

For some, doing online groceries has become an Olympic game; netizens are posting videos of setting a 5AM alarm clock, jumping out of bed, and entering their online orders as fast as they can. One video showed a wife cheering on her husband while his thumb was going as fast as possible to place grocery orders via his smartphone e e-commerce app.

“If I have to keep grabbing groceries like this, I’m gonna have a nervous breakdown,” one thirty-something lady from Shanghai wrote on Weibo: “I really hope the situation in Shanghai gets better soon. What happened to the city I grew up in?”

For more articles on the Covid-19 topics on Chinese social media, check here.

By Manya Koetse

Get the story behind the hashtag. Subscribe to What’s on Weibo here to receive our weekly newsletter and get access to our latest articles:

Spotted a mistake or want to add something? Please let us know in comments below or email us. First-time commenters, please be patient – we will have to manually approve your comment before it appears.

©2022 Whatsonweibo. All rights reserved. Do not reproduce our content without permission – you can contact us at info@whatsonweibo.com.

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