Haidilao expanded from China to the US but struggled due to misaligned strategies between the two markets. In China, Haidilao succeeded by providing outstanding customer service and food quality at affordable prices through strategic standardization and an integrated supply chain. However, in the more competitive and mature US market, Haidilao faced higher costs, cultural differences, and an inability to adapt their strategy for the different market trends and consumer preferences. As a result, Haidilao was unable to deliver the same high-quality experience at low prices in the US that made them successful in China.

1. GROUP 7Innovation At Haidilao
INNOVATION AND CHANGE IN ORGANIZATION
TERM PROJECT PRESENTATION

2. Overview / Contents
Haidilao in China
1. China Food Service Market
2. Hidilao’s Competitive Advantage
(a) Outstanding Service
(b) Food Quality
(c) Affordable
3. Conclusion
Haidilao in US
1. Haidilao Competitive DisAdtantage
2. Challenges
(a) Service
(b) Food Quality
(c) Price
3. Conclusion
Executive
Summary
Conclusion
& Next Step

3. Executive Summary
Why their success in
China was not last?
Issues
KSFs in China
Haidilao Strategy for
entering US:
Market situation in
US:
Analysis
Misaligned strategy
for a different
market environment
lead to the failure of
Haidilao
Outcomes

4. 1. China Food Service Market
温饱
小康
2014: Enjoy the life
1. Franchising
2. Go Global
3. Diversity
4. Healthy

5. 1. China Food Service Market
Quality
Quantity / Diversity
2014

6. 2. Haidilao’s Competitive Advantage
Experience & Affordable
Experience Food Price
Service
Entertainment
Quality
Taste
Cost
Margin
L
H
L
H
L
H
Excellent J Okay Okay
Spend cheap money but experience the star service.

7. 2. Haidilao’s Competitive Advantage
Experience
1
Food
2
Price
3
Service specific to hotspot dining
situation
Service specific to different
customer needs
- Children, Pregnant, Smokers etc.
Service specific to situations
- Soaked (offered slippers), sick
(ginger soup)
Making the waiting process a pleasure
experience
1 2
43
A. Outstanding Service: All services are free

8. 2. Haidilao’s Competitive Advantage
Experience
1
Food
2
Price
3
B. Entertainment

9. 2. Haidilao’s Competitive Advantage
Experience
1
Food
2
Price
3
C. Support Service Design: interdisciplinary and multi-purpose
Culture
Talent Development
Measure &
Reward

10. 2. Haidilao’s Competitive Advantage
Haidilao’s Implementation
Support Service Design:
interdisciplinary and
multi-purpose
Experience
Integrated Industry
Chain
- Standardization 2005
Food
Price

11. 2. Haidilao’s Competitive Advantage
Experience
1
Food
2
Price
3
A. Support Service Design: interdisciplinary and multi-purpose
Downstream Upstream
☞ Processed food products
☞ Rinse with water
☞ Serve to customers
☞ 4 major logistics centers
☞ Soup base processing center
☞ Meat products from
established suppliers
Integrated Industry Chain: Standardization 2005

12. How to achieve outstanding experience & low costs?
3. Strategy In China: Experience & affordable
Taste
Quality
Service
Entertainment
Health
Hygiene
Low Medium High

13. 4. Sub-Conclusion
More than just Good Service
Hard imitable because
the whole value chain is
aligned with the company
goals.
Culture
Management, Leadership
Human Resource
Supply Chain
Environment
Approved Good Strategy

14. China USA
What happened?

15. 1. US Food Market
• Increased competition plus
stagnant revenues
• Intense price competition
• Higher costs
• Consumer mega-shift
• SoLoMo displacing mass
media advertising’s
influence

16. 1. US Food Market
Top Trends: 2013 Chef Survey
1.
Sourcing(meats & seafood)
2.
Production
3.
Hyper-local sourcing
(eg. Restaurants gardens)
Local & Organic
1.
Healthful kids’ meal
2.
Gluten-free cuisines
3.
Whole-grain
Health
1.
Environmental
2.
Seafood
Sustainability

17. 2. China Vs. US
Keep Strategy: Outstanding Experience & affordable.
A. Increased competition plus stagnant revenues
B. Intense price competition
C. SoLoMo displacing mass media advertising’s influence
(social, local and mobile)
D. Mature Market
SAME
A. Cultural Distance
B. Higher Operational Costs
C. Higher Standards
D. Market Segmentation
E. Trend
DIFFERENT
New Challenges →

18. 3. Haidilao SWOT
O T
S W
Standardizations
Service
Sucessfull
Strong Brand in Asia
Inexperienced Management
(not international)
Marketing
Medium taste
Strong Brand in Asia
(High Expectation)
New market
Learning opportunities
Against the trend
Higher Operational Cost

19. 4. Haidilao Challenge
1. Management 2. Higher Cost
3. Culture Distance 4. Localization

20. 5. Haidilao Competitive Disadvantage
Expensive & Bad Service
Customer Experience (Service & Entertainment)
Food (quality, taste)
Price (cost, margin)

21. How to achieve outstanding experience & low costs?
6. Strategy In US: Experience & affordable
Taste
Quality
Service
Entertainment
Health
Hygiene
Low Medium High

22. 6. Strategy In US: Reality Experience & affordable
Taste
Quality
Service
Entertainment
Health
Hygiene
Low Medium High
How to achieve outstanding experience & low costs?

23. 6. Strategy In US: Reality Experience & affordable
Low Medium High
Taste 0 x, x
Quality 0, x, x
Service 0 x, x
Entertainment 0 x, x
Health 0, x, x
Hygiene 0, x, x
X Low Cost, China (Strategy and Successful Implementation)
X Low Cost, USA , Strategy
0 High Costs, USA, Implementation

24. Conclusion
Haidilao
Service
Innovation
Product
Innovation
Management
Innovation
Meet with American standard.
Market Segmentation.