Haidilao Says Food Safety Scandals Behind It With New 'Smart' Store

China’s leading hot pot chain, Haidilao International Holding Ltd., which debuted its shares in Hong Kong last month, is launching its first “smart” concept restaurant on Sunday with the hope of resolving one of its biggest branding crises: rat infestation.

The new location in eastern Beijing will be equipped with an automated warehouse that operates in temperatures between 0 and 4 degrees Celsius (32 and 39 degrees Fahrenheit), a condition in which rats and cockroaches can’t survive, company Chief Information Officer Shao Zhidong said.

Other smart facilities include an intelligent kitchen management system that monitors the entire food preparation and cooking process, and the capability to customize hot pot soups that cater to diners’ requests.

The employment of advanced technology to improve hygiene was a pledge made by Haidilao co-founder and Chairman Zhang Yong during his interview with Caixin ahead of its shares debut in Hong Kong. Floated in late September, Haidilao stock has so far largely underperformed since its initial public offering at HK$17.80 ($2.27) a share.

Haidilao on Friday closed down 2.17% to HK$16.26.

Since last year, food safety problems have plagued the decades-old hot pot chain, when undercover reporters exposed rat infestations and staff who handled food with their bare hands in certain outlets in Beijing and as far away as Singapore.

The company hopes its smart restaurants will end its sanitation crisis and help cut labor costs by around 17%. The new 93-table concept store will employ around 140 servers, about 30 fewer than branches of similar sizes, a restaurant manager told Caixin.

The restaurant chain aims to have two more such stores in the Chinese capital by the beginning of next year, but said there won’t be a rapid expansion due to the higher costs and difficulties in retrofitting the current stores with new technologies.

Contact reporter Coco Feng (renkefeng@caixin.com)