Zhang Yong Rewrites His Own Playbook at Hot Pot Heavyweight Haidilao

Last week, Haidilao International Holding Ltd., a leading Chinese hot pot chain, announced the return of its founder, Zhang Yong, to the role of CEO. Zhang’s comeback comes as the company faces declining earnings and aims to undertake a strategic overhaul. According to a source close to Zhang, his return marks a "second revolution" for Haidilao, with primary goals to accelerate the "Red Pomegranate Plan"—an initiative focused on incubating new restaurant brands to diversify revenue streams beyond hot pot—and to streamline decision-making processes within the company [para. 1][para. 2].

Founded in Jianyang, Sichuan, the company has grown from a single table to a major player in China’s catering industry, becoming the first Chinese restaurant chain to go public on the Hong Kong Stock Exchange in 2018 and expanding internationally as early as 2012. Haidilao has survived food safety controversies and the challenges brought on by the Covid-19 pandemic, but it now faces a tougher environment characterized by fierce competition and low profit margins [para. 3]. Zhang is known for instilling in Haidilao a philosophy of self-determination and upward mobility, utilizing an incentive system to allow employees to progress within the organization [para. 4].

Zhang’s entrepreneurial journey began after a series of failed ventures. Born into a modest family in 1971, his early business attempts were unsuccessful until he opened a small malatang (spicy broth) restaurant in the wake of economic reforms in 1992. That venture proved lucrative, leading to the foundation of Haidilao in 1994 with his wife and partners, using 8,000 yuan of pooled funds. The company subsequently expanded domestically and internationally, reaching 363 outlets before its public listing in 2018. To support growth, Zhang established an integrated supply chain, notably with Yihai International supplying soup bases, and built independent entities for logistics, warehousing, and HR [para. 5][para. 6][para. 7].

Central to Haidilao’s culture has been its master–apprentice vocational training system, allowing experienced staff to nominate and fast-track apprentices into roles of responsibility [para. 8]. However, the aggressive expansion that followed the 2018 IPO—from 466 stores to 1,298 by 2020—proved problematic. In 2021, Haidilao reported a net loss of 4.16 billion yuan, erasing almost all prior profits [para. 9]. Analysts attribute this to both external factors like Covid-19 and internal issues such as mismanagement in the master–apprentice system, where profit-driven promotions led to underqualified managers and operational scandals, as well as poor site selection for new locations [para. 10][para. 11][para. 12]. In response, the company launched the "Woodpecker Plan" to close about 300 underperforming restaurants and reformed its management and evaluation processes [para. 13].

In 2024, Haidilao renewed its diversification efforts with the "Red Pomegranate Plan." The Entrepreneurship and Innovation Committee, created in 2023, now oversees development and evaluation of new brands and ventures [para. 15][para. 16]. By June 2025, Haidilao had incubated 14 new brands managing 126 restaurants; revenue from non-hot pot businesses increased 227% year-on-year to 597 million yuan, though it still comprised less than 3% of total revenue [para. 17]. Nonetheless, the core business faces headwinds: first-half 2025 revenue dropped 3.7% to 20.7 billion yuan, net profit fell 13.7% to 1.8 billion yuan, and table turnover declined [para. 18]. As of mid-2025, the chain operated 1,322 stores, 21 fewer than the previous year, and franchising efforts remained modest with just three new franchised outlets, contributing 0.4% of revenue in early 2025 [para. 19].