About two years ago, I was taken to a local restaurant in Beijing by my friend. It was a hotpot restaurant called Haidilao. During the meal, I couldn't help but notice the young, fast moving, highly efficient and friendly waiting staff serving their customers in the dining hall. Given my management consulting and headhunting background, I was able to read further that they were in fact highly motivated and passionate in doing their jobs. They were serving the customers from their hearts (with a smiling face). This is not unusual in China, but also in other parts of the world. Although give star hotels and top airlines give us good service, we can tell that the majority of their staff are performing according to procedures, not necessarily from their hearts. 

I was also amazed in my subsequent visits to other Haidilao branches that the front line staff were empowered to make decisions on the spot. One time we over-ordered and the staff agreed to take back the uncooked food (as it was still fresh and placed separately in the cart). Another time, we told the staff we really liked the vegetable (tanghao) but did not know where to buy it, the staff told us which market we could go to and also gave us a portion to cook at home. In China, we sometimes come across enthusiastic sales staff trying to push for more sales but at Haidilao, they would remind you that you can order half-portions, while still showing enthusiasm. 

In addition to the motivated and effective staff, the restaurants also pay attention to the details of customer service, for example, customers wearing glasses are provided with lens cleaning cloths to clear steam from the hotpot, lady customers are given a small hairband to tie their hair back, the restaurants assign about 10% of their space as a waiting area and customers are provided with free snacks, manicure and shoe shining services while waiting to be called to their table.

At peak hours, there is usually at least a 1-2 hours waiting time but customers (like me) still arrive and wait for their table. Unlike the majority of restaurants in town, Haidilao's washrooms are actually clean and well maintained. 

In terms of operations, the restaurants must have highly standardized and efficient processes to ensure the meat and vegetables are served to the tables quickly and are clean and fresh. 

The company sens a portion of the staff bonus to their parents every month and has built a school dormitory for the children of the staff. 

At one time, a senior manager tasked with opening a sizeable restaurant in Beijing was cheated by the "landlord". As a result the company lost 3M RMB in rental payments and deposits - a good chunk of the company's cash flow during its early stage of development. Zhang Yong did not reprimand the manager because he thought he could have fallen for the same scam himself which was well designed and executed. Although Zhang is known for his temper, in this incidence, he bore the financial loss without blaming the staff. 

At Haidilao, the restaurant manager is not made responsible for profit. Zhang Yong thinks that if the staff do their jobs properly, profit will follow. Front line staff are empowered to make their own decisions in serving their customers, including giving discounts or free dishes as and when needed.

 

One can say that Haidilao's people-oriented philosophy and staff engagement practices (a hot topic these days) are not new concepts to the Western corporate world. However, I have not seen them implemented to the extent that Haidilao has in China or elsewhere in the world. This reminds me of my personal / working experience at Hewlett Packard when the company had put into practice the people-oriented values - HP way- so well.  

Haidilao was started by Zhang Yong (founder) in Jianyang city, Sichuan province, in 1994. Now, Haidilao has 30+ restaurants in six provinces with 6000+ staff. Haidilao's management philosophy has caught the attention of the business and academic  communities in China - articles have been published in newspapers and the Harvard Business Review, and a book has been written about it by a business school professor at Peking University. The Company, due to its success, has also caught the attention of the investment communities and potential investors within the same sector. 

Zhang came from a humble background - he graduated from a vocational college and worked as a laborer before founding the hotpot business. The management  values and philosophy he put in practice have contributed to Haidilao's success and will possibly ignite a service revolution in China.

The people-orientated way of doing things at Haidilao - treating the staff with respect - has become the company's core value. The company typically recruits young and low skilled laborers from far away cities and villages, mainly from Sichuan province. The management treats its staff as part of the family, it provides staff quarters with a maid service for cleaning and washing, free internet access and air-conditioning. The staff accommodation is located within 20 minutes walking distance from the restaurants.

The Service sector in China is still in its early stage of development. There's large room for improvement in service quality for the vast majority of companies in China. Haidilao has demonstrated that a company can achieve a quantum leap in staff productivity and customer service quality with people-oriented management values and a properly implemented philosophy. It does not only provide a good example for local companies but also for multinational companies operating in China. 

(Note: the author of this article David Yeung has no commercial​ or personal relationship with Haidilao or its management /owner. He has written this article with a view to raising the awareness of the local and overseas business communities on the vast potential of the service sector in China. With Haidilao leading the change, the service revolution in China may just be around the corner to offer significant enhancement in service quality and staff productivity). 

A Service Revolution in China

The Haidilao case

My Experience

Recipe for Sucess

Conclusion