This is no ordinary restaurant. It’s Heidi Lao. China’s biggest hot pot chain is worth more than $9 billion. There are free services like manicures while you’re waiting in line and while you’re dining, there’s entertainment—lots of it. The restaurant even has its own boy band but are these gimmicks enough to make it a success outside of China? Heidi has grown to over a thousand outlets across the globe and with fresh funds from a recent public listing, the company plans to expand across the US. This is uh.
manicures shoe shining and massages for waiting customers How do I get a hold of that? Can a local Chinese chain restaurant take on America? This is the economics of Heidi Lao, so what is Chinese hot pot exactly? It’s a century-old cuisine in China meant to be eaten communally with everyone sat around a table. Everyone will share in the same soup. yeah to cook all kinds of dishes fresh dishes cook it together and share the food around the restaurant chain offers more than just hot pot, besides free manicures.
There are also playrooms for kids in almost every outlet with an in-house nanny. The restaurant also provides waiters who dance on request. The most important thing for us is to be very friendly because we want our customers to have a good experience in the restaurant. Heidi LA’s over-the-top performances and customer service set it apart from competitors and it keeps customers coming back, driving up Revenue: Its net profit last year reached $620 million, almost double the amount in 2019 before the pandemic.
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Hot pot itself is not that unique a dish, so how do you make it unique? You do it by building the ambiance and building the service culture that makes people want to come back again and again and again and they’ve been very successful. The company prepares all of its food in centralized kitchens offsite, which keeps overhead costs low. Meat and vegetables are purchased in enormous quantities and the soup stocks are prepared and packaged here before they’re sent to the outlets. The strategy has worked out for the company and now.
It wants to ramp up its international presence by attracting more investors. Today marks a special day for us; it’s not just about being in LA in May. Heidi’s International operator is super high-listed in the US, raising nearly $53 million with shares surging more than 40% on its NASDAQ debut. 70% of that new money is earmarked for the company’s global expansion. The United States or American market, is a very important market for us, not only just from the consumer perspective but also from the capital.
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perspective, we felt that Hadil can also leverage the experience, leverage the market, you know, the company’s first foray into the US was in 2013 when it opened an outlet in Los Angeles. In the decade since, Haidilao has opened more than 20 stores across North America, now its second biggest international market, making up nearly a quarter of its overseas revenue. Uh, it is a more diverse uh City so it is more suitable for a hot business. The restaurant chose not to open in Chinatown to set itself apart from other.
overseas Chinese businesses a strategy it applies to all of its global ventures in the US that’s helped it to attract a cult following, including Hollywood stars. If you open a Chinese restaurant in the states, uh, your target is to attract more non-Chinese customers, but appealing to American consumers may be easier than Wall Street investors are new to Chinese listings on us. Stock exchanges slowed dramatically in 2022 because of tensions between Washington and Beijing. Analysts say, however, that Heidi LA’s expansion plans defy the bubbling.
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tensions Heil Lao flies under the radar with politics and that makes it a great company to grow internationally. Most people are never going to know what the organizational heritage of high how people are not concerned about dropping $100 in hail as compared to spending $35,000 on a BD vehicle, which is then pitched as eliminating 50 American jobs. There are other difficulties, however, in exporting a business that’s centered on selling not just food but a very specific restaurant experience that the staff provide. These.
Extravagant services can be challenging to reproduce in all its global outlets. It had to shut down manicure services in the US for example, because as a restaurant, it couldn’t get a cosmetology business permit. Quality control is another concern. The company has about 1,400 outlets across the globe; all of them are operated directly by Haidilao. Unlike some of the biggest fast food chains in the world that have expanded via franchises, the company aspires to grow into a global restaurant juggernaut such as McDonald’s and KFC. Like it,
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peers Haidilao is now considering franchising its business but only in China and it’s doing so cautiously. Hey, LW, success mainly relies on the direct communication between customers and our staff. Whether franchising can or will change it is still a question mark. Whatever direction Heidi Lao takes as an analyst.
