Analysis of Haidilao's 2019 Employee Efficiency Ratio Improvement and Digital Cost Reduction Effects

Based on the information I have collected, here is a detailed analysis of Haidilao’s 2019 employee efficiency ratio improvement and digital cost reduction effects:

In 2019, Haidilao’s employee cost accounted for

of its revenue, an compared with 29.56% in 2018 [1]. This data indicates that Haidilao maintained a high level of investment in employee compensation and benefits.

• 2015: 27.31%
• 2016: 26.18%
• 2017: 29.33%
• 2018: 29.56%
• 2019: 30.10%[1]

Haidilao’s per capita revenue in 2019 led the industry:

• Haidilao’s per capita revenue in 2018: RMB 245,700
• Xiabuxiabu’s per capita revenue in the same period: RMB 180,600
  [1]

Haidilao’s per capita revenue was

than that of Xiabuxiabu, reflecting a higher level of employee efficiency.

Haidilao vigorously promoted smart store construction during 2018-2019, mainly reflected in:

• Digital Management System
  : Established a comprehensive KPI assessment system to achieve refined operation management [2]
• Smart Kitchen Technology
  : Introduced automated equipment and intelligent systems to improve back-of-house efficiency [2]
• Central Kitchen System
  : Built smart central kitchens to provide direct dish distribution services to stores [2]

Haidilao achieved significant cost optimization through digital means:

• Raw material and consumable costs: 42% (lower than the industry average due to the use of higher-quality ingredients) [3]
• Rental costs: 3.31% (far lower than the industry average of 10.26%) [1]
• Water and electricity costs: 3.4% (remained stable) [4]

• Leading Sales per Square Meter
  : Haidilao’s sales per square meter in 2019 were significantly higher than the industry average [1]
• Table Turnover Rate
  : The overall table turnover rate remained at a high level in 2019, reflecting operational efficiency [5]
• Organic Brand Traffic
  : Strong brand influence lowered the proportion of rental costs [1]

• Affiliated Companies’ Whole Industry Chain Layout
  : Covers various raw materials such as ingredients, soup bases, and seasonings [2]
• Optimized Logistics Distribution Network
  : Established 34 logistics distribution warehouses by the end of 2022 [2]
• Procurement Cost Control
  : Achieved cost optimization through a digital procurement platform [6]

• “Four-Color Card” Management System
  : Strengthened store management assessment through digital tools [5]
• Feishu System Application
  : Realized informatization and standardization of store management [5]
• Dynamic KPI Assessment
  : Established a scientific performance evaluation system [5]

According to the latest data, Haidilao’s digital cost reduction effects continued to show in 2024:

• Raw material cost proportion dropped to 37.9% (a decrease of 3 percentage points from 40.9% in 2023) [7]
• Rental and related expenses remained at a low level of 1.0% [7]
• Water and electricity expenses remained stable at 3.4% [7]

1. Employee Efficiency Ratio Improvement
   : Through high-salary strategy and digital management, Haidilao achieved an industry-leading per capita revenue of RMB 245,700, which was 35.9% higher than that of industry peers.

2. Digital Cost Reduction Effects
   : Through smart stores and digital management systems, Haidilao successfully controlled rental costs to 3.31%, the lowest level in the industry, while maintaining raw material quality.

3. Input-Output Balance
   : Although the proportion of employee costs was relatively high (30.10%), high investment brought high returns, reflecting Haidilao’s “people-oriented” business philosophy.

• Continue to deepen digital transformation, especially the application of AI technology in supply chain management
• Focus on employee training and development to maintain talent competitiveness
• Continuously optimize the cost structure to seek a balance between quality and efficiency

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[1] Tianfeng Securities Research Report - Initiation Coverage Report on Haidilao (06862)
[2] Guosen Securities - In-depth Report on Haidilao (6862.HK)
[3] Northeast Securities - In-depth Report on the Catering Industry
[4] Haidilao International Holding Ltd. - 2024 Annual Report
[5] 21st Century Business Herald - RMB 650 Billion “Boiling” Restructuring: Haidilao Focuses on Experience, Xiabuxiabu Focuses on Cost Control
[6] China Chain Store & Franchise Association - Conference Materials of 2025 China Chain Catering Summit
[7] Haidilao International Holding Ltd. - Annual Results Announcement for the Year Ended December 31, 2024