China Food

Zhang Yong abdicates


“ 
how can Zhang Yong, who once stood in the spotlight, finish the curtain call with dignity?
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Before falling into the altar, Zhang Yong chose to jump down on his own initiative.
On the evening of March 1, Haidilao released the announcement of management personnel appointment. Zhang Yong, founder, chairman of the board of directors and former CEO of Haidilao, announced that he would step down as CEO and be replaced by Yang Lijuan, deputy CEO and chief operating officer known as “the best waiter”.
Since 1994, Zhang Yong established the first undersea fishing in Jianyang, Sichuan, he has led undersea fishing for 28 years. Now that this node exits, it may be a good choice for Zhang Yong and Haidilao.
Nine days ago, Haidilao just issued a profit warning, announcing that the company turned into a loss in 2021, with a net loss of 3.8 billion yuan to 4.5 billion yuan. After the release of the huge loss news, Zhang Yong chose to quit before publishing the 2021 annual report.
Behind the pre loss, it is also the bitter fruit of the accelerated expansion and emergency braking of Haidilao stores in the past two years. According to the financial report data of Haidilao in previous years, there were 466 stores during its listing in 2018, 544 stores expanded sharply against the raging epidemic in 2020, 299 stores were added in the first half of 2021, and the number of stores reached 1597 as of June 30, 2021.
However, in the second half of 2021, Haidilao made an emergency brake and announced the closure of 300 stores.
Photographer: Xiao Li
In this regard, Zhang Yong once reflected on the expansion strategy internally: “in June 2020, I further made a plan to expand the store. Now it is really blind self-confidence. The current bitter fruit can only be swallowed by ourselves.”
Now, Zhang Yong, who swallowed the bitter fruit, chose to retreat bravely and gave up his CEO position to Yang Lijuan, a key figure who has worked in Haidilao for more than 27 years and led Haidilao to the national market.
For Zhang Yong personally, a person who once stood in the spotlight has now completed the curtain call with dignity, which can be regarded as a proper end to his entrepreneurial life; For Haidilao, the past management mode focusing on Zhang Yong’s individual can no longer adapt to today’s huge organizational system, and the new organizational style needs to be broken.
Since the beginning of “selling pot by pot and opening shop by shop”, Zhang Yong and Haidilao are good at teaching by example. The rapid expansion of the scale is bound to increase the geometric radius of management, and the difficulty of management can be imagined. In February this year, Haidilao frequently rushed to the hot search because of privately labeling customers and food safety problems.
However, Zhang Yong did not quit Haidilao. He will continue to serve as chairman of the board of directors and executive director. Now, what Zhang Yong needs to do is to find a balance between the traditional apprenticeship system and the standardized process, and realize a smooth switch between the change of personal management style and organizational style.
Radical undersea fishing set the wrong goal
Zhang Yong is a man who understands human nature and himself.
“It’s hard to gain insight into human nature. For example, consumers say that Haidilao is not delicious. In fact, it may be that it’s too expensive. My wife said I came home late, maybe I don’t care enough about her. If I believe in my wife and stay at home every day, I believe my wife will hate me more.” On June 15, 2021, facing the sharp decline of stock price and performance for months, Zhang Yong said at the investor exchange meeting.
In the exchange meeting, Zhang Yong’s golden sentences appeared frequently. For example, “no enterprise will continue to grow. An enterprise is an organization and has vitality like people. If this year is good, it may not be good next year; if this year is not good, it may not be bad next year”; “Why was the online hype about the underwater fishing system so awesome? It was covered up by the performance. And every time I said there was a problem, everyone said I was modest.”.
Zhang Yong’s Frank speech now seems more like a preventive injection.
In November 2021, Haidilao announced that it would gradually shut down about 300 stores before the end of the year. The number of closed stores accounted for nearly 20% of the total number of stores, and the one-time loss and impairment loss of long-term assets disposed of by this move amounted to about 3.3 billion yuan to 3.9 billion yuan. At the same time, it also said that it would “timely shrink the business expansion plan”: if the average turnover rate is less than 4 times / day, in principle, it will not open a new Haidilao restaurant on a large scale.
This is the tuition fee for correcting the deviation of expansion strategy.
Haidilao realized that its basic plate is not the increasing number of stores, but the turnover rate that it has been proud of in the past. If you set the wrong goal, you are shaking your basic plate.
It is understood that the business adjustment of Haidilao mainly focuses on closing poorly operated stores and optimizing the organizational structure. In the past two years, under the guidance of the rapid expansion channel strategy, the total number of stores has nearly doubled. However, due to the influence of wrong location, insufficient number of excellent store managers and repeated epidemic, the turnover rate is poor and the overall business performance of the company is reduced. In addition, the company will rebuild and strengthen some functional departments, restore the regional management system, optimize the assessment system, and pay attention to the construction of corporate culture and Haidilao University.
When Huang Tieying, a visiting professor at Guanghua School of management of Peking University, asked Zhang Yong, “many people want to circle money these days. Why don’t you?” Zhang Yong told him frankly, “if you use the money from the investment bank, you have to open a shop according to others’ plans. But I think business is like people. You have to work when you should work, eat when you should eat, and sleep when you should sleep. You can’t open several stores every year if you want to open several stores.”
We all know the truth, but in decision-making, how to subtract is more difficult than how to add, and how to “retreat” is more difficult than how to “advance”. Shutting down 300 stores and finding moths mixed in during the rapid expansion of Haidilao is an important purpose of the “woodpecker plan”. The personnel appointment announcement last night also said that Yang Lijuan will continue to be responsible for the implementation and promotion of the “woodpecker plan”. This appointment is also an important measure to strengthen the corporate governance structure.
On November 12, 2021, Haidilao announced that it planned to place 115 million shares at HK $20.43 per share and planned to raise 2 billion yuan for “self rescue”.
Transition from apprenticeship to new organizational culture
For Yang Lijuan, once the only deputy general manager of Haidilao, Zhang Yong is the boss, the master and more like a big brother.
“Basically, his big strategy has not failed.” Yang Lijuan is a firm executor of Zhang Yong’s decision-making. When referring to Zhang Yong, she often uses very absolute words.
Once, Zhang Yong and the senior management team went to a plateau in Sichuan for tourism. The atmosphere was just right. When everyone walked and sang, Yang Lijuan picked a bunch of wild flowers on the roadside. Seeing this behavior, Zhang Yong suddenly changed his face.
He loudly blamed Yang Lijuan: is it easy to grow a bunch of flowers in such a cold and high altitude place? How can you just ruin a life? Your quality is so low!
This scene is fully described in the book “you can’t learn how to fish at the bottom of the sea”. In the later whole journey, Zhang Yong still chattered and “scolded” Yang Lijuan and cried in front of all cadres.
Zhang Yong is not regardless of occasion or emotion. He hides parental consciousness in his heart and often plays some roles in the role of boss.
This management method close to the apprenticeship system is applicable when the team is small and the organization is relatively simple, because there is enough time and space to run in. Including the current salary system of Haidilao, it still follows the apprenticeship system. For example, the salary of the store manager is linked to his apprentice.
Obviously, such management efficiency can not keep up with the expansion speed of the scale of Shanghai Dilao organization.
The phrase “guests are caught one table at a time” was once spoken by Zhang Yong. The business model of Haidilao is very simple, that is, selling pot by pot and opening shop by shop.
From two stores in 1994 to six stores in 2004, Haidilao has been used for 10 years; From 146 stores in 2015 to 466 stores in 2018, it has increased by nearly 3.2 times and took three years; From 466 to 1597 stores, more than 1000 stores have been added in more than two years, and a new store has to be opened every day on average. At the same time, the turnover rate of restaurants has declined all the way. Since 2021, the turnover rate has been fluctuating up and down the profit and loss warning line 3.
Such a speed requires new management methods, and such a huge organizational system requires a new organizational culture.
Zhang Yong, who is only 52 years old this year, chose to quit, which seems quite unexpected to the outside world. However, according to insiders of Haidilao, this belongs to the normal new old handover of the company.
According to him, Zhang Yong was more responsible for the company’s decision-making and actual implementation. This personnel adjustment is mainly to realize the separation of powers between the board of directors and the CEO. After the adjustment, the decision-making level and the actual operation level will realize the separation of rights and responsibilities. In the future, the operation end of the company will form a pattern with President Yang as the center and Li and Wang working together.
According to last night’s announcement, Li Yu will serve as chief operating officer of Chinese mainland. Wang Jinping was appointed chief operating officer of Hong Kong, Macao, Taiwan and overseas.
Li Yu joined the company in 2007 and successively served as store manager and Regional Manager (Taiwan, Thailand, South Korea and Japan). Wang Jinping joined the company in 2008 and successively served as store manager and Regional Manager (Singapore, Malaysia, Australia and New Zealand). Under the new operation structure, they will assist Yang Lijuan to implement the operation strategy in the future.
According to the Beijing Youth Daily, the two newly appointed chief operating officers are another move to make the management team younger after Haidilao added seven young executive directors in August 2021. Li Yu, 36, and Wang Jinping, 38, as representatives of the “post-80s” generation, will help Yang Lijuan improve the operation efficiency of the group in different regions and strengthen the supervision and implementation of the company’s management and implementation.
“I’m most annoyed that people ask me about the management of Haidilao as soon as they see me.” Zhang Yong once told Chinese entrepreneurs. If God asked Zhang Yong to choose again, if there were other ways to make money, Zhang Yong said he would definitely not do catering and would be too tired. Now, after stepping down as CEO, would it really be a better life for Zhang Yong if he could accompany his wife and children, play golf and cards every day?
Author: Yao Yun; Source: China Entrepreneur Magazine (ID: ICEO com cn), reprint has been authorized. Reprint authorization and media business cooperation: Amy (wechat: 13701559246); Foodaily Expo 2022] foodaily Expo 2022 is the theme and invites 500 + the world’s most innovative brands and 4000 + middle and high-level industry decision makers… In the conference (foodaily fbic 2022) module, we set 2022.05.31-06.02. We’ll see you in Shanghai! related reading

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