Chang'e founder joins Haidilao's board, potentially hinting at a tea collaboration venture.
Haidilao, the popular hotpot restaurant chain, has made a strategic move by appointing Zhang Junjie, the founder of Chagee, a rapidly growing tea beverage brand, as a new independent non-executive director. This collaboration, which began in June 2023, is set to bring valuable insights to Haidilao's board.
Zhang, who remains independent from Haidilao to avoid conflicts of interest, is the most knowledgeable in the tea beverage industry among Haidilao's independent non-executive directors. His expertise is expected to significantly impact Haidilao's decision-making processes, particularly in the tea beverage sector.
Haidilao, with 1,343 restaurants under its belt, boasts one of the highest table turnover rates in the industry, averaging 4.2 times. The company's board, which comprises four committees, is led by Ma and Wu in the corporate governance committee.
In a bid to further expand its offerings, Haidilao recently launched a nationwide renovation of its drink bars, introducing tea bars within its outlets. Over 900,000 cups of tea have already been sold, demonstrating the potential for growth in this area.
The primary role of an independent non-executive director is to support decision-making and offer suggestions. Zhang's annual salary is RMB 1.2 million (USD 168,480), reflecting the importance of his role.
Haidilao's move to open up franchising isn't driven by a need for funds, as the company has ample cash reserves. However, the proportion of franchised Haidilao stores will be very small. The company primarily looks at potential franchisees' physical assets when screening them, especially in lower-tier markets.
Zhang's presence could influence how quickly Haidilao can establish itself in the tea beverage market. In fact, Haidilao is considering incubating a tea beverage sub-brand, inspired by Chagee's expertise in standardization and franchising.
It's worth noting that Haidilao's multi-brand strategy includes Yanqing, a barbeque chain, Xiaohai, a hotpot brand, and Miaoshixiong, known for its fish and shrimp dishes, among others. Xiabu Xiabu was the last successful competitor to integrate a tea beverage brand into its stores.
In 2023, Chagee's gross merchandise value reached RMB 10.8 billion (USD 1.5 billion), and it's expected to exceed RMB 20 billion (USD 2.8 billion) in 2024. This rapid growth underscores Zhang's ability to scale up the tea beverage business through franchising once a single-store model is proven successful.
Zhang is not involved in Haidilao's day-to-day operations but offers valuable insights, ensuring a balanced approach to decision-making. His term will begin on August 27 and last for three years. This strategic appointment is set to shape Haidilao's future in the tea beverage market.
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