Zhang Yong did three things after returning to Haidilao

AI Q&A: How does the Red Pomegranate Plan screen for promising new brands?

Interface News reporter | Ma Yue

Interface News editor | Ya Hanxiang

The urgency with which Zhang Yong, founder of Haidilao, returned to the CEO role this January was validated in this company’s 2025 annual report—Haidilao revenue in 2025 was RMB 43.23 billion, up 1.1%; core operating profit was RMB 5.4 billion, down 13.3% year over year; and net profit was RMB 4.04 billion, down 14% year over year.

When the industry generally attributes pressure to the consumption environment and intensifying competition, Haidilao points to problems within first. The financial report explains that the decline in profit was mainly driven by a drop in turnover rate and adjustments to innovation models such as products and dining scenarios.

“No matter whether it’s the decline in turnover rate or pressure on customer traffic, it’s definitely our management that hasn’t done well.” At a communication meeting on March 27, Zhou Zhaocheng, vice chairman of the board of directors and executive director of Haidilao, told Interface News, “This is something our company needs to reflect on. Whether it’s market responsiveness, the product and service experience, or employee initiative, there are still some shortcomings.”

And at such a critical time, Zhang Yong taking back the reins is a key moment for this dining giant to reflect and adjust.

Chart production: Interface News Ma Yue

“Zhang Yong’s return can more effectively consolidate consensus internally, and when pushing certain strategic decisions on projects, efficiency will be higher and the overall direction will be clearer as well. But the company’s major decisions and direction are still continuing to be,” Zhou Zhaocheng emphasized.

Interface News learned that after Zhang Yong returned to Haidilao, he mainly advanced the business around three main lines.

First is stabilizing the hot pot core business: through optimization of products and the store model, it will improve the profitability of the core business and the brand’s appeal; second is steadily pushing the “Red Pomegranate Plan,” using multi-brand exploration to find a second growth curve and screen opportunities amid uncertainty; and third is stepping up the construction of an intelligent middle platform to improve data and system capabilities.

For the hot pot core business, one clear change that can be seen at present is that Haidilao stores are continuously being renovated.

This is the “not the same Haidilao” strategy being carried out internally. Haidilao aims to diversify its stores and renovate dining scenarios through a “one store, one strategy” operating model, such as fresh-cut meat stores, late-night snack stores, parent-child stores, and pet-friendly stores, among other restaurant models. By the end of 2025, more than 200 featured themed restaurant renovations had been completed cumulatively.

Haidilao’s carefully selected stores | Photo credit: Interface News Ma Yue

For a catering giant that excels at standardization, how to adapt to different markets and make differentiated renovations while still having replicable experience remains a dual challenge for both first-line stores and headquarters. It tests how precisely they can grasp different segments of customer groups in different commercial areas, and it also requires them to bear a certain cost of trial and error.

Zhou Zhaocheng explained to Interface News that the renovation of Haidilao’s featured themed restaurants comes, on the one hand, from bottom-up proposals submitted by stores. After validation of the results, the company will also look from the perspective of regions and even the entire country to see whether there is potential for promotion and replication. And the “pioneer” who proposed this new model will also receive corresponding incentives. On the other hand, it also comes from support from headquarters—once new store types are found through business analysis, headquarters will also encourage stores to attempt renovations.

After Zhang Yong’s return, the Red Pomegranate Plan is also being re-planned at the level of mechanisms.

At present, Haidilao is implementing within the company a dual incubation mechanism of “chef founders” and “citizen restaurants.” The former focuses on employees’ independent entrepreneurship, while the latter focuses on project incubation led and driven by headquarters.

And Zhou Zhaocheng told Interface News that although both fall under the Red Pomegranate Plan, different systems mean a clearer division of labor, clearer responsibilities, and corresponding incentive systems to ensure the investment into projects.

The “spray the net wide” style of encouraging employee entrepreneurship still follows certain rules and standards. “As for what we call employee internal entrepreneurship, it’s still more about encouraging people who have management experience—for example, outstanding store managers, regional managers, or even higher-level roles—to do it,” Zhou Zhaocheng explained.

Interface News learned that currently, some fully formed sub-brands largely come from entrepreneurship by veteran employees at Haidilao and still lean toward large-scale, replicable chain catering. For example, the founder of the Yiepui Korean barbecue restaurant is Yang Hua, head coach of Haidilao’s entrepreneurship committee; the founder of Xiaoai Loves Fried is Wang Qiang, director of the entrepreneurship office.

At present, some newly promoted projects are already showing early results.

For example, Haidilao’s seafood pavilion has already opened eight stores in multiple cities. According to data provided by Haidilao, after the Nanning flagship store opened in February this year, its turnover rate has remained stable at more than 6 times per day; since the Guangzhou store opened in December 2025, its turnover rate has also remained above 5.5 times per day. The company’s management believes that the seafood pavilion model is still in the validation and expansion stage, and in the next three years it is expected to further scale up and achieve a goal of 500 stores.

Another project drawing key attention is the sushi category. After Haidilao launched the RUSHE sushi project in July 2025, the stores’ turnover rate has also remained at more than 6 times per day. Based on internal judgment, given the overall outlook of the sushi track and its own advantages in areas such as practical supply chains, the sushi model has the potential—and an opportunity—to open 100 stores in the next two years.

Haidilao seafood pavilion

RUSHE sushi

For projects planned by headquarters, what they emphasize in practice is “high quality for the right price,” meaning that while having solid, dependable quality, the pricing must also be attractive—such as Haidilao’s seafood pavilion.

This is also a way to adapt to current consumption trends. In recent years, price wars in the catering industry have been intense. Wang Puzhong, CEO of Meituan’s core local commercial business, once publicly mentioned last year that the average spend per dine-in customer has already come very close to 2015. For Haidilao, however, with advantages in integrating resources across the supply chain, product R&D, and operational digitization, once the business model is formed, its ability to expand quickly and fine-tune will also be strengthened.

But Haidilao is also aware that multi-brand entrepreneurship still carries considerable risk, because there are very few entirely new categories in the catering industry. Entrepreneurship more often differentiates within existing tracks through different product understandings and operating approaches.

And entering a new track inevitably involves lots of trial and error. Some projects will be eliminated due to poor market feedback. Overall, the incubation of multiple brands is a long-term, dynamic process.

Therefore, in Zhang Yong and Haidilao’s view, the Red Pomegranate Plan is more like a “screening mechanism” rather than an incubator.

“Best case, these brands should judge whether their business model holds up according to market acceptance,” Zhou Zhaocheng told Interface News. “That’s the so-called self-reliance—you have to go out into the market and grind, and what you grind out is the real skill.”

But this grind in the market will also put some pressure on Haidilao’s overall performance.

Interface News noted that in 2025, Haidilao’s other restaurants recorded operating revenue of RMB 1.52 billion, an increase of 214.6% year over year. The share of other restaurants’ operating revenue in total revenue also rose from 1.1% in 2024 to 3.5%.

Zhou Zhaocheng acknowledged that these proactive investments also increase costs. “Some multi-brand businesses are still in the climbing phase. For example, brands opened last year haven’t reached a stage with very strong profitability, and that also affects operating conditions,” he said.

Photo source: Interface Gallery

Besides the impact on profit during the climbing phase, the multi-brand operating model also brings certain challenges to the company’s overall management and coordination.

This may be why Zhang Yong emphasized building an intelligent middle platform.

“The construction of an intelligent middle platform fundamentally improves overall efficiency from the management perspective,” Zhou Zhaocheng said. With the increase in multi-brand businesses, the complexity of resource coordination, business analytics, and decision support has increased significantly, so the headquarters’ capabilities in these areas also need to be strengthened in parallel. “Headquarters will be stronger in resource integration, information acquisition, and business judgment—this is also why we built the intelligent middle platform,” he said.

This capability not only serves the main brand, but also will support new businesses in the Red Pomegranate Plan. From product R&D to the supply chain, to store operations and digital tools, higher efficiency can be achieved through the middle platform.

To some extent, the three actions Zhang Yong took after returning mean that Haidilao wants to transition from a catering company primarily centered on a single brand into a multi-brand catering group that values organizational coordination capabilities.

And in the transitional stage where the main business is under pressure and new businesses have not yet matured, whether the successful approach Zhang Yong previously led Haidilao with can be replicated across other brands still needs to be tested over time.