#110 2018 · Haidilao (Zhang Yong) · Restaurantsincentive-flip
Haidilao paid store managers more for their protégés' stores than for their own
the problem
Trusted managers had every reason to hold back a deputy good enough to leave
background
A restaurant chain that grows by promoting its best store managers into regional roles faces a quiet contradiction: the manager most capable of training a great replacement is also the person with the most to lose if that replacement leaves to open a competing or cannibalizing store nearby. The usual tools — non-competes, one-time bonuses, loyalty appeals — treat the symptom without changing the underlying math: one manager, one store, one paycheck.
Haidilao changed the math directly. A manager who opted into the mentor-track pay formula earned less from their own store but gained a permanent royalty stream from every store their trained successors opened, and a smaller one from their successors' own successors — a multi-generational override that made building a lineage of trained managers more lucrative than protecting one's own storefront.
the move
Instead of relying on non-competes or retention bonuses to stop capable deputies from leaving — or from being quietly held back by managers who feared training their own replacement — Haidilao let each store manager choose a second pay formula: a smaller cut of their own store's profit (0.4%), plus a share of every store later opened by a manager they had personally trained (3.1%), plus a smaller share of those proteges' own proteges' stores (1.5%). Training the most successful successors, not running the best single restaurant, became the highest-paying job in the company.
the payoff
Store openings accelerated sharply, with Haidilao's outlet count growing at roughly 41% annually from 2017 and its opening pace exceeding 50% in 2018 around its Hong Kong IPO. The same incentive later became a documented liability: at a 2021 shareholder meeting, founder Zhang Yong publicly blamed the multiplying royalty structure for driving reckless over-expansion, and the company closed around 300 underperforming stores that year — an honest coda to a mechanism that worked exactly as designed, just for longer than it should have.
what came after
The 师徒制 (mentor-apprentice) system is credited with the aggressive store-count growth that carried Haidilao to its 2018 Hong Kong IPO, and equally documented as the mechanism Zhang Yong himself later blamed for the over-expansion that forced roughly 300 store closures in 2021 — a case where the same lever that built the company also, unchecked, nearly broke it.
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references
- [1]关店300家，海底捞承认"师徒制"翻车，曾被认为是最大的商业机密界面新闻, 2021jiemian.com
- [2]海底捞张勇："穷人思维"丢了首富澎湃新闻, 2021thepaper.cn