1. Introduction

In the context of Chinese chain catering industry, economic growth and the increasing popularity of the Internet have led to diversification in consumer demand. This, in turn, has prompted the emergence of numerous catering brands that are diversifying their offerings in dishes, services, management, marketing, and embracing digital services in line with the contemporary operational landscape. In recent years, the global catering industry has been significantly impacted by the COVID-19 pandemic, resulting in an overall contraction of the consumer market and intensifying competition among enterprises.

Haidilao, a prominent hot pot chain catering enterprise founded in Sichuan Province in 1994, has achieved great success owing to its commitment to quality, considerate service, innovative organizational and management practices, and an expansion strategy. However, In the present phase of enterprise development and the current industry context, Haidilao confronts several challenges. Firstly, the expansion of the enterprise has made overall organization and management of the information system more intricate. Secondly, cross-departmental collaboration efficiency remains low, partly due to a dearth of informal communication channels. Departmental homogeneity and selfish departmentalism are prevalent issues. Moreover, employee cognitive biases are unavoidable. Thirdly, as Haidilao's reputation for service quality has grown, customer service expectations have also risen, rendering it more demanding for Haidilao to meet these expectations. Lastly, Haidilao's renowned mentorship model has historically played a beneficial role in employee management and branch expansion, but potential drawbacks exist. However, previous literature has scarcely explored the challenges Haidilao faces in operations and management, along with potential solutions. This paper provides a brief overview of China's chain catering industry's current state. It further details Haidilao's distinctive features, organizational management approach, achievements, and areas of concern. The challenges Haidilao experiences in its current operational and management phase are meticulously examined, and based on enterprise management theory, practical measures and recommendations to address these challenges are presented.

2. Current Situatition of Chinese chain catering industry and Haidilao Hot Pot

2.1. Current Challenges of the Chinese Chain Catering Industry

The first challenge revolves around intense market competition. In the chain catering industry, fierce competition ensues as numerous international and domestic brands strive to establish a presence, engaging in a relentless battle for consumers' attention and a slice of the market share. This competitive landscape centers on factors like product offerings, services, pricing, and robust marketing endeavors. The second challenge pertains to diversified development. As consumer preferences grow more varied, chain restaurant enterprises continuously expand their array of offerings, providing a broader range of dishes and dining experiences tailored to a spectrum of tastes and inclinations. Next is the imperative of digital transformation. An increasing number of chain restaurant companies are hastening their digital evolution by adopting intelligent technologies and mobile payment solutions. This strategic move enhances the seamless fusion of online and offline experiences, with the ultimate goal of boosting service efficiency and elevating customer satisfaction.

Furthermore, the concern for environmental and health considerations comes to the fore. The rising consciousness surrounding environmental and health matters prompts a growing number of chain restaurant enterprises to introduce eco-friendly and health-conscious menu options. This strategic adjustment caters to consumers' rising demand for nutritious and sustainable dining alternatives. Finally, the challenge stemming from the pandemic emerges. The far-reaching impact of the COVID-19 pandemic on the global chain restaurant industry cannot be underestimated. The myriad challenges, including enforced restaurant closures and dwindling consumer foot traffic, have compelled enterprises to employ innovative strategies. These include an augmented focus on delivery services and the promotion of online marketing initiatives to adapt to the new normal.

2.2. A Brief Introduction to Haidilao

Haidilao, founded in 1994, initially opened its inaugural hot pot restaurant in Sichuan province. Over the past two decades, it has transformed from a modest local hot pot eatery into the premier brand in China's chain restaurant industry, ultimately securing the pinnacle position in the catering sector by market value. This extraordinary accomplishment owes itself to Haidilao's distinctive competitive strategy. By consistently delivering high-quality and attentive services that evoke a sense of home, the company has succeeded in both attracting new customers and fostering unwavering loyalty among its patrons.

Moreover, Haidilao distinguishes itself by offering superior employee benefits, setting it apart from its industry counterparts and solidifying its preeminence among a plethora of catering enterprises. Through its signature hot pot experience, exceptional service standards, and proactive marketing approaches, Haidilao has achieved resounding triumphs not only within the Chinese restaurant landscape but also on the global stage, thereby captivating the interest of discerning investors.

2.3. The Management Concept of Haidilao

As the company's founder, Zhang Yong recognized that relying solely on the flavors of the dishes would not suffice to distinguish his catering establishment, given the multitude of hot pot variations in China. Conversely, he discerned that elevating the quality of service offered represented a more effective strategy for leaving a lasting impression on customers. This elevation of service standards is intricately linked with the motivation of the workforce, underscoring the pivotal role that human resources and employment management assume in the company's operations. Hence, the organizational approach of Haidilao hinged on two principal concepts: an incentive mechanism and emotional engagement.

Regarding the incentive mechanism, clear assessment criteria and equitable pathways for advancement were implemented. This meant that high-performing employees were offered participation in store dividends, aimed at rectifying the imbalances often inherent in traditional employment relationships. Additionally, Haidilao incorporated a mentoring system into its training approach, wherein a mentor would reap greater dividends if the apprentice's establishment proved profitable. This symbiotic arrangement served to boost motivation on both fronts.

In terms of emotional engagement, Haidilao annually invests significantly in employment management, gaining renown for its generous employee welfare initiatives. This concerted effort seeks to foster a stronger sense of belonging among the staff. Collectively, these measures assume crucial roles in enhancing both the service quality and creative innovation within Haidilao [1].

2.4. The Benefits Which Haidilao’s Mode Has Brought

After more than two decades of development, guided by Haidilao's dual standardization approach to service and food quality, the company has emerged as a frontrunner in China's chain restaurant industry. Driven by its distinctive service-centric business model, Haidilao has captured a strong consumer following, with many patrons specifically seeking out the Haidilao experience for its exceptional service. As of June 30, 2020, Haidilao has established a network of 935 company-operated outlets worldwide [2].

In September 2021, Haidilao secured a place on Hurun's prestigious 'China Catering Chain Enterprises Investment Value Ranking TOP50.' Among the featured enterprises, Haidilao stands out as the most valuable domestic catering chain company in China, boasting a valuation of 147.2 billion yuan. Furthermore, its distinct employee incentive mechanism positions it as an industry benchmark for study and emulation, recognized even as a classic case across various sectors [3].

Haidilao fosters a sense of ownership among employees, motivating them to pursue their tasks with heightened vigor. This dynamic initiates a virtuous cycle: the staff's positive work attitude cascades into customer satisfaction, which, in turn, reverberates back to the staff. This symbiotic relationship fuels Haidilao's positive brand reputation and subsequently amplifies its turnover.

Notably, this positive feedback loop nurtures staff loyalty and initiative, facilitating the identification and retention of employees with exceptional potential. Thus, Haidilao's brand stands as a testament to the efficacy of such a cycle, yielding a far-reaching impact that spans from motivated staff to satisfied customers and a thriving business.

2.5. Haidilao at This Stage of the Existence of Commercial Pain Points

Currently, Haidilao faces several critical business challenges stemming from inefficiencies in cross-departmental collaboration, intense market competition, adverse consequences of the master-apprentice system's growth, the mismatch between employees' ages and values, and diverse demands from overseas markets. As a result, these challenges have translated into declining turnover over recent years, the compelled shutdown of franchise units, and concerns regarding the quality of their food offerings.

3. Challenges faced by Haidilao in the current phase of management

3.1. Increased Difficulty in Overall Organization Management Because of Expansion

To begin with, the challenge lies in effectively managing the daily aggregation of information. Haidilao operates with a headquarters-plus-shops organizational structure, necessitating the collection of copious information from frontline operations and its transmission between the headquarters and shops. Over time, this task has grown into a significant hurdle. The intricacies underlying complex knowledge transfer difficulties stem from the inherent complexity of the knowledge itself. It's imperative to distill the core of the issue by delving into the characteristics of this intricate knowledge. Meanwhile, the challenges linked to suitable channels and environments arise due to the heightened demands complex knowledge transfer imposes on these elements. Consequently, managers encounter difficulties in swiftly grasping real-time updates and the status of each shop, thereby impeding informed decision-making [4].

Moreover, the existing data system employed by Haidilao reveals certain limitations. Although the Tian Zi Xing data system has proven highly convenient for its front-facing sales and service departments, its utilization has not yet permeated the entirety of the enterprise. Particularly, Haidilao's logistics and other key departments have yet to fully embrace this system.

3.2. Low Cross-Departmental Collaboration Efficiency

Firstly, there is a lack of informal communication channels. Informal communication refers to exchanges that occur outside the formal organizational information channels. In comparison to formal communication, informal communication offers the advantages of rapid dissemination, extensive reach, and higher employee receptivity. Leveraging the strengths and weaknesses of informal communication, it is better suited to facilitate upper-level leaders in understanding the thoughts and opinions of lower-level employees within the enterprise [5].

Haidilao employees perceive that the company seldom engages in extracurricular activities, resulting in a dearth of informal communication channels. This deficiency has led to a lack of mutual understanding among employees from different departments, hindering interdepartmental communication beyond formal contexts and thereby undermining the foundation for effective cross-departmental exchanges. Consequently, senior leaders within the organization face challenges in effectively comprehending information from lower-level employees and disseminating information downward in a timely manner.

Secondly, there is departmental homogeneity and selfish departmentalism. The departmental divisions within Haidilao have led to the concentration of individuals with similar skills and knowledge backgrounds. This has given rise to "departmental homogeneity," where employees within the same department tend to view the work of other departments through similar value systems and evaluation criteria. Once different departments develop distinct value systems, "selfish departmentalism" emerges, often impeding cross-departmental communication. Departments become preoccupied with their own tasks, focusing on their responsibilities at the expense of the broader picture. This accentuates competition among departments while weakening cross-departmental cooperation, resulting in the emergence of disagreements and conflicts and increasing the organization's internal friction costs [6].

Lastly, there is individual cognitive bias. Due to varying employee perceptions of matters, differing cognitive processes and outcomes in information processing occur, resulting in disparate viewpoints on the same subject. For example, varying degrees of "misunderstanding" exist among departments regarding one another's work. The department responsible for guest reception might perceive the daily tasks of the welcoming department as leisurely and accompanied by a lax work attitude. However, this perspective underestimates the mundane nature of the welcoming department's daily tasks. Conversely, the welcoming department may lack insight into the operational intricacies of guest reception, instead making judgments based solely on subjective cognition. This has culminated in communication barriers across departments [7].

3.3. The Growth Trend of Haidilao Service Level does not Match Customer Expectations

As widely acknowledged, Haidilao stands as a vanguard in the service industry. In recent years, its marketing efforts have generated substantial customer expectations [8]. Furthermore, as Haidilao's service reputation continues to grow, customer expectations are poised to escalate. The elevated customer expectations may progressively transform into heightened demands for service quality. Eventually, this trajectory can result in a misalignment between Haidilao's service level and customer expectations. Having attained an apex in its service industry leadership in recent years, Haidilao's service level has approached its zenith. Paradoxically, the consistency of its service is occasionally punctuated by variances. A survey reflects that consumers note divergent service levels across different Haidilao outlets, or even within the same establishment [9]. Particularly in the post-pandemic era, Haidilao faces the challenge of substantial attrition among experienced employees, leading to an increased workload per employee and occasional inability to accommodate high customer influx. Regrettably, customers may not fully appreciate these operational challenges and might perceive a diminishment in Haidilao's service quality compared to the past. Presently, bridging the gap between customer expectations and the actual service level poses a formidable challenge, substantially augmenting Haidilao's management complexities.

3.4. The Negative Impacts of Mentoring System

In terms of the mentoring system of Haidilao, on one hand, it is necessary to acknowledge that this kind of management system did played an important role in the process of development and expansion, and it is still having a great positive impact today. From staff training and management to the opening of a new branch, montoring system is widespread throughout the whole company.

An experienced, outstanding employee or branch manager have the chance to be a master, while the new staff are regarded as apprentices. There is a ceremony held at the beginning of this relationship, then the master will be directly responsible for the apprentices, it is the duty for the master to teach, guide and supervise. And the performance of both master and apprentice will be closely integrated. For example, the excellent performance of apprentices will lead to the recognition and reward for the master, the profit of the apprentice branch is tied to bonus of the master. Besides, the fault and dimission of the apprentice may lead to the question for the master as well.

On the contrary, such a close mentoring culture in management system may lead to some negative consequences. During the upward phase of the company development, the direct and tight accountability between mentors and apprentices will increase management efficiency and the speed of branches opening. As the company expands in size and the management increases in hierarchy, an apprentice employee or manager and his or her master may have a higher loyalty to each other, rather than to the company, for there is a stronger connection between them on both emotion and benefit, but the connection with the whole company seems a weaker one. If the company headquarter can not put in place effective measures to curb this imbalance, it will gradually lose its management and control over the entire enterprise [10].

4. Application and suggestion for Haidilao based on enterprise management theory

4.1. Methods to Increased Difficulty in Overall Organization Management Because of Expansion

To address the most significant challenges stemming from expansion, Haidilao should cease blind expansion and instead implement an optimized organizational structure along with a robust internal control system. It is recommended that Haidilao establish a supervisory board to enhance the organizational framework and institute a comprehensive supervisory board system that safeguards the autonomy and authority of the supervisory board's mandate. Company legislation should outline specific procedures through which the Supervisory Board can conduct financial audits, including but not limited to the ability to inspect or reproduce accounting records and documents at any time, or to request pertinent accounting reports from child supervisors, and other relevant individuals. Additionally, the supervisory board should have the authority to scrutinize the company's asset status and conduct investigations and verifications of financial documents submitted by the Board of Directors to the General Meeting of Shareholders [11].

To address the issue of inadequate integration and utilization of information in day-to-day operations, Haidilao must enhance its information communication system. Furthermore, the enterprise's internal information resource planning should make effective use of suitable software. This, in turn, facilitates the establishment of an information system framework that aligns with the actual developmental trajectory of the enterprise.

Additionally, meticulous attention should be given to internal information system planning. This planning process is predicated on the foundation of integrating information resources. Moreover, when advancing information system development, enterprises must base their decisions on their unique information technology infrastructure and the specific informational requirements that they have identified [12].

4.2. Methods to Address Low Cross-Departmental Collaboration Efficiency

In response to the deficiency of informal communication channels among Haidilao employees, the organization could institute the creation of an internal social platform or application. Through this platform, employees would be enabled to share work experiences, suggestions, anecdotes, and other relevant information, thereby fostering interactivity and the exchange of information amongst personnel. Additionally, Haidilao may consider periodically organizing employee-centric activities, gatherings, or team-building events, thereby affording staff members the opportunity to engage in more facile intercommunication, thereby augmenting team cohesion. Ultimately, senior management personnel may also assume an active role in informal communication endeavors, manifesting an open and transparent communication style, as a means to galvanize employees to partake in sharing and discourse.

With regard to the issues of departmental homogeneity and selfish departmentalism among Haidilao employees, the organization's initial course of action should be to incentivize cross-departmental collaboration initiatives. By facilitating exposure to diverse perspectives from disparate backgrounds and departments, this approach could potentially dismantle inter-departmental barriers, fostering a culture marked by enhanced openness and collaborative inclination. Additionally, recalibrating the performance evaluation framework to not only emphasize individual departmental achievements, but also encompass the broader interests of the entire corporation, could potentially encourage heightened involvement in cross-departmental cooperation. Lastly, periodic cultural cultivation activities could be implemented, underlining the significance of cooperation, openness, and diversity [7].

In addressing the phenomenon of individual cognitive biases evident among Haidilao employees, an initial step involves the provision of specialized training sessions focusing on cross-departmental collaboration. These initiatives would serve to cultivate an understanding of disparate departmental workflows, objectives, and challenges, subsequently attenuating misunderstandings and augmenting appreciation for the functioning of other divisions. Additionally, Haidilao should actively endeavor to promote transparency, involving the dissemination of pertinent company-related information across the organization. By engendering transparency, the potential for misunderstandings and unfounded speculation could be curtailed, in turn fostering a climate of trust. Lastly, the establishment of a proactive collaborative culture, coupled with the recognition and reward of employees engaged in cross-departmental cooperation, could tangibly contribute to the reduction of misconceptions and antagonistic sentiments.

4.3. Maintain the Advantages of the Existing Service Model and Continuously Strengthen It

For the entire catering service industry, Haidilao's refined service model has outstanding advantages. In the face of the problem that customer expectation no longer matches the existing service level, this study believes that Haidilao should, on the basis of maintaining the existing advantages of meticulous service, conduct a market survey on the reasons for the current customer's disappointment in service and customer demand, and make differentiated improvement according to the survey results. Haidilao could also learn from the way of the hotel industry, such as Hilton, registers customers' preferences. On the next visit, the hotel staff will arrange the customers according to the customer's preference and make the customer feel at home. Because Haidilao itself uses tablet computer to log in to the member account to order, it can use tablet computer to issue questionnaires for demand survey before each meal, which can better provide different consumers with differentiated and customized services, so that consumers feel special care by the brand [9].

Haidilao can also implement exclusive dish giveaways or promotional activities for popular menu items at different tables by leveraging the backstage data collection and analysis of each member's dish preferences. The differentiated management model should comprehensively consider the individualized requirements of customers, manifested in meticulous attention to details across all aspects of service. As an illustration, besides Haidilao's distinctive complimentary manicure service, additional personalized offerings could include makeup and hairstyling services for female customers. These services not only enhance their dining experience but also help neutralize the lingering aroma of hot pot, ensuring that after relishing a delectable meal, female customers could maintain their appearance.

This approach may appear intricate and potentially challenging, it proves to be an effective managerial strategy aimed at retaining customers through distinct approaches. By continuously reinforcing these measures, the enterprise can strengthen its customer base and reap maximum benefits from this differentiated approach [8].

4.4. Measures on the Negative Impacts of Mentoring System

In the process of company development, compared with the relationship between employees and the company, the greater common material interests and closer emotional connection between mentors and apprentices will, to a large extent, lead to various negative effects and the formation of small interest communities.

Firstly, the company should establish a well-structured performance evaluation system along with a rewarding and dividend mechanism that promotes positive outcomes [13]. By ensuring the positive impact of direct responsibility between mentors and apprentices, the alignment between the overall company's benefits and each employee's material interests is strengthened, or even heightened. When prioritizing the greater collective good, the contrasts between smaller interest-based communities are diminished, while the bonds between each individual and the broader collective are reinforced.

Secondly, right from the commencement of each employee's orientation training, the company should diligently cultivate a corporate culture reminiscent of a "Haidilao extended family." This will foster a deeper sense of emotional attachment and responsibility toward the entire company in employees' future endeavors. To ensure the supervision of service quality, food quality, and financial operations at each branch, an independent oversight mechanism should be established that is directly accountable to the corporate headquarters. This approach helps circumvent intricate interest connections and nepotism. Simultaneously, the roles and obligations of this oversight mechanism must be explicitly outlined to avert the potential stifling of innovation within branches due to excessive management. Moreover, it is imperative for the company to institute a seamless upward information feedback channel, affording bottom-level employees and apprentices the right to voice their perspectives. This initiative not only ensures they receive the equity and fairness they deserve but also enhances interaction between each employee and the company as a whole. Additionally, the corporate headquarters gains more avenues to access frontline information.

5. Conclusion

This text discusses various aspects of the chain restaurant industry and focuses on Haidilao, a prominent Chinese restaurant enterprise, as a case study. The text covers the current status of the chain restaurant industry, introduces Haidilao's background and organizational management mode, outlines the benefits of Haidilao's approach, analyzes the challenges Haidilao faces in business management, and proposes countermeasures to address these challenges.

Haidilao faces various challenges in its business management. The company's rapid expansion has resulted in difficulties in daily information aggregation, and inadequate integration of data systems. Additionally, deficiencies in informal communication, departmental homogeneity, and selfish departmentalism hinder efficient collaboration across different departments. Furthermore, defects in the recruitment system have caused variability in employee quality due to relaxed educational requirements and shifting employee demographics, impacting overall service consistency and quality.

Proposed countermeasures encompass a range of strategies. These involve improving organizational management by implementing a supervisory board to ensure independence and internal control, enhancing information communication systems, and strengthening risk assessment and response mechanisms. Additionally, efforts are focused on enhancing cross-departmental collaboration through the establishment of an internal social platform for communication, and promoting transparency and cultural development. Lastly, a revamped recruitment system is recommended, involving an adaptation to changing employee demographics and an increased emphasis on management knowledge and education during the recruitment process.

The provided passage continues to discuss various aspects of the challenges and potential strategies for Haidilao. One focal point is the utilization of technology for operational efficiency and innovation. While the text briefly mentions digital solutions for ordering and management, it suggests further exploration into how Haidilao could leverage emerging technologies like artificial intelligence and data analytics to optimize staffing levels and streamline communication through mobile apps or online platforms.

In summary, the article discusses the competitive challenges faced by Haidilao in the chain restaurant industry and provides potential strategies to address these challenges, including improving organizational management, enhancing collaboration, meeting customer expectations, and optimizing the mentoring system and recruitment processes.