This is an English adaptation of a FoodBud historical article originally published on November 26, 2021.
After Haidilao announced plans to close around 300 restaurants and raise about RMB 2 billion for purposes including debt repayment, the pressure around store closures appeared to be spreading across its broader portfolio.
Recently, U Ding Maocai, a brand controlled by Haidilao, said on its official WeChat account that some of its stores would stop operating.
Since 2020, Haidilao has tested a series of noodle and fast-casual brands, including Shibacuan, Laopai Youmianer, Baifu Private Noodles, and Qin Xiaoxian. The market response has been muted. Some observers interpreted Haidilao’s wave of brand incubation as a sign of mid-life strategic pressure.
U Ding Maocai was actually launched much earlier. In 2012, while Haidilao was still in a strong growth phase, it set up an independent team to create U Ding Maocai and explore a new market. By the end of 2018, U Ding had 45 restaurants in cities including Beijing, Shanghai, Xi’an, and Wuhan.
Before 2019, U Ding Maocai was effectively controlled by Zhang Shuoyi, younger brother of Haidilao founder Zhang Yong. At inception, the company was funded by Gou Yiqun, Yang Lijuan, and Yuan Huaqiang, all Haidilao executives. Haidilao’s other founding couple, Shi Yonghong and Li Haiyan, also previously invested in U Ding’s parent company.
U Ding listed on China’s NEEQ market in 2016, but its operating performance was never especially strong. According to Zhai Men Can Yan data cited in the article, U Ding Maocai currently had only 23 operating stores, far from its earlier target of reaching 120.
In 2019, U Ding terminated its NEEQ listing. After Haidilao completed its Hong Kong listing, it spent RMB 204 million to acquire all shares of U Ding’s parent company, Youdingyou Catering.
According to U Ding’s 2018 interim report, Beijing Jinghai Youding Entrepreneurship Consulting Center held 45.9%, while Hillhouse Capital held 44.1%. Hillhouse had invested RMB 96.08 million in 2016 and exited with a slight loss.
The company was initially established with RMB 1 million in registered capital. The first investment round totaled RMB 4.385 million, the second totaled RMB 24.875 million, and the third included Hillhouse’s participation, alongside RMB 30.26 million contributed by Zhang Yong and his wife, Shi Yonghong and his wife, and others. When U Ding was sold to Haidilao, Zhang Yong and his wife, Shi Yonghong and his wife, and related parties cashed out a combined RMB 114 million.
In other words, even if the maocai business did not make money, it had a “big brother” willing to pay the bill.
U Ding Maocai, through Youdingyou, also invested in several restaurant brands, none of which were described as successful. These included Haidao Shrimp Rice, Caini Yunnan Cuisine, Xu Xiaoshu Malatang, Jiayi Bing Catering, and Weichu, though it later exited Weichu.
Haidilao now fully controls U Ding Maocai, but neither U Ding’s restaurant investments nor Haidilao’s internally incubated brands had yet proven especially successful.
By contrast, the companies built around Haidilao’s hotpot core were strong performers in their respective areas. Yihai International, for example, listed in Hong Kong in 2016 before Haidilao itself and had a market value of HKD 46.9 billion at the time of the article.
Beyond listed company Yihai, Haidilao’s core ecosystem included Shuhai and Weihai.
Within Haidilao’s product system, Zhengzhou Shuhai Industrial mainly supplied hotpot soup bases, sauerkraut fish seasonings, and mala xiangguo bases. Shuhai Beijing mainly provided Laopai prepared vegetable products. Jarud Banner Haidilao supplied lamb products. Haihongda Beijing, also known as Hi La Song, provided delivery services. Honghuotai, established by Haidilao and Yonyou Group, provided software services. Xunfei Zhiyue, established by Haidilao and iFlytek, provided intelligent restaurant development systems.
Haidilao also separated many middle- and back-office functions into independent businesses. Beijing Shuyun Dongfang Decoration Engineering mainly handled restaurant decoration for Haidilao stores. Beijing Weihai Management Consulting focused on human resources services. Beijing Haishengtong Financial Consulting, formerly Haidilao Finance, was established in 2013 to provide financial consulting to Haidilao and other companies. For customer operations, Haidilao also had Beijing Haihai Technology, which provided game operations and used in-store games and social features to help merchants retain customers and manage members.
From soup bases and prepared vegetables to logistics and software development, Haidilao had effectively split out almost every business function into separate subsidiaries, including finance and human resources. These subsidiaries began by serving Haidilao, then expanded to serve other restaurant companies, giving Haidilao a way to participate across multiple parts of the foodservice value chain.
U Ding Maocai’s own financial reports illustrated this linkage. In 2017, U Ding generated RMB 109 million in annual revenue, while related-party transactions with Shuhai, Yihai, and Shuyun Dongfang exceeded RMB 33 million.
The article’s broader point was that even if Haidilao closed 300 restaurants, those sites could still be taken by other restaurant brands. The business could continue through other parts of the group’s ecosystem. Haidilao had already built a system stretching from front-end restaurants to back-end supply chain operations, giving it ways to offset risk and volatility across different links in the chain.
Note: IPO, valuation, store-target, fundraising, market-cap, and closure-plan figures are historical and reflect the article’s November 26, 2021 context.