Zhang Yong, the billionaire founder of Chinese hotpot chain Haidilao, has stepped down as its chief executive officer while the company overhauls its operations and trims its network of restaurants.
The 51-year-old Zhang will remain as chairman and executive director, but will shift his focus to formulating Haidilao’s long-term strategies, the company announced in a filing to the Hong Kong Stock Exchange. The tycoon, who holds Singapore citizenship and currently has a net worth of $6.9 billion, is succeeded by 43-year-old Yang Lijuan, who served previously as the company’s deputy CEO and chief operating officer.
The management change comes as the restaurant chain faces a difficult time. Haidilao issued a profit warning in February, telling investors that it expects a loss of between 3.8 to 4.5 billion yuan ($602 to $712 million) in 2021, compared with a net profit of 310 million yuan the year before. The filing said Haidialao had been hit with one-off losses from impairment and asset disposals, including the decision to close more than 300 restaurants last year. Haidilao’s shares have tumbled more than 70% over the past 12 months.
The newly appointed CEO will be responsible for improving Haidilao’s performance. Initially undeterred by the pandemic, the company continued to open new stores and expand rapidly. It operated close to 1,600 restaurants as of last June, including 1,491 in mainland China and 106 in Hong Kong, Macau and elsewhere.
But with soaring costs and falling turnover rates, Haidilao decided last November to suspend or shut down stores with “relatively low customer traffic” and “unsatisfying results,” according to a stock exchange filing made at the time. The company said it wouldn’t lay off any employees, though.
The company also pledged to slow down its expansion in a timely manner. Founded in 1994 by Zhang, Haidilao made its name with both its hotpot offerings and a strong emphasis on customer service. It is known for offering queuing customers free manicures, shoulder massages and noodle-pulling demonstrations. Zhang’s wife Shu Ping, who has a net worth of $1.7 billion, is also a company director.