20 May 2019
Pedestrians walk past an advertisement for a Haidilao hot pot restaurant in Shanghai. Photo: Bloomberg
Pedestrians walk past an advertisement for a Haidilao hot pot restaurant in Shanghai. Photo: Bloomberg

Behind the Haidilao saga

Haidilao, a popular hot pot chain in mainland China specializing in Sichuan-style hot pot cuisine, has been caught in a scandal after an undercover reporter discovered the appalling hygiene in the kitchens in two of its Beijing restaurants.

Secret footage shows rats wandering in the kitchen and slipping into the cupboards, while kitchen staff lift sludge out of the sewer with soup ladles.

After the incident was published by the media, the restaurant immediately came under fire from the public.

Haidilao managed to defuse the public relations disaster. Just three hours after the news report was broadcast, the company issued a public statement admitting to the terrible conditions in the restaurants and pledging to take responsibility.

Two hours later, the company issued another statement listing seven emergency measures to improve the hygiene standards in its restaurants, including temporarily shutting down the two Beijing stores in question. In the same statement, it also reassured the staff in the two stores about their future.

First astonished and then impressed by how the Haidilao management behaved after the outbreak of the crisis, the mainland public was quickly placated, and condemnation of the company on the internet was soon replaced by high praise for the restaurant chain management.

“I’m really touched by your sincerity. But we also expect you to change. I will continue to patronize your stores as long as the hygiene problem is fixed,” one mainland netizen said. “I always believe Haidilao is a miracle in China’s service industry. I hope you can improve and get through this crisis.”

My opinion is that the mindset behind the public leniency toward the restaurant chain is in fact dangerous.

It is because first, even if the company’s public relations exercise seems to have been successful, the company should not blur the focus of the saga by diverting public attention from the fundamental issue of food safety and its negligence.

Second, some views hold that rats and poor hygiene in the Haidilao restaurant kitchen are just a trivial problem, compared with toxic chemicals in food products and gutter oil.

But this is a reputable mainland restaurant chain we are talking about, a restaurant other players are supposed to emulate.

If the public in general adopts such a mindset of low hygiene standard and benchmarking against worst practices, it’s hard to expect much improvement in China’s food and beverage industry.

Third, while the Haidilao management might deserve credit for taking full responsibility for the incident and not making their frontline workers who performed the unhygienic procedures a scapegoat, they shouldn’t have harbored them either.

It is indispensable for an enterprise to set clear guidelines of accountability if it aims to strive for further development.

Otherwise, regardless of the management effort to formulate rules, it would be difficult to ensure the rules will be implemented at all.

In August, a Haidilao branch in Singapore was fined by the National Environment Agency there after one of its staff was caught handling food with bare hands.

This is a clear example that to overseas clients, they will judge a restaurant with a much more stringent criteria.

For a restaurant to be sustainable, hygiene is the top priority, followed by its services and PR tactics. The day when Haidilao’s kitchen can survive the closest scrutiny is when the company is truly ready to go global.

This article appeared in the Hong Kong Economic Journal on Sept. 1

Translation by Alan Lee

[Chinese version 中文版]

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Hong Kong Economic Journal contributor

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