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Analysis of the Efficacy of Haidilao's Marketing Mix in the Uk

Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics

Haidilao Hot Pot

Haidilao Hot Pot

1.0 Introduction

According to Manthei (2017), the core of the marketing concept is to focus on the needs of the target customers, implement a marketing mix, and focus on the overall market to achieve profits and achieve corporate marketing goals. Therefore, the marketing mix is crucial as a marketing tool. The marketing mix focuses on the various strategies and tactics in the marketing management of an enterprise from the perspective of management decisions. Thabit and Raewf (2018) think that Marketing mix has become an important method commonly used to study marketing issues. The marketing mix analyzes how it relates to the external environment. Ashill and Jobbe (2014) companies can influence the external environment through proactive and creative marketing. In essence, the external environment is developing in a direction that is conducive to corporate marketing goals. Išoraitė (2016) believes that the marketing mix means the best combination of various means. If these means can be coordinated with each other, they can play the greatest possible role comprehensively. Therefore, the success or failure of corporate marketing depends to a large extent on the choice of strategy and the effect of their comprehensive use.

Haidilao Hotpot restaurant is a popular Chinese hotpot chains which has branches not only in China but also in other parts of the world including Japan, South Korea, the United States and Singapore. In 2018, the company opened its first branch in London, United Kingdom as part of its global expansion branch. The company has currently a plan to increase its eateries other parts of Britain. The chain is popular for its unique customer service. Customers waiting to be served are offered free shoe polishing, free manicures, video games and free massages to pass time. A Chinese-style hotpot meal entails a group of diners who sit around a hot pot which is bubbling with flavored soup where diners place food such as noodles, vegetables and meats which cook in the soup (, 2019).

The objectives of this research is to analyze the marketing mix of Haidilao Hotpot Restaurant in the United Kingdom, hoping to identify the shortcomings of Haidilao Hotpot restaurant's marketing mix, and explore the room for improvement in its marketing mix combination. Finally, by establishing a 7ps analysis model for Haidilao Hotpot Restaurant, it provides suggestions for improvement in marketing mix.

This report has five key parts. It begins with an introduction which presents an overview of the project including its background, aims and objectives. The subsequent part is the main findings concerning the efficacy of Haidilao's marketing mix in the UK of which the recommendations are based on. The report ends with a conclusion and the relevant appendices.

2.0 Project Aim and objectives

The core aim of this project is to analyze the efficacy of Haidilao's marketing mix in the UK. Specific objectives that will be addressed under this objective include the following:

1. To analyze the marketing mix of Haidilao Hotpot Restaurant in the United Kingdom

  1. To identify the shortcomings of Haidilao Hotpot restaurant's marketing mix
  2. To provides suggestions for improvement in marketing mix.

3.0 Findings and Critical Analysis 3.1 Haidilao Hotpot restaurant's SWOT Analysis

SWOT is a strategic framework that stands for Strengths, Weaknesses, Opportunities, and Threats that companies face in both their macro and internal environment in which they operate. In most cases, Weaknesses and Strengths are confined to the company’s internal-resources, limitations and skills. On the other hand, Threats and Opportunities refer to factors which are evaluated in light of the existing market conditions alongside factors such as economical, political, technological, health& safety, legal and environmental (Osita et al, 2014).


Among Haidilao’s Strengths is its superior service and product quality. This is among the features that have enhanced customer loyalty towards the company. According to Platform Executive (2020) Haidilao emphasis on providing quality of services and products has worked for its own good. Accordingly, Haidilao is able to compete successfully on the international market.

This company has also so far shown a successful track record in market performance. This pertains to launching new products both in the local market and also in its international presence. Ambler (2018) confirms that Haidilao has launched and tested different concepts in a diversity of markets most of which have been successful.

The domestic market in which Haidilao operates is a robust one. This provides both roadblock and strength to the innovation and growth of the company. The high potential in the local market reinforces its capability to pursue international markets since its already cushioned from extreme risks (Ambler, 2018).

Haidilao’s intellectual property has also been its source of strength which has propelled it to a higher competitive position. Currently, this company harbors an array of copyrights and patents some of which are both from creators while others are gained through innovation. This has helped in motivating its people, improving its customer service as well as leverage on its competitive strategy (Liu and Jie, 2017).

Haidilaos premium charges as compared to its competitors have helped in creating high margins. The high margins have helped the company in thwarting competitive pressures as well as in investing in market expansions, developments, research and innovation (Liu and Jie, 2017).

Haidilao also enjoys a first mover advantage. Experimentation in a diversity of segments has helped this company in finding unique solutions for exploiting the potential market (Cheng, and Wang, 2013).

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Lastly, this company enjoys a strong relationship with its suppliers, as well as other members of the supply chain. Through leveraging the skills of its supply chain partners, Haidilao can be able to increase its services and products.


Despite the stability of its balance sheet, the company is experiencing low return on investment. According to Xie-lin and Xiao-dan (2014), the “Return on Invested Capital” is a metric that requires a serious consideration. Additionally, Haidilao’s business model is easily replicable despite the high number of copyrights and patents that the firm harbors. With the industry which this firm operates it, the intellectual property rights are difficult to be implemented. Though effective in thwarting same size competition, it is not easy to stop start-ups from disrupting the markets at different levels. Haidilao has also not reached a level where it is able to harness the power of technology particularly I the front end processes. This is despite the fact that company has an integrated technology within its backend processes.

Haidilaos organization culture has also proved to be its source of weakness. In particular, the culture has fueled turf wars within its different departments, making some managers unwilling to share some crucial information. This could subsequently lead to limitations on future development since the withheld information could reduce opportunities in the market base (Tricon Foodservice Consultants Ltd, 2018). Further, the company does not have a good track record especially in environmental considerations. This has a potential of leading to consumer backlash since most consumers regard environmental protection as crucial in business practices.

Ambler (2018) also finds the company’s project management as being too focused on internal delivery rather than taking into consideration the interests and concerns of external stakeholders. This approach has a potential of leading to customer backlash and negative public relations.


The first opportunity for Haidilao is developments in Artifical Intelligence. The company can exploit its developments in artificial intelligence in better predicting consumer demand, improving its strategies and addressing its niche market segments. What is more, the boom in artificial intelligence and machine learning has significantly transformed the technological landscape that this firm operates in. Accordingly, this firm can use these developments in enhancing its efficiencies, transforming processes and reducing costs (McFarlan et al, 2018).

Haidilao can choose to reduce the number of products or offerings in the market and place focus on only the most successful ones. This way, the company can be able to achieve growth and competitive advantage. Furthermore, Haidilao’s expansion in the international market gives the company an opportunity to access diverse and high level talent. This will give it a competitive edge over domestic and international markets. It is also possible for Haidilao to exploit opportunities in the adjacent markets to expand its market base and growth through its products and services.


Among the threats facing globalization is the growing inequality. For instance, Haidilao has experienced this phenomenon in the EU and US markets where the demand for its products is much lower for the middle and lower class customers (McFarlan et al, 2018).

The issue of bureaucracy and government regulations is also a matter of concern for companies such as Haidilao. The fast changing government regulations especially those related to labor safety, and environmental concerns warrants operational and management changes that could be costly to the firm (Ya-ming, 2016).

There are also threats of new entrants owing to increased efficiencies and reduced costs. As much as Haidilao is able to exploit the use of e-commerce and social media to reach its customers at a low cost, most of its competitors both international and local are also able to do so (Ya-ming, 2016). Additionally, the culture of standard prices in the industry where Haidilao operates has also acted as an impediment to its growth. Accordingly, the company is unable to raise its prices even when its premium services deserve so (McFarlan et al, 2018).

3.2 7Ps Marketing mix of Haidilao Hotpot Restaurant in the United Kingdom


Haidilao Hotpot Restaurant products are in five categories all of which are sold under the brand name of Haidilao. In other words, this company has products with different varieties, making it possible for customers to choose a preferred product variety and which serves his or her needs (Ya-ming, 2016). Haidilaos products are also highly differentiated with unique features that are deficient in most of its competitors. Alongside these is the perception of high quality of its products compared to those of its rivals. This makes customers to be willing to pay the premium prices for these products. What is more, Haidilao’s products are also popular for its traditional touch and design while also being practical for the consumer’s use (Coghlan and Hansen, 2018).

Basically, Haidilao Hot Pot Restaurant offers ‘hotpot’ meals to its clientele. In these hot pots is a chemical reaction which is activated by pouring hot water over a heater pad which subsequently releases enough heat to warm a pre-cooked meal within a short time (about 10 minutes) (McFarlan et al, 2018). Besides restaurants, Haidilaos product line also includes sauces and broths and the most recent product named “hotpot for lazy people” which is essentially a self-heating hotpot. Only cold water is needed to prepare this hot pot, making it popular among office workers, students and even travelers. With Haidilaos hot pot, one will have a warm meal wherever he or she is. The package contains a variety of packaged ingredients, spoons, heating pad, chopsticks, and bowls (Koetse, 2018).

Customers waiting to be served at Haidilao Restaurant source: (Khor, 2019)

Many customers also prefer Haidilao services because of the additional personalized and free services it offers to customers. Besides the free drinks, games, fruits and snacks, the brand also offers manicures to its clients while they are waiting for the services. Customers also enjoy free leather shoe cleaning, free message services, free photo printing and even children’s play rooms (Gabriel, 2018).

A typical manicure services at Haidialo Resturant


Currently, Haidilaos pricing strategy is based on a competitive pricing model drawn from the competitors pricing analysis. A part from competitor analysis, the company also takes into consideration the cost of operation and services in setting its prices as well as on products where information on competitor’s price is unavailable. However, it should be generally known that Haidilaos pricing is a bit higher compared to its competitor (Tie-ying, 2011). The higher price is used to make up for the free and personalized features accorded to its customers. Furthermore, the higher costs of its products on the online platform are attributed to free delivery services which are incorporated in the products final price. The company also utilizes a bundle pricing which entails bundling products together and selling them at lower prices than if the items were sold individually. There is also an optional product strategy model for specific products whereby; base products are priced separately from the price of accessories which come along with them. Nonetheless, although Haidilao sets prices for its products are fixed, wholesalers, retailers and channel members are able to get the products at a lower price which enables them to earn a significant level of margins as profits (Coghlan and Hansen, 2018).

Haidilaos tea costs approximately $3 per pax but which is refillable while access to the dipping condiments of the hot pot costs approximately $4 per pax. A customer will also need to pay for the soup base which costs around ($20+). A typical balanced and sensible meal with meat and vegetables will cost a buyer approximately $45 to $55 per pax. The high charges have been taunted as meant to cover the hidden costs of free services (Liew, 2020).


There are two main marketing channels followed by Haidilao in reaching its customers. The first one is selling its products on wholesale; whereby; wholesalers buys the products from the company, sells them to retailers who then sells to the final consumers. The second strategy is through a direct sale through its online platform whereby; customers can order the products directly which get delivered on them. Currently, Haidilaos products are present in over 500 retailers operating in different parts of the country. The extensive use of retailers is part of the businesses marketing approach where its objective is to ensure its customers access their products as conveniently as possible (Coghlan and Hansen, 2018).

To provide timely deliveries to its customers, Haidilao has partnered with diverse service providers to manage its online operations. There is also in place an omni-channel distribution system where its offline stores are integrated with its online stores to further enable customers access the products in an easy way. Considering the high and frequent traffic on its website, there is no doubt that Haidilao makes a substantial amount of sales (Cai, 2015).


To promote and advertise its products, Haidilao employs a diversity of media channels. In particular, both traditional and digital media is incorporated in its promotion strategy. Apart from advertising its products on local radio and television channels, this company also employs social media channels to reach its audience. The channels where it has created its presence include Facebook, Youtube and Twitter which are considered cheaper and with high usage. These platforms are updated regularly and this has helped the company in generating many followers. In particular, there are over one hundred thousand followers in each of these channels. Moreover, Haidilao also takes part in various events and exhibitions that takes place in different parts of the country around the year. This has helped in promoting brand image and presence around the country (Labrand, 2017).

Personal selling is also an approach that Haidilao considers in increasing its presence and driving sales especially in its retail stores. This entails training its sales force in dealing with customers and providing exemplary and satisfactory services that will influence customer repurchase intentions. In determining a yearly promotional budget, Haidilao employs a certain percentage from the overall sales so as to determine its marketing budget (Pasto, 2018).


Haidilao values all the people including employees, suppliers, and customers in its operations. The individual sales personnel, and those workers are adequately trained to execute their role, how to persuade customers, respective all customers, addressing their needs accordingly (Yiahan, 2019). Suppliers are also valued since their role is regarded crucial as it regards to provision of services and goods to customers. Without the raw materials or support accorded by these suppliers, the company may not be able to meet the needs of its customers. Furthermore, the person who works at the retail stores also well trained to interact and deal with customers and their issues (Czinkota, 2018).


To ensure that customers can always access products at the local retail store, Haidilao has installed systems that enable the local stores to notify the central team whenever the inventory gets low. Once they receive the notifications, the management works by replenishing the local stores with more products to continue serving customers. Pertaining to its online delivery system, the personnel checks the orders received in its computer system and based on these, the specific products are shipped to the partner delivery service provider who in turn take it to the customer (Khor, 2019). Besides, Haidilao regularly undertakes market research as well as available opportunities so as to better serve the customer needs. Furthermore, the feedback gained from social media pages, through its helpline or just its stores are acted upon to enhance customer’s experience (Yiahan, 2019)..

Physical Evidence

Most of Haidilaos products have a unique colored packaging that creates appeal to potential and existing customers. Furthermore, the company designs and provides its unique shelves with distinct designs and colors which it places at the local retail stores. These make them to be easily identifiable among customers. What is more? Haidilao is more of user-friendly, with high quality photos which are taken from different angles (Czinkota, 2018).

3.3 The shortcomings of Haidilao Hotpot restaurant's marketing mix


This company has been facing food safety problems which in one way or another have ruined its reputation. This problem began when undercover journalists exposed workers who could handle food with their bare hands as well as rat infestations in certain outlets in Singapore and even Beijing. These revelations created an image of a food dealer with no regard with hygiene, healthy and food safety in its outlets (Feng and Xinyue, 2018).

Aside from these issues, Haidilao also sticks with its traditional line of products without making use of innovations. In other words, the company does not exploit opportunities in its current market and tailor its product offerings according to the local context, culture and preferences. For instance, since its products in the UK market are those of Chinese origin, it would mean most of its customers in the UK market would be the Chinese and a few British citizens who may want some of these products (Fioretti and Zhu, 2020).


The high pricing and charges at Haidilao would not only make most of the products out of reach for customers in the lower economic level but will also make many others to be skeptical on purchasing the products. Despite provision of free personalized services, many feel that Haidilao’s outlets are overrated and that such services have hidden charges. As much as customers would be pleased with the excellent customer care, they would certainly be barred by the high prices (Tripadvisor, 2017).


As much as this company harbors an online website and ordering system, it is yet to create a strong social media presence. In particular, the company’s pages on Facebook, Instagram, Twiter and Pinterest are not as much active and thus the company needs to scale up through regular updates. In addition to these is the need to market its products in these platforms with representatives working round the clock to solve client’s issues.

It is also seen that this company relies on independent retailers in selling its produce. This means that the company is facing costs associated with wholesaler margins while it is also not possible to customize the stores to its culture or appeal.


As earlier noted, Haidilao’s social media marketing in the UK market is weak as compared to its rivals. Unlike its competitors, the company is yet to hire influences such as movie/TV stars, socialites, artists, or comedians to create awareness of the brand and its offering on social media. This business is further yet to exploit the diverse digital media marketing techniques including the use of blogs, search engine optimization and banner advertisements (Fioretti and Zhu, 2020).


Despite provision of training programs for its staff, Haidilao does not yet have a clear strategy of motivating its workforce. This means that many of the staff has no morale to improve performance or exceed target.


Much of the processes at Haidilao are still carried on a manual level. This is despite the current technological developments that have made it possible for processes to be computerized and automated. This also means that the firm is incurring unnecessary cost in operations. In other words, the company’s innovative capability can be said to be low, thus contributing to high cost and pricing of its services.

Physical Evidence

Haidilao does not undertake a regular survey of its customers on what the customers feel about its packaging and goods in general. This makes it hard for the management to understand where or what they need to improve as it regards to packaging and service provision. Furthermore, Haidilao does not have its own stores but rather relies on those of independent retailers. This makes it impossible for the company to tailor these stores to the customer’s tastes, preferences or in a way that creates appeal for customers.

3.4 Marketing mix strategies for restaurants in the UK

To survive in the UK business environment, the restaurants in the country have to ensure that the food is good and in good quality. The philosophy also extends to creating a positive relationship with their customers as well as suppliers (Deloitte, 2017). Furthermore, most of the companies also believe on the importance of taking care of their people, the community and the environment. These companies work with the community either as suppliers or just for corporate social responsibility. As a means of environmental conservation, many of these companies have resorted to alternative energy such as wind power to power their operations (Dhavale, 2012).

The products have to tasteful and look appealing, alongside being made from wholesale ingredients. In addition to these is a diversity of product lines which keeps on improving on a regular basis (Deloitte, 2017). When it comes to pricing, a majority of dealers make it appealing to influence more sales for positive returns. Among the factors considered in deciding on the charges include the cost of operations, the competitors pricing, and the customer segments (Joan, 2011). As it pertains to place, UK restaurants have a preference of setting up their retail shops other than using independent retailers. However, while there are those selling directly to consumers, others place their products with retailers and wholesalers including major supermarket chains. These companies also try to influence how such products reach customers at the point of sale (Fioretti and Zhu, 2020). For instance, there those who secure key positions for their products in the stores, those choosing to pay for end of shelf positions for its goods to make it possible for customers to see and purchase them. UK restaurants promotional approaches falls in two approaches; above the line promotion and below the line promotion (Howard, 2015). Above the line promotions refer to paid for advertisements including in the traditional advertising channels such as TV, the press or radio. Other examples of above the line promotions include advertising on supermarket trolleys, positioning or displays in stores. Below the line promotions can take many forms and include designing books of vouchers, leaflet drops, or email newsletters for consumers (Furman, 2017).

Regarding processes, many of restaurants have already incorporated technology in their processes. This has made it possible for processes to be centralized and automated such as the online ordering processes, the central inventory management, human resource or supplier management among other processes (Restaurant Magazine, 2018).

4.0 Discussion and recommendations

4.1 Discussion of the findings

From the SWOT Analysis section, it is evident that Haidlao strives to provide products with superior quality and excellent service. These features have worked to enhance customer loyalty as well as the ability to compete successful in the UK market. Specially, it can be said that the free and personalized services including manicure, body massage, nail cuts, children care services etc have worked by drawing customers closer and creating appeal to its services. However, the free services are catered for by the premium charges that Haidilao charges its customers, thus cushioning the company from a big loss.

It should also be noted that Haidlao is performing ideally well in its domestic market. This gives it the financial muscle necessary in pursuing international markets that could appear risky (Fioretti and Zhu, 2020). Nonetheless, the flexibility of Haidilaos business model means that it can be replicated and copied by its rivals. This creates a business risk of the company losing its value to its competitors.

It is also noted that the premium prices charged by the company is locking out some category of consumers, especially those in the lower economic situation. Such people would not afford to buy the services from this particular provider and hence; they will look out for food dealers with prices that range within its budget. It is also noted Haidilao does not have its own retail stores, rather sells its products through independent wholesalers and direct sales from its website. However, this arrangement is limiting Haidilao’s ability to design the stores in a way that creates uniform, appeal, and brand recognition. Although the company installs its own shelves on these independent retailers, it is not possible for the company to monitor how the customers are treated within the stores, as well as provision of after sales services.

Regarding promotion, it is evident that Haidilao employs a diversity of marketing approaches including the use of traditional media, digital media and outside advertisements such as the use of posters, and exhibitions. This could have contributed to its current high number of customers and fans as well as the high sales volumes translating to high returns.

Much of the processes at Haidilao are still carried on a manual level. This is despite the current technological developments that have made it possible for processes to be computerized and automated. This also means that the firm is incurring unnecessary cost in operations. In other words, the company’s innovative capability can be said to be low, thus contributing to high cost and pricing of its services.

Comparing the Haidilao’s marketing mix with that of other food restaurants in the UK, a significant difference is noticeable. For instance, most of the restaurants attach a greater importance to corporate social responsibilities, value its people, care for the environment and use of alternative energy. These aspects are ignored or rather missing from Hailao’s program.

Furthermore, rather than use independent retailers, it is found that a majority of food operators in the UK have their own stores. In this light, they are able to design and maintain the stores as per their culture and desire.

4.2 Suggestions for improvement in marketing mix of Haidilao Hotpot restaurant in UK

It is possible for the company to reduce its pricing in a way that accommodates all customers in the economic circle. The best way this can be achieved is through diversifying its product portfolio to consider even products that can be afforded by customers in the lower economic segment. The other way is to reduce the cost of operations, by for instance, using computers in making inventory, automating the necessary functions, liaising, sourcing from lower priced suppliers, buying their own properties for its own stores and striving to sell more. If the cost of production reduces, then the company will be in a position to lower its pricing. It is also possible to introduce some little fee for the current free personalized services so that it covers for the “hidden charges” inherent in the regular products.

There is also a necessity for Haidilao to introduce its own retail stores rather than using independent distributors. This way, the company will be able to have more control of the distribution, customer service and marketing strategies. Besides, this will help in reducing the cost of operations while also raising the profit margins by selling directly to the consumers without going through intermediaries.

Another critical aspect that Haidilao requires to consider is incorporation of CSR in its programs. They can do this by engaging the community in its operations either as suppliers, employing some of the members, pursuing a philanthropic program such as paying school fees for the less fortunate members of the society, designating specific days to clean the neighborhood, providing food services to the community, or being environmentally conscious in its operations. This will help in creating a positive image for the company, and thus attract potential customers towards it.

5. Conclusion

In summary, Haidilao’s marketing approaches and product offerings have made it a successful food dealer in the UK market. Its aggressive marketing and adverting approaches on both traditional and digital media alongside provision of unique product categories has seen this firm create a loyal base of customers that have propelled its growth.

However, there are still areas that this company needs to work on in order to enhance its services. As provided in the suggestion areas, it is still possible for this company to streamline its operations through the use of technology with a focus of creating efficiency and cost reduction. This will enable it reduce its pricing to favorite rates for poor members of the society.

It is also important for the company to consider diversifying its product portfolio to consider even the local cuisines instead of relying on its Chinese designs. Introduction of the variety product categories will help attracting a variety of customers thus increase its revenue pool.

Moreover, it would also be helpful for this firm to study its UK rivals and the trends in the food industry and apply measures to help it transcend this trend. If it fails to monitor the trajectory appropriately, then the company will find itself overtaken by the rivals and events.

It is hoped that marketers especially those in the food chain business will learn from Hadilaos strategies and success and work on improving their own. At the same time, the recommendations that have been designed for Haidilao are deemed to be critical for the company in moving it to even a higher success level.


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Silas Nyamweya (author) from Nairobi, Kenya on January 02, 2021:

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