HONG KONG • China's insatiable demand for spicy hotpot is placing the founders of a restaurant chain atop one of the world's fastest-growing fortunes, allowing them to outpace many of the wealthiest families globally.
As of last week, Mr Zhang Yong, chairman of Haidilao International Holding, and his wife Shu Ping had grown US$5.6 billion (S$7.6 billion) richer this year, a 74 per cent jump in just over three months.
That pace is topped only by Australian mining baron Andrew Forrest doubling his fortune this year; Chinese education tycoon Lu Zhongfang's 83 per cent rise; and American used-car billionaire Ernie Garcia's 78 per cent gain, according to the Bloomberg Billionaires Index, a ranking of the world's 500 richest people.
Haidilao went public last September and it has been a lucrative time for China's largest hotpot chain, popular for the spicy broths with which diners cook their meat and vegetables.
It is pushing to make its restaurants more efficient by creating automated kitchens. Perks like the free manicures it offers waiting customers have kept families coming in. And the brand is expanding overseas, with new locations planned in New York and London.
Last year, revenue surged 60 per cent to 17 billion yuan (S$3.4 billion) and that has helped push the stock up by more than 77 per cent this year. At US$21 billion, the company's market value is now higher than that of Chipotle Mexican Grill.
"A good set of results has resulted in the stock rallying to new highs," said William O'Neil & Co analyst Tristan D'Aboville, pointing to increases in sales growth and new restaurants added in the second half of last year.
Another power couple behind Haidilao, co-founder and executive director Shi Yonghong and his wife Li Haiyan, have also grown 74 per cent wealthier this year, based on last Friday's data. Their fortune is now worth US$6.3 billion.
Still, the enthusiasm for Haidilao's stock is making it increasingly expensive. Valued at 47 times projected earnings for the next 12 months, it is now about four times more expensive than Hong Kong's benchmark Hang Seng Index, according to data compiled by Bloomberg.
China's increasingly competitive hotpot market is projected to grow at a compounded annual rate of more than 10 per cent, with revenue topping 700 billion yuan by 2022, according to consultancy Frost & Sullivan.
Besides small, privately owned restaurants, there are other competing brands like the publicly listed Xiabuxiabu Catering Management (China) Holdings.
Haidilao has a less than 3 per cent share of the Chinese hotpot market, says its September prospectus.
In an interview last October, Haidilao chief strategy officer Zhou Zhaocheng said the company sees room for growing by offering customers diverse choices and better service, and by creating new experiences for them.
So far, it has kept Chinese consumers loyal by making their visits more fun. Its outlets provide free board games as well as shoe-polishing and manicure services for those waiting. Diners can also watch a Sichuan opera show or even a noodle dance where employees twirl lengthy ribbons of noodle.
Last October, one of Haidilao's restaurants began introducing robots to take orders and deliver raw meat and vegetables to customers to cook in the simmering pots of soup placed on their tables.
Mr Zhang, a former welder at a tractor factory, founded Haidilao with friends in 1994. The company went public last year.
He and his wife, both Singapore citizens, have a net worth of US$13.2 billion as of last Friday. This includes holdings in Haidilao's seasonings and sauce arm, Yihai International Holding, which has seen its shares rise more than 87 per cent this year. The couple hold about 58 per cent of Haidilao.
Now, Haidilao and other Chinese hotpot brands are attempting to expand overseas. Little Sheep, a hotpot chain owned by Yum China Holdings, opened its first overseas branch in Los Angeles in 2003.
"With the rise in Chinese outbound tourism and growing appreciation for China's hotpot culture, we are excited about accelerating the expansion of Little Sheep globally," Yum China chief executive Joey Wat said last November.
Little Sheep now has over 60 restaurants worldwide. That gives it a greater overseas presence than Haidilao, which had 36 outlets outside China at the end of last year.
"Haidilao was able to cut through the clutter of various Chinese hotpot operators through its exceptional service," said OC&C Strategy Consultants partner Jack Chuang. "Whether Western customers will embrace hotpot - it is a big open question."