Advances in Social Science, Education and Humanities Research, volume 631

Proceedings of the 2021 International Conference on Social Development and Media Communication (SDMC 2021)

Consumer Behaviors in Choosing the Hotpot

Restaurant
— Hai Di Lao and XiabuXiabu
Zhiyuan Chang1,*
1
RDFZ Chaoyang Branch School, Beijing, China, 100028
*
Corresponding author. Email: [email protected]

ABSTRACT
Hotpot is a traditional and popular meal in China, two major popular restaurants in people’s mind are Hai Di Lao and
XiabuXiabu. They have different characteristics and various strategies to maintain their performance. For instance,
they have different pricing strategy, different method of service, and different types of hotpots. Other hotpot
restaurants can hardly compete with them. This paper discusses the underlying reasons for the good performance in
Hai Di Lao and XiabuXiabu through comparing data from their official website and using other theories. Overall, two
restaurants are using different strategy: high level services verses cheaper price. This research presents that there are
many means to become successful. There are many ways to achieve one result.

Keywords: Behavioral economics, restaurants, service, price, customer preference.

with equal opportunity for workers”. Hai Di Lao pays

1. INTRODUCTION full attention to every consumer and try its best to serve
them. Hai Di Lao has a complete supply chain that
Hai Di Lao is a traditional hotpot restaurant. ensures a lower cost. Hence, Hai Di Lao can earn great
Registered in 1994 in Si Chuan province in China. It profit through its dishes, providing the basis of its high-
gradually spread its branch stores across the country. It cost services. What Hai Di Lao does to attract
focuses on relative high-level services, now having 868 consumers will be analyzed.
sites in China and 67 outside China. XiabuXiabu,
registered in 1998 in Taiwan, is another famous hotpot 2.1. Enthusiastic services
restaurant that changed its main target customers,
developing a different style, one pot per customer to Whenever asking about the most famous
enjoy a small hotpot individually, from other hotpot characteristic for Hai Di Lao, it is their services. The
restaurants that shares a big pot. Many types of waiter in Hai Di Lao is overwhelmingly enthusiastic and
researches about these two restaurants analyze the they care about detail. Waiters are providing hot towels
reasons why they can achieve such success, such as the for those who wait for repast. There are waiters to tell
marketing strategies and management policies each people “mind the steps”. There are even staff playing
restaurant employed. Based on the data analysis, this with child in the playground in the restaurant. Unlike
paper discusses how those two hotpot restaurants attract other restaurants. It has established consumers’ belief in
customers and why others cannot compete with them. quality service. Additionally, Hai Di Lao provides a
Two restaurants are employing different styles and higher salary to their workers and they can make the
strategy, but they both get the ultimate success, showing decision facing the needs of customers [1]. This makes
that there are many ways to achieves the goal. We can workers in Hai Di Lao have more passion, getting them
try to change our view whenever there is difficulties. evolved, having a sense of belonging, and having a lot
of power. For instance, they can give a discount or even
2. ANALYSIS OF HAI DI LAO free of charge when no special events or activities
happens [2].
Hai Di Lao has its guide of action that “focusing one
consumer, everything can be achieved by our service

Copyright © 2022 The Authors. Published by Atlantis Press SARL.

This is an open access article distributed under the CC BY-NC 4.0 license -http://creativecommons.org/licenses/by-nc/4.0/. 1539
 Advances in Social Science, Education and Humanities Research, volume 631

According to “hierarchical theory of needs” also offer a free cake for that table. Waiters will create a
proposed by Abraham H. Maslow (1943), people have warm atmosphere that builds positive emotions among
different needs, including physiological need, safety consumers [4]. Afterward, when consumers are paying
need, belongingness and love need, esteem need, self - the bill, they will be asked for their feeling about the
actualization need and etc [3]. Overall, the service in event and any aspects to improve. They will then
Hai Di Lao can fulfill many needs for consumers, not remember this moment and link their current emotions
only physiological needs. Hai Di Lao can satisfy the to the feeling about the meal.
esteem need and belongingness. This will cause
consumers to form positive believes and opinions about 2.4. Brand
Hai Di Lao and help to create consumers’ brand loyalty.
In addition, the detailed and all-sided service will ensure Because of its service, Hai Di Lao has its brand and
consumers a very positive experience. fame. People who enjoyed the good service will
introduce Hai Di Lao to their friends. This will build an
2.2. Pricing strategy and location initial impression and will make their experience in the
restaurant more positive. The target consumers further
Hai Di Lao has outstanding pricing strategy to help it to increase sales. Hai Di Lao is focusing on
maintain its profits and cover its cost while maintaining middle and high-level services [3].
special and enthusiastic services. Hai Di Lao does it in
Furthermore, Hai Di Lao follows the technology
two ways. For one, it will charge a relatively higher
development in China closely, introducing its
price for their meals since consumers are having brand
information and the latest news on popular online social
loyalty and are willing to pay. For another, Hai Di Lao
Apps such as Instagram [1].
employed a discount pricing strategy.[3] There is a
discount for different consumer groups such as college Hai Di Lao has a professional public relationship
students and elderly people. Besides, different discounts team, knowing well about how to create hot topics and
are provided at different times. On weekdays, there are deal with negative news. For instance, they will respond
discounts from 2 to 5 pm and from 10 pm to 7 am. On quickly to the mistakes they do. For some less serious
the weekend, 60 percent discounts are given between 12 problems, such as the mistake from the chief when
a.m. to 7 a.m. [3]. The location of each restaurant is performing how to stretch noodle, Hai Di Lao will just
analyzed including target consumers, surrounding turn it into a humorous story and tell people that they
environment, possible competitors and their current can get free meal if they meet this. This helpful public
situation. The location makes the restaurant more relationship team ensures Hai Di Lao to have a good
visible, more popular. reputation [5].
Moreover, unlike traditional hotpot restaurants that In addition, Hai Di Lao develops their take-out
have a simple and colorless menu, Hai Di Lao creates a service. People can enjoy the hotpot at home since there
colorful one with fancy pictures. This will attract will be a deliveryman sending the pot and ordered
consumers. dishes for them. The take-out service increases their
sales since consumers don’t have to wait for the table
2.3. Activities and facilities and can buy the hotpot at home without going to the
restaurant. It helps to advertise themselves since others
The infrastructure in Hai Di Lao is also a key factor can see the pot and will ask about where to enjoy those
that attracts consumers. In Hai Di Lao, Lots of facilities foods, creating more customers.
for people to enjoy. For the child, there is playground
like toys, bouncy castle for them to play. For the adult Hai Di Lao builds its good reputation and brand
who waits for their seats, there are different kind of firstly through its beliefs and its actions—serving
games for them to play, such as Pokers cards, chess, and consumers as the primary goal. Then, the consumers
so on. Various snacks are ready for those who feel who have enjoyed the experience will help to advertise
hungry. Free WIFI is enabled for people who use their brand. According to “Induction resistance to
phones. In short, People can wait while playing or Theory of mind” (Brin,1966), customers will think that
having something to do, helping to pass time. their decision is correct, providing more and more
Customers enjoy those facilities and they can be happy reasons. Eventually, they will trust Hai Di Lao totally
and free in Hai Di Lao as if they are at home [2]. When and they will even doubt the credibility if there are any
comparing Hai Di Lao with others, consumers will find negative news. Moreover, Halo Effect, which lets
it even better. people generalize their experience to all its franchised
stores, will ensure a good performance among all Hai Di
Despite the things for people who wait for the seat. Lao stores [6].
There are also events for people who are having their
meal. For instance, workers are celebrating, singing the
Birthday song to people who have a birthday. They will

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3. ANALYSIS OF XIABUXIABU cheap and thus affordable for most people. The average
cost of XiabuXiabu is 70 Chinese Yuan, much cheaper
XiabuXiabu is another popular hotpot restaurant that than other hotpots restaurant.
has more than 50 stores. It is different from traditional
hotpot that people gathered around using one pot. In XiabuXiabu employs various advertisements to
Xiabuxiabu, each person has his or her own pot to cook attract consumers, those advertisements have
the dishes. outstanding and beautiful pictures. The different hotpot
style, in addition, is used as part of their advertisement.
Various advertisements make XiabuXiabu well known.
3.1. Different style of eating
Therefore, for middle income level, they will view
XiabuXiabu is different from traditional hotpot, it XiabuXiabu as a popular restaurant, having a better
provides a small pot for each person. This change impression even they have not been there once. This
ensures that XiabuXiabu can attracts more consumers. impression will affect their decision afterward.
For instance, it has different combos to provide different
flavors of individual hotpot. Consumers can enjoy a 4. COMPARISON
unique experience since they go to eat hotpot alone.
Both Hai Di Lao and XiabuXiabu have a complete
supply chain that reduces their costs, but they take
3.2. Supply
advantage of this in different fields. Hai Di Lao uses it
XiabuXiabu has a completely strict supply chain that to improve their services. XiabuXiabu develops a
transports all raw materials. All franchised stores are standardized flavor across all stores and the cheap price.
using the regulated dishes sent from the overall They have different atmospheres. In Hai Di Lao,
distribution center. The supply chain reduces the cost, waiters will treat people with extreme passion, creating
ensuring XiabuXiabu to charge a low price and a welcoming and warm atmosphere. Consumers who
attracting consumers. Also, XiabuXiabu standardizes want to enjoy such a service will go to Hai Di Lao more
everything it uses, such as the weight of the dish, often. XiabuXiabu is different, there are less workers.
arrangement of the dish, and even the seasoning for The waiter will just take the dishes the consumer
hotpot. The result of this is the same flavor in every ordered and let consumers to cook themselves.
store. Consumers who want to enjoy the flavor can go to
any XiabuXiabu store to have a meal. The price of dishes and the target consumers are
different as well as can be seen in Table 1. Hai Di Lao
Overall, the low price and the flavor can attract provides a relatively high-level service. People who go
consumers since it is cheaper and they can taste the to Hai Di Lao are aiming to enjoy the services since the
same flavor again after they have a good experience dishes don not have much difference in most hotpot
before. restaurants. XiabuXiabu is designed as a bar counter,
serving people in the most efficient way and having
3.3. Location and culture more consumers enjoying the meal. The main target
group for XiabuXiabu is the lower income group, letting
XiabuXiabu must located in tier one cities such as
them enjoy hotpot without spending too much. The
Shanghai, Beijing because of the disadvantages of the
average cost for a person to enjoy Xiabu Xiabu would
standardized supply chain. However, XiabuXiabu
be less than 70 Chinese Yuan while Hai Di Lao costs
employed a different strategy. Its cheap price attracts
much more, near 200 Chinese Yuan and more. The bar
consumers and develops a special atmosphere which
counter design and the low price ensure a high table
causes people feel as if they are belonging to the tier one
turnover rate which offsets the drawbacks of low
cities when they have the meal, providing a sense of
price—lower profit.
satisfaction among consumers [7].
Overall, Hai Di Lao attracts consumers through its
3.4. Target consumers services, providing a unique experience to customers
those other restaurants can not. The reason is that this
The target consumer group is the low-income and service is costly for restaurants, if there are less
the middle level in the city. For people on low-income consumers and revenue, the restaurant will shut down.
level. XiabuXiabu produces a delightful experience and Hai Di Lao can maintain the service is due to the supply
a relax between their busy work. Its price is relatively chain, brand loyalty and its pricing strategy.

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Table 1. Costs report for the first half year in 2021

Hai Di Lao Xiabu Xiabu

Total Revenue (before tax)/million 20,094.0 3,046.9

Staff cost/million 7161.7 926.7

Material/million 8502.4 1,134.8

Rent/million 198.6 140.8

Electricity/million 693.1 94.9

Discount/million 2,169.1 531.0

Others/million 801.0 207.0

By comparing two restaurants, Hai Di Lao is name and the enthusiastic service. XiabuXiabu is less
spending much more on staff cost which the training special, it is easier to imitate and it does not have a
cost is included. Also, Hai Di Lao has much more strong feature to attract consumers. Despite the
facility cost (Material). The discount shows and proves differences in various fields, both restaurants get
that Hai Di Lao provides various activities and extraordinarily popular in China, having lots of
discounts to customers. Overall, Hai Di Lao spent more customers and generating huge profits. There are
on developing its service and its facility. Hai Di Lao has numbers of ways to the final success.
more branch stores and hence its overall revenue is
much greater than Xiabu Xiabu [8, 9]. AUTHORS’ CONTRIBUTIONS
For a new restaurant to do this, it needs the This paper is independently completed by Zhiyuan
hardworking workers which is almost impossible since Chang.
they can change jobs to Hai Di Lao or other hotpot
restaurants. It is suitable for almost all kinds of events ACKNOWLEDGMENTS
including parties, dates. Its consumers are the best
advertisement. Consumers will recommend Hai Di Lao This paper takes almost two months, encountering
to their friends, and they will have a cheerful party in loads of difficulties. Great thanks to my professor and
Hai Di Lao which creates more customers. XiabuXiabu my tutor, helping me, guiding me, and offering their
is using the cheap price to attract consumers, they offer valuable opinion. Lastly, thanks to the librarian,
delicious dishes at a relative cheaper price. Additionally, providing crucial information and data for my paper.
consumers can enjoy the same taste when they order the
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