Hotpot Phenomenon Haidilao Bites Off More Than It Can Chew

What’s new: Chinese hotpot chain Haidilao International Holding Ltd. posted poorer than expected 2020 financial results as the pandemic bit into the industry’s revenue and the company’s store-opening ambitions dragged down its profits.

The restaurant group reported that its profit plunged 86% to 310 million yuan ($47.5 million) on revenue of 28.6 billion yuan, representing a modest 7.8% growth rate. The results underwhelmed investors, falling short of several securities firms’ predictions of annual revenue above 2.9 billion yuan and profit above 500 million yuan for the year.

Shares in the Hong Kong-listed restaurant operator closed down 1.57% at HK$53.4 ($6.88) per share on Wednesday following the Tuesday report.

More details: The company opened 544 new stores last year, propelling its number of hotpot restaurants across the world to 1,298, of which 1,205 are on the Chinese mainland. Daily same-store sales slipped nearly 18% to 104,900 yuan.

As the pandemic-related restrictions stopped consumers from dining out last year, Haidilao stepped up its efforts to offer food-delivery services, generating 60% more online orders and raking in 718 million yuan in revenue, albeit less than 3% of overall revenue.

All brick-and-mortar restaurants under Haidilao on the mainland were shut between January and March last year, when some could reopen. Most stores had resumed operation by mid-April 2020.

As the mainland’s epidemic was brought under control in the second half of the year, the hotpot business overseas still suffered from depressed demand, resulting in revenue declines of 35% and 38% in the North American and European regions, respectively.

Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full Caixin article in Chinese, click here.

Contact reporter Anniek Bao (yunxinbao@caixin.com) and editor Heather Mowbray (heathermowbray@caixin.com)

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