Haidilao Announces Losses of RMB4.16 billion, 276 Restaurants to Close

By Lars James Hamer, March 24, 2022

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The popular hot pot restaurant chain, Haidilao announced losses of RMB4.16 billion over 2021 and the closure of 276 restaurants.  

The losses come despite a sharp increase in revenue of 43.7% to RMB41.11 billion.

Haidilao said the losses were partly due to a 54% rise in staff costs and higher spending on materials and consumables during their 2019 rapid expansion plan. 

Store closures were originally announced in November 2021 when Global Times reported that Haidilao was set to close around 300 stores “due to a lack of customers and poor performance.”

Sixteen of the restaurants that closed were due to lease expiration and “other reasons.”

Back in November, Haidilao said stores would be closed because they failed to reach expectations in light of the company’s rapid expansion plans in 2019. 

As part of their rapid expansion project, the company opened 308 restaurants in 2019 and 544 the following year. As of June 2020, there were 868 Haidilao restaurants on the Chinese mainland.  

For the first six months of 2021, an additional 299 stores were added. As of December, there were 1,433 Haidilao restaurants on the Chinese mainland and Hong Kong. 

After the closure of the 276 stores, there are still around 1,300 of the popular hot pot restaurants on the Chinese mainland, meaning that Haidilao is still China’s biggest hotpot restaurant chain. 

Billionaire founder of Haidilao Zhang Yong said the expansion was “too confident” and stepped down earlier this month amongst projected losses. 

Just a week prior to Zhang Yong’s resignation, Haidilao was hit by online controversy after a woman made claims that the brand was keeping detailed files on customers’ dining habits and even their physical appearance. 

The Shanghai woman posted a series of photos of the company’s filing system on Xiaohongshu, which included categories such as physical appearance, observed behaviors and customer demands.

Under the physical appearance category, comments such as “healthy skin” and “slim” were made. 

Customer demands included requests such as “plain water” and “hand-peeled oranges.”

The woman’s post on Xiaohongshu later went viral on Weibo, with users sharing similar experiences. 

Shanghai Zheng Ce Law Firm told Yahoo News that keeping customers profile’s on record is not illegal, so long as information is kept private. 

Haidilao reached out to the Xiaohongshu user and offered her an apology and a complimentary gift. 

Haidilao is famous for its above-and-beyond service. Waiting guests are treated to snacks, drinks, Wi-Fi, board games and even manicures, shoe shines and a hand massage. 

During the dining itself, should guests order their hand-pulled noodles, they are treated to a ‘noodle dance’ from the waiter.

The waiters and waitresses are required to greet every customer that crosses their path and make an effort to engage in conversation. 

Should a customer go to a Haidilao restaurant by themselves, staff will give them a cuddly teddy bear that sits opposite, ensuring no one dines alone. 

Sichuan Haidilao Catering Co., Ltd. was established in 1994. It is a large cross-provincial private catering enterprise that mainly operates Sichuan-style hot pot and integrates the characteristics of hot pot from various regions.

[Image via Weibo@财新网]

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