BEIJING, Feb 23 (TMTPost) – Haidilao International Holding Ltd. (Haidilao), a Hong Kong-listed hotpot restaurant chain, has forecast positive net profits, a reversal from huge losses in 2021.

Haidilao International Holding Ltd. (Haidilao) released its profit forecast on Tuesday. According to the announcement, as of December 31, 2023, Haidilao's annual operating revenue is expected to be no less than RMB 41.4 billion, with a year-on-year increase of no less than 33.3%.

Compared to a net profit of RMB 16.4 billion in 2022 (excluding the business of its overseas unit Super Hi International), Haidilao's net profit in 2023 is expected to be no less than RMB 4.4 billion. This is mainly attributed to the increase in its turnover rate and the improvement in operational efficiency of the restaurants.

That is to say, Haidilao's revenue has nearly doubled compared to 2019 pre-pandemic levels. Compared to the revenue of RMB 24.94 billion and net profit of RMB 2.56 billion (excluding business of Super Hi International) in 2019, the expected revenue and net profit for 2023 are projected to increase by no less than 65.9% and 71.8%, respectively.

This turnaround was not possible without its  "Woodpecker Plan" and the "Hard Bone Plan".

The Woodpecker Plan refers to cost-cutting measures announced by Haidilao on November 2021, designed to compensate for the negative effects caused by the company’s rapid expansion. The cost-cuts were realized by  closing 276 stores that failed to meet expectations by December 31 of that year.

This move allowed Haidilao to turn losses into profits.  Meanwhile, in the second half of 2022, Haidilao launched the "Hard Bone Plan," resuming operations at some stores that had been closed under Woodpecker Plan launched in 2021.

The intense competition in the catering industry and declining consumer power in the post-pandemic market force enterprises to explore new business models and increase their operation efficiency.

Firstly, the price. Data shows that in the first half of 2023, the average consumption per person at Haidilao decreased from RMB 105 in the same period last year to RMB 102.9, whereas this figure was RMB 110 in 2020.

Meanwhile, Haidilao provides the delivery business, including B-to-B hotpot banquets and solo dining services. According to Zhang Ying, the person in charge of Haidilao's delivery business, the sales revenue for this business remained a stable growth in 2023.

In addition, flexible store activities and scene have brought a large amount of attention to Haidilao, including the provision of shuttle buses for concertgoers after the concert.

In addition, Haidilao launched more than three hundred new products throughout 2023. Moreover, it has delegated the authority to adjust products and services based on local needs to store managers and regional managers since the beginning of this year.

In this process, the recovery of the tourism market in 2023 has also benefited the catering market. Data shows that during the Dragon Boat Festival holiday, customer traffic of Haidilao stores increased by more than 40% compared to the same period last year and their daily customer flow increased by more than 70% during the 8-day National Day holiday compared to the same period in 2019 .

Haidilao's path to profitability indicates that adopting the real market demand in a timely manner is crucial for reversing an adverse situation. (This article was first published on the TMTPost app. Author: Xie Xuan, Editor: Fang Yu)