Haidilao’s Mixed 2025 Interim Results Signal Industry Transformation
On August 25, 2025, Haidilao International Holding Ltd. released its mid-year financial results, presenting a tale of two contrasting realities. While the hot pot giant reported a 3.7% year-on-year revenue decline to RMB 20.703 billion and a significant 13.7% drop in net profit to RMB 1.755 billion, these headline numbers mask a crucial divergence between its traditional dine-in business and rapidly expanding delivery operations. This performance fell notably short of market expectations, which had anticipated approximately RMB 2.2 billion in net profit. The results reflect broader shifts in China’s餐饮 industry, where changing consumer behaviors and increased competition are forcing even established leaders to adapt their strategies.
The company attributed the profit decline primarily to decreasing table turnover rates and initial adjustments to product and format innovations. Meanwhile, Haidilao’s delivery business emerged as the standout performer, growing nearly 60% year-on-year to reach RMB 928 million in revenue. This contrast between struggling dine-in operations and booming delivery services encapsulates the current transformation of China’s food service sector, where convenience and single-serving options are gaining ground against traditional group dining experiences.
Financial Performance Overview
Haidilao’s 2025 interim results reveal several concerning trends alongside promising developments. The company’s revenue decrease to RMB 20.703 billion represents the first significant contraction in years, while the 13.7% profit drop to RMB 1.755 billion indicates margin pressure beyond mere top-line challenges. These figures become more concerning when viewed against China’s broader餐饮 landscape. According to National Bureau of Statistics data, while overall national餐饮 revenue grew 4.1% during the first half of 2025, revenue from premium and large-scale餐饮 enterprises (categorized as ‘above designated size’) experienced negative growth for the first time, declining by 0.4%.
Key Performance Metrics Analysis
Two critical metrics illustrate Haidilao’s operational challenges: average customer spending and table turnover rate. The company’s average customer spending in self-operated restaurants reached RMB 97.9, a slight increase of RMB 0.5 from the previous year but still below the psychologically important RMB 100 threshold. More significantly, the table turnover rate—a crucial indicator of restaurant efficiency—dropped to 3.8 times per day from 4.2 times during the same period in 2024. This decline is particularly notable considering that in late 2021, Haidilao management identified an overall turnover rate of 4.0 times per day as their minimum acceptable standard, while the company achieved a peak rate of 5.0 times per day back in 2018.
Haidilao cited intensified market competition and evolving consumer preferences as primary reasons for the declining turnover rate. The company’s response included strategic store closures, with net new openings turning negative for the first time. By June 30, 2025, Haidilao operated 1,363 restaurants globally, including 1,299 self-operated restaurants in mainland China, 23 in Hong Kong, Macao, and Taiwan, and 41 franchised locations. During the first half of the year, the company opened 25 new self-operated restaurants and 3 franchised locations but closed 33 underperforming stores, resulting in a net reduction of 5 locations.
The Dine-In Challenge: Understanding Declining Traffic
The struggle facing Haidilao’s dine-in business reflects broader industry headwinds affecting premium餐饮 brands. Multiple factors have contributed to the declining foot traffic and table turnover rates that have impacted the company’s profitability. Understanding these challenges provides insight into not just Haidilao’s situation but the evolving Chinese consumer landscape.
Changing Consumer Preferences and Economic Factors
China’s post-pandemic consumer behavior has shifted significantly toward value-consciousness and convenience. While group dining at premium restaurants like Haidilao remains popular for special occasions, everyday dining patterns have moved toward more economical options and convenience-oriented solutions. The economic uncertainty that persisted into 2025 has made consumers more thoughtful about their dining expenditures, particularly for higher-priced restaurant experiences. This trend is reflected across the premium餐饮 sector, explaining why above-designated-size restaurants experienced negative growth while overall餐饮 spending continued to increase.
Additionally, the rise of alternative entertainment and dining options has created increased competition for consumers’ leisure time and spending. The convenience of food delivery platforms, the growing quality of ready-to-eat meal options, and the expansion of competitive dining concepts have all contributed to分流 (diversion) of customers from traditional dine-in establishments. Haidilao’s previous growth model—which relied heavily on rapid expansion and high table turnover—has encountered natural limits in this increasingly competitive environment.
Operational Challenges and Strategic Response
Haidilao’s operational challenges extend beyond broader market trends. The company has faced difficulties maintaining its legendary service standards while managing costs amid inflationary pressures. Labor costs, ingredient prices, and rental expenses have all increased, squeezing margins even as customer traffic has declined. In response, Haidilao has implemented several strategic initiatives:
– Store optimization: Closing underperforming locations while focusing on improving efficiency at remaining restaurants
– Digital transformation: Enhancing operational efficiency through technology implementation
– Format innovation: Experimenting with different restaurant concepts and service models
– Menu optimization: Adjusting offerings to balance quality, value, and profitability
These measures represent a shift from Haidilao’s previous growth-at-all-costs approach toward a more sustainable, efficiency-focused strategy. The company’s management appears to be acknowledging that the era of rapid expansion through new store openings has reached its limits, necessitating a focus on improving existing operations.
The Delivery Boom: Haidilao’s Growing Off-Premise Business
While Haidilao’s dine-in business struggled, its delivery operations emerged as the undeniable success story in the 2025 interim report. The nearly 60% year-on-year growth in delivery revenue to RMB 928 million demonstrates the company’s effective adaptation to changing consumer preferences. Particularly impressive was the performance of Haidilao’s ‘Xia Fan Huo Guo Cai’ (下饭火锅菜) or ‘Rice Companion Hot Pot Dishes’—single-serving meals designed specifically for the ‘一人食’ (single diner) market segment. This innovative product line alone accounted for over 55% of Haidilao’s total delivery revenue and shows continuing growth momentum.
Strategies Behind Delivery Success
Haidilao’s delivery success stems from strategic initiatives across multiple dimensions. The company identified three key areas of focus that drove its off-premise business growth:
– Product innovation: Expanding menu variety, improving quality, and creating high-value offerings tailored for delivery
– Operational efficiency: Enhancing fulfillment capabilities and optimizing delivery logistics to handle order surges
– Platform partnership: Leveraging partnerships with major delivery platforms for traffic and promotional support
Beyond traditional hot pot delivery, Haidilao has been testing new product categories including rice bowls, self-mixed beverages, and other delivery-friendly options. The company’s approach demonstrates a sophisticated understanding of how delivery differs from dine-in experiences, requiring specialized packaging, modified recipes, and streamlined ordering processes.
The Single-Diner Market Opportunity
Haidilao’s focus on the ‘一人食’ (single diner) market represents a strategic recognition of demographic and social trends. With growing numbers of single-person households, busy professionals seeking convenient meal solutions, and changing dining habits post-pandemic, single-serving delivery options have become increasingly important. Haidilao’s ‘Xia Fan Huo Guo Cai’ line successfully translates the hot pot experience—traditionally a group activity—into a convenient individual meal without compromising on quality or flavor.
This strategic targeting of the single-diner market has allowed Haidilao to tap into new usage occasions and customer segments that might not regularly visit their restaurants for traditional dine-in experiences. The success of this approach suggests significant potential for further growth as the company continues to develop products specifically designed for delivery consumption.
Diversification Efforts: Beyond Traditional Hot Pot
Haidilao’s growth strategy extends beyond its core hot pot business and delivery operations. In 2024, the company launched the ‘Pomegranate Plan’ (红石榴计划), an internal entrepreneurship program designed to incubate and develop new restaurant brands. This initiative aimed to transform Haidilao from a single-brand restaurant operator into a diversified餐饮 group with multiple successful concepts.
Mixed Results from Brand Diversification
After approximately one year of implementation, the Pomegranate Plan has produced mixed results. While most试点 (pilot) projects have generated limited market response, a few brands have emerged as successful outliers. As of June 30, 2025, Haidilao operated 14 additional restaurant brands beyond its core hot pot concept, totaling 126 locations. The most successful among these has been ‘Yan Qing Kao Rou Pu Zi’ (焰请烤肉铺子), a barbecue concept that expanded rapidly with 46 new locations in the first half of 2025, reaching a total of 70 stores.
Revenue from ‘other restaurants’—including Yan Qing Kao Rou Pu Zi—reached RMB 597 million in the first half of 2025, representing impressive year-on-year growth of 227.0%. While still a small portion of Haidilao’s overall business, the success of these emerging brands demonstrates the company’s ability to identify and scale promising new concepts beyond hot pot.
Strategic Rationale for Diversification
Haidilao’s diversification efforts serve multiple strategic purposes:
– Risk mitigation: Reducing dependence on a single brand and concept
– Market coverage: Addressing different customer segments and price points
– Growth expansion: Creating additional avenues for revenue growth beyond core business saturation
– Talent retention: Providing entrepreneurial opportunities for high-performing employees
While the overall results of the Pomegranate Plan have been modest thus far, the successful expansion of Yan Qing Kao Rou Pu Zi suggests that with careful concept selection and execution, Haidilao can successfully extend its operational expertise to adjacent餐饮 categories.
Future Outlook and Strategic Direction
Looking forward, Haidilao has outlined a three-pronged strategy to address current challenges and position the company for sustainable growth. Management emphasized their commitment to taking concrete actions to overcome difficulties and create long-term value for shareholders.
Enhanced Dining Experience and Digital Transformation
The company plans to continue improving its core dine-in experience while leveraging digital tools to enhance operational efficiency. This includes refining service protocols, optimizing menu offerings, and implementing technology solutions that streamline operations and improve customer satisfaction. Digital transformation initiatives will focus on data analytics, customer relationship management, and operational automation to reduce costs while maintaining quality standards.
Diversified Operations and Organizational Optimization
Haidilao will continue pursuing diversification through both the Woodpecker Plan (啄木鸟计划) for operational efficiency and the Pomegranate Plan for new brand development. The company intends to dynamically adjust its organizational structure incorporating new technologies and continue exploring franchising models to capitalise on its brand strength while reducing capital requirements for expansion.
Strategic acquisitions and ecosystem expansion
Management indicated they will strategically seek acquisitions of high-quality assets to diversify their餐饮 business forms and customer base. This approach suggests Haidilau may pursue mergers and acquisitions to accelerate growth and enter new market segments more rapidly than organic development would allow.
Investment Perspective and Market Performance
As of August 25, 2025, Haidilao’s stock closed at HKD 14.88 per share, giving the company a market capitalization of approximately HKD 82.9 billion. The market’s reaction to the interim results reflected the mixed nature of the announcement—concern about the declining profitability of the core business tempered by optimism about the rapid growth of delivery operations and successful new concepts.
Analysts remain divided on Haidilao’s prospects, with some emphasizing the challenges of turning around the dine-in business while others focus on the company’s successful adaptation to delivery and diversification. The company’s ability to execute its three-part strategy—enhancing core operations, expanding delivery, and developing new concepts—will likely determine its performance in coming quarters.
Implications for China’s Restaurant Industry
Haidilao’s experience reflects broader trends affecting China’s餐饮 sector. The divergence between struggling dine-in operations and growing delivery business demonstrates how consumer preferences are shifting toward convenience and value. The success of single-serving options highlights the importance of adapting traditional dining concepts to new consumption patterns.
Other premium餐饮 brands are likely facing similar challenges, suggesting that industry-wide adaptation will be necessary. Companies that successfully balance maintaining their dine-in excellence with expanding their delivery capabilities and exploring new concepts may emerge stronger from this transitional period.
For investors and industry observers, Haidilao represents a case study in how even market leaders must evolve to remain competitive. The company’s willingness to make strategic pivots—including closing underperforming stores, investing in delivery infrastructure, and experimenting with new brands—demonstrates a pragmatic approach to navigating market changes.
The coming years will test whether Haidilao can successfully transition from a growth story driven by rapid expansion to a sustainable business model built on operational excellence, diversification, and adaptation to changing consumer behaviors. Their progress will be closely watched as an indicator of broader trends in China’s consumer and餐饮 markets.
For those interested in following Haidilao’s journey, the company’s investor relations page provides regular updates on their performance and strategic initiatives. Industry observers may also want to monitor China’s National Bureau of Statistics releases on餐饮 sector performance for broader context on market trends.