On July 30, Chinese hot pot chain Haidilao unveiled a staggering 30-fold surge in profits for the first half of 2023, amounting to a record-breaking 2.2 billion RMB (305.9 million USD). In comparison, profits during the same period in 2022 were approximately 72 million RMB (10 million USD).
This extraordinary surge represents the highest half-year profit scale since Haidilao’s initial public offering on the Hong Kong Stock Exchange, with the previous high being 911 million RMB (126.6 million USD) in 2019. The company attributes this impressive growth to increased turnover rates, improved internal management, operational efficiency, and overall economic recovery.
As of the end of July, the National Bureau of Statistics released consumption data for the first half of 2023, indicating a revival in the catering market. During this period, national catering revenue amounted to 2,432.9 billion RMB (338.3 million USD), exhibiting a remarkable year-on-year increase of 21.4%. For Haidilao, operational costs primarily comprise raw materials and consumables, employee salaries, and store rent, accounting for 40%, 30%, and 1% of revenue respectively. In an effort to streamline costs and enhance efficiency, Haidilao reportedly saved 3.7 billion RMB (514.5 million USD) in labour costs in 2022 by closing stores and implementing employee layoffs.
According to media reports, the next focus for Haidilao is “efficiency enhancement”, which entails increasing the unit price per customer. However, this path poses challenges as the company faces limitations in the hot pot market regarding the maximum unit price. Moreover, Haidilao’s efforts to enhance efficiency have been met with public scrutiny. For instance, the company’s decision to discontinue the free clear soup pots and prevent customers from bringing their own ingredients has sparked debates both online and offline. Additionally, some customers have noticed price increases in Haidilao’s snacks, with one individual mentioning a 2-RMB (0.28 USD) rise in the price of snacks.
As Haidilao navigates the delicate balance between cost control and efficiency increase, the company remains dedicated to leveraging its internal strengths while adapting to market demands and consumer expectations. With the catering industry rebounding and Haidilao’s current strategies in place, the company’s recent profit report showcases its resilience and ability to thrive amidst challenging economic conditions.