The behemoth Chinese hotpot chain Haidilao has been in the middle of a controversy after reopening its stores and considerably hiking up prices to offset the damages caused by the COVID-19 epidemic. Haidilao publicly responded that the total price increase did not exceed 6%, and that different stores and cities had different pricing plans.
SEE ALSO: Hot Pot Chain Haidilao Reveals 2019 Financial Results, Looks To Further Expand in 2020
However, as economic pressures posed by the epidemic forced consumers to decrease their spending, and their tolerance for price increases was lowered, many customers were outraged with Haidilao’s price increase. As a result, the restaurant chain publicly apologized on Weibo, saying that the pricing would be restored to normal.
Haidilao had previously explained why it resorted to increasing prices. It was difficult for the restaurant chain, which relied on dine-in customers for more than 90% of its revenue to quickly restore its chain capacity, and bear the costs of employees’ salaries and ingredients.
According to Haidilao’s 2019 annual report, the chain’s table turnover rate and the same-store sales growth rate both declined. The table turnover rate fell from 5.0 times/day in 2018 to 4.8 times/day, and the same-store sales growth rate in first- and second-tier cities fell from 4.3% to -1.9%.