Haidilao, a Chinese hot pot chain, announced Monday that it foresees a net loss of about 3.8 billion yuan ($600 million) to 4.5 billion yuan as of Dec. 31, 2021. The revenue in 2021 is expected to exceed 40 billion yuan, an increase of more than 40 percent, compared to 2020 revenue of about 28.6 billion yuan.
Haidilao estimates losses mainly due to the following factors: First, in 2021, Haidilao closed more than 300 restaurants and dropped restaurant business performance and other factors resulting in losses totaling around 3.3 billion yuan to 3.9 billion yuan. In addition, the restaurant chain’s operations were impacted by the continuing changes in the global landscape and repeated outbreaks. These were compounded by the accelerated expansion of the chain’s network in 2020 and 2021 and the company’s own internal management problems.
Also, particularly in the second half of 2021, affected by global and regional outbreaks of epidemics and public health control, Haidilao restaurants suffered a decline in operating revenues compared to the same period in 2020. Overseas stores also saw greater losses in 2021.
Regarding future plans, Haidilao launched a “Woodpecker Plan” in November 2021, led by Executive Director and Deputy Chief Executive Officer Yang Lijuan, in an effort to boost operational performance. The company has adopted proactive measures to limit rent and other operating costs, rigorously manage working capital and use credit facilities and equity financing instruments with a view to ensuring sound cash flow and a strong cash position.
In 2018, Haidilao, most famous for its thoughtful service, was listed on the Hong Kong Stock Exchange with an issue price of HK $17.8/share and a market value of HK $100 billion. By February 2021, its share price reached a record high of HK $85.75/share, and its total market value was once close to HK $470 billion. However, in the following year, its share price declined sharply. Today, Haidilao closed at HK $19.08 per share with a market value of HK $106.4 billion.
At the end of 2021, after several years of rapid expansion, Haidilao decided to slow down and announced to gradually shut down about 300 restaurants whose operations failed to meet expectations before December 31, 2021. Some restaurants were temporarily closed and will reopen should conditions improve over the next two years.