Hotpot giant Haidilao is Served a Cold Reality

Haidilao, which is usually considered the gold standard for premium casual dining, has found itself caught up in the crossfire as millions of diners swapped fancy meals for cheaper eats. With guest visits plummeting and profits taking a rare dive as well, the brand is ditching its old playbook. Can Haidilao regain its magic?

In 2025 China’s economy hit a wall. While GDP growth hit that steady 5% target as per the official 2025 data from the National Bureau of Statistics of China (NBS), people were clutching their wallets. For the first time in years, the dining scene grew slower than general retail (3.2% vs 3.7%), hinting that people were tightening their belts and doing without fancy dinners.

This macro backdrop hit Haidilao International Holding (Haidilao) right where it hurts. While the country saw sluggish growth, Haidilao’s revenue barely budged, up just 1.1%. The most telling stat?

It lost over 31 million customer visits as people swapped premium hotpot for cheaper eats. It’s clear: even the kings of service aren't immune to a nationwide "belt-tightening" trend. Unfortunately, the underlying numbers reveal a deeper financial sting.

Drowning In the dip

While Haidilao’s total FY 25 revenue inched up a meagre 1.1% y/y from CNY 42.75bn in FY 24 to CNY 43.23bn, net profit took a painful 14% y/y drop from CNY 4.70bn to CNY 4.04bn—its first drop in three years. The real kicker? They lost over 31 million guest visits, a 7.5% y/y decline from ~415 million to ~383.9 million, while same-store sales slid by 6.7% y/y.

With the table turnover dipping from 4.1 to 3.9 times a day and per-customer spend flatlining with a tiny 0.2% y/y rise to CNY 97.7 from CNY 97.5 in FY 24, the old hotpot magic is feeling the pinch.

Raw material costs spiked, rising 8.1% y/y to hit 40.5% of revenue. Not ready to give up, they shut or moved 85 self-operated spots while betting big on franchising with 66 new stores.

Under founder Zhang Yong, Haidilao is pivoting to the "Pomegranate Plan," scaling over 20 budget-friendly sub-brands to win back cautious spenders. They’re ditching heavy costs for an asset-light franchise model in lower-tier cities, using AI automation to slash labor expenses, and targeting 40–50 new international stores via its overseas arm Super Hi.

Well, given Haidilao’s beaten-down valuation, this turnaround is possibly what the market is waiting for.

Bottoming out

Haidilao’s stock price is currently around HKD 14.82, down nearly 15.1% over the last year, sitting well below its 52-week high of HKD18.28. With a market cap of HKD 70.3bn ($10.2bn) it’s still a heavyweight, and the valuation looks relatively lower at a 2026 P/E of 15.1x, especially compared to its 3-year average of 16.7x.

The real solace for investors is the dividend yield, which is expected to climb from a solid 5.69% in 2025 to 6.27% by 2027.

Analysts seem to think the worst is over, too. Out of the 39 analysts who cover the stock, 24 have "Buy" ratings on it, with an average target price of CNY 15.60, which suggests robust 23.6% upside potential at present.

Losing steam

Investing in Haidilao has been a spicy ride lately. They’re still the hot pot kings, but 2025 was a rough ride. Even their legendary table turnover dipped below their own passing grade of 4.0. That's an internal metric where Haidilao stops opening new stores if their table turnover falls below 4.0 times per day.

Under the Red Pomegranate Plan" franchise model, it is closing dozens of stores and betting big on the franchisees. But if the latter plan fizzles, the brand’s reputation is toast.

With food prices and labor swallowing 33% of revenue, margins are indeed feeling the squeeze.