HaidiLao's profit model has been rewritten: the main hotpot business slows down, and the second curve has yet to overcome the cost pain point | Dayu Finance

Ask AI · Why couldn’t new business growth reverse the slump in profits?

After market close on March 24, Haidilao International Holding Co., Ltd. released its full-year results for 2025. The financial report shows that for the full year, the group achieved revenue of RMB 43.225 billion, up 1.1% year over year; net profit was RMB 4.042 billion, down 14.0% year over year. After going through the post-epidemic recovery cycle since 2023, the changes reflected in this report are relatively clear: the company has moved from the previous phase of recovery-driven growth into a new stage characterized by slower growth in its core business, pressure on profit margins, and a transformation that has yet to form effective support.

Viewed over a longer time horizon, this turning point is even more evident. In 2023, Haidilao’s revenue surged 33.6% year over year, jumping from RMB 31.039 billion in 2022 to RMB 41.453 billion, achieving a rebound; in 2024, revenue grew slightly further to RMB 42.755 billion; but in 2025, revenue basically stalled, recording only a 1.1% year-over-year increase. The profit trend is broadly consistent with this: net profit was RMB 1.637 billion in 2022, rebounded significantly to RMB 4.495 billion in 2023, rose again to RMB 4.700 billion in 2024, but fell back to RMB 4.042 billion in 2025. Overall, the recovery dividend from the earlier period has largely been released, and the profit “center of gravity” has begun to shift downward in stages.

Core base under pressure: table turnover rate and average check size both weaken

As a key metric outsiders use to assess Haidilao’s operating quality, changes in table turnover rate and average check size are directly reflecting incremental pressure on the core business.

In 2025, the group’s self-operated restaurant overall table turnover rate fell from 4.1 times per day in 2024 to 3.9 times per day; over the full year, the number of customers served declined 7.5% year over year to 383.9 million. At the same time, per-customer spending continued to trend downward from RMB 104.9 in 2022: it fell below RMB 100 to RMB 99.1 in 2023; in 2024 and 2025, it was RMB 97.5 and RMB 97.7 respectively, lingering in a low range. The synchronized weakening of table turnover rate and average check size directly compresses each store’s revenue capacity under the store model.

Against this backdrop, revenue from Haidilao’s self-operated restaurant business decreased 7.1% year over year to RMB 37.543 billion. This segment still accounts for more than 80% of the group’s total revenue, so changes in the core business directly weigh on overall performance.

In response to changes on the demand side, the company began adjusting its store structure. At the end of 2023, the group operated 1,374 stores worldwide in total, with its direct-operated model long viewed as the core foundation for maintaining its service standards. But by 2025, this strategy showed signs of loosening: the number of self-operated Haidilao restaurants fell from 1,355 in 2024 to 1,304, with 85 stores closed or relocated during the year. Meanwhile, 45 self-operated stores were converted into franchised stores, increasing the total number of franchised restaurants to 79. As a result, Haidilao started to rebalance between maintaining service standards and improving asset efficiency, gradually moving toward a lighter asset model.

Adjustments to the workforce structure are also being advanced in parallel. The group’s total number of employees decreased from 153,747 in 2023 to 125,620 by the end of 2025, cutting by more than 28,000 over three years. But compared with changes in headcount, labor costs showed stronger rigidity. This expense rose from RMB 13.040 billion in 2023 to RMB 14.113 billion in 2024. In 2025, it slightly declined to RMB 14.073 billion, but the share of revenue still remained in the 32.6% to 33.0% range. With personnel downsizing and cost levels staying high at the same time, this reflects structural constraints in improving labor efficiency for service-intensive catering.

Against this backdrop, in 2025 the group advanced the construction of a “smart catering ecosystem intelligent back office,” introducing algorithms for automated scheduling and inventory management, attempting to improve operational efficiency through data-driven means. However, based on the current financial performance, the above initiatives have not yet produced a clear reduction in costs.

Incremental business expansion: high growth alongside high costs

With growth pressure building in the hot pot core business, Haidilao allocated more resources to delivery and multi-brand businesses, seeking to build new sources of growth.

In terms of growth rates, both businesses are in a phase of rapid expansion. After delivery revenue fell to RMB 1.041 billion in 2023, it rebounded in 2025 thanks to product lines such as “home-style rice dishes,” with revenue up 111.9% year over year to RMB 2.658 billion. Multi-brand business also accelerated noticeably: since the group set up an innovation and entrepreneurship office in 2023 to trial sub-brands (revenue that year was RMB 0.346 billion), by 2025 it was upgraded into the “Red Pomegranate Plan,” forming a brand matrix covering multiple categories such as seafood street-food stall dining and Chinese fast food. In total, it has 20 brands and 207 stores, achieving full-year revenue of RMB 1.521 billion, up 214.6% year over year.

However, in terms of absolute scale, the above business volumes are still relatively limited and still cannot adequately offset the shortfall caused by the core business revenue decline. At the same time, its expansion has brought significant cost pressure. In 2025, the total cost of raw materials and consumables reached RMB 17.526 billion, and the cost share of revenue rose from 37.9% in 2024 to 40.5%. In addition, the combination of delivery fulfillment system construction and multi-brand marketing investment drove other expenses up 21.8% year over year to RMB 2.270 billion.

Against a backdrop where total revenue grew only slightly, multiple upward pressures on the cost side directly squeezed profit margins, becoming one of the important reasons why net profit saw a double-digit decline that year.

Cash reserves and reduced dividends: the transformation enters a consumption phase

The pressure on the profit side is being transmitted to cash and shareholder returns.

At the end of 2023, Haidilao’s bank balances and cash were RMB 9.330 billion. By the end of 2025, that figure dropped to RMB 6.602 billion, decreasing by more than RMB 2.7 billion over three years. The contraction in cash reserves, to some extent, reflects the company’s continued cash consumption during its business structure adjustments and new business investment process.

The dividend policy has also become more cautious. The board recommended paying a 2025 interim cash dividend of HKD 0.384 per share, down significantly from HKD 0.824 per share in the same period of 2023. The tightening of shareholder returns, which aligns with the current profit level and cash-flow situation, also reflects the company’s priority consideration of capital safety in an uncertain period.

Haidilao is trying to shift from a growth model driven mainly by a single hot pot core business to an operating structure running multiple business formats in parallel. Delivery and multi-brand businesses continue to expand in scale, but their profitability and stability still need to be validated. With neither foot traffic nor average check size having improved meaningfully yet, the core business remains in an adjustment phase, while the new business has not yet formed enough strength to take over as support.

Against this backdrop, in the short term the company will still face pressure from having to repair profits while also transforming its structure in parallel, and rebuilding the growth path still requires time.

Reporter: Du Lin | Editor: Liu Meimei | Proofreader: Tang Qi