From incubation to scaling up: Haidilao's sub-brand accelerates expansion

Ask AI · How Can Haidilao Balance Short-Term Investment and Long-Term Growth Under a Multi-Brand Strategy?

In 2025, Haidilao achieved a record high in revenue. While its main brand remained firmly in place to hold down its market “base,” its long-gestating “Red Pomegranate Plan” has officially moved from internal incubation into market expansion. On March 31, Beijing Business Today’s reporter learned more from Haidilao’s earnings briefing. The company also said that startup brands would not set specific store-opening targets—first “run the store model,” then open stores. “Extreme value for money” is the main direction for Haidilao’s future development. In the current environment, where rational consumer trends are strengthening in the restaurant industry and price competition has grown increasingly intense, Haidilao is reshaping its competitiveness through a two-track layout of primary and secondary brands. Meanwhile, how to continuously give consumers reasons to visit in person has become the core issue in its efforts to get through industry cycles.

Incubating High-Value-For-Money Brands

2025 is the year that Haidilao’s “Red Pomegranate Plan” moves away from the “bubble-like” characteristics of early incubation and fully shifts toward market-driven expansion. Beijing Business Today’s reporter learned through Haidilao’s 2025 annual report earnings briefing that in 2026 Haidilao will have clear expectations for its secondary brands that are performing especially well, such as sushi and seafood hotpot fast eateries. At the earnings briefing, Haidilao’s management said that the fast-eatery model for hotpot with “seafood counters” has the potential and opportunity to reach a goal of 500 stores within the next three years, while the sushi model has the potential and opportunity to open 100 stores within the next two years.

It’s not hard to see that Haidilao intends to quickly scale up its second brand. Financial statement data directly confirms the growth momentum that the second brand brings to the company. In 2025, the operating revenue of Haidilao Group’s other restaurants reached 1.52B yuan, up 214.6% year over year, becoming the key growth engine for the group in addition to the main brand. Among the projects mentioned above, the overall table-turning rate for the sushi concept is currently kept above 6; and in many locations, the table-turning rate for seafood hotpot fast eateries at their first stores is above 5.5.

By the end of 2025, Haidilao had already operated 20 secondary brands covering multiple sub-sectors, including seafood hotpot fast eateries, sushi, Western light meals, small hotpots, and Chinese fast food. The total number of stores increased to 207.

For this year’s plan, Haidilao said it will continue to advance the dual-system incubation mechanism within the “Red Pomegranate Plan.” This dual system includes chefs who are “running the show” and “ordinary folks’ kitchen.” The chefs-focused track mainly targets employees’ independent entrepreneurship projects, while the ordinary folks’ kitchen track mainly emphasizes projects planned and led by the headquarters.

However, Haidilao also mentioned at the briefing that the startup brands would not set specific store-opening targets; they would first test the store model, then open stores. “Extreme value for money” is the company’s main direction for future development. The company hopes that through the “Red Pomegranate Plan,” it can find more projects that fit “extreme value for money.”

Behind Profit Fluctuations

While revenue hit new highs, in 2025 Haidilao’s net profit and core operating profit also fluctuated compared with the previous year. That change in data also directly reflects Haidilao’s continual “tinkering” over the past year.

In 2025, Haidilao rolled out differentiated operations around the principle of “one store, one strategy.” By the end of 2025, Haidilao had cumulatively completed renovations for nearly 300 specialty-themed stores, and it has already formed various models, including fresh-cut stores, late-night snack stores, family-and-kids stores, pet-friendly stores, community stores, and more.

On the other hand, the early-stage cultivation costs brought about by accelerating expansion under the “Red Pomegranate Plan” are also an important factor behind the profit fluctuations. A multi-brand layout means Haidilao needs to continue investing in areas such as site selection and store openings, model refinement, supply-chain fit, and organizational coordination. For example, seafood hotpot fast eateries have integrated seafood counters, market self-selection, “one person, one pot,” and other new models.

At the earnings briefing, Haidilao also said that in terms of product strategy, it introduced more new items that combine quality and value for money, which—on a short-term basis—has brought a certain impact on gross margin performance. Second, in continuously improving the service experience, the company increased investment in store materials and detail innovation. Third, the multi-brand business is steadily advancing, and the related new formats are still in the investment and ramp-up phase, which also affects the profit side in the short term.

Yuan Shuai, Deputy Director of the Investment Department at the China Academy of Urban Development Research Institute, said that a series of actions by Haidilao has shown outsiders the determination of the hotpot giant to change and adapt. Innovation in the main brand is designed to align with market trends and increase user stickiness. The layout of secondary brands is aimed at tapping consumption demand at different tiers. During this process, there are also costs of experimentation. These short-term investments lower profit in the current period, but in the long run, fundamentally, they are an inevitable pain point for the company during a strategic transformation period—and also the necessary path for building momentum for long-term development.

Creating Ongoing Reasons to Dine In

Today, the restaurant industry has fully entered a rational-consumption phase. Industry growth has slowed, price competition has intensified, and consumers are making dining decisions more cautiously. “Is it worth it?” has become the core standard for evaluating where to eat. Because of that, when people looked at Haidilao in the past, the core focus was only the hotpot main brand. But now, Haidilao has started to form clear layouts across multiple tracks, including hotpot fast eateries, barbecue, sushi, and small hotpots—moving from wide initial market testing to systematic expansion.

“No matter whether it’s breaking the ‘one-thousand-stores, one-same-face’ pattern or achieving a double engine of dine-in and delivery, Haidilao is rebuilding its system from standardized operations to differentiated operations, completing its transformation from maximizing service intensity to tailoring experiences. This is exactly how Haidilao, after being tested by the sands of time, is constructing its core competitiveness,” said Bai Wenxi, Vice Chairman of China Enterprise Capital Alliance.

Based on the breakdown of interim and annual report data, Haidilao already showed relatively clear signs of operational repair in the second half of 2025. Year-over-year revenue growth shifted from a 3.7% decline in the first half to a 5.9% increase in the second half; the group’s year-over-year decrease in restaurant operating revenue narrowed from 6.9% to 2%; the main brand Haidilao restaurants’ year-over-year decrease in operating revenue narrowed from 9% to 5.1%; and the year-over-year decrease in core operating profit narrowed from 14% to 12.7%. However, under today’s market environment and intense competition, Haidilao still faces the core test of continuously attracting consumers to visit in person.

Yuan Shuai further said that to continuously hone its core competitiveness and give consumers sustained reasons to visit, Haidilao needs to accurately exert efforts across multiple dimensions—products, scenario-based service, supply chain, and digitalization—and tightly align with market demand. The main brand and secondary brands need clear positioning and continuous optimization of the global supply chain. By lowering ingredient costs through centralized procurement and direct supply from origin, and by using intelligent systems to predict customer traffic, manage inventory, and reduce food waste, Haidilao can build multi-layer competitive barriers through efficient operations and cost advantages, giving it more flexibility to respond in a complex market environment.

Beijing Business Today reporter Guo Binlu