business news

Hotpot chain Haidilao to shutdown 300 restaurants by the year-end

Hotpot chain Haidilao to shutdown 300 restaurants by the year-end
Hotpot chain Haidilao to shutdown 300 restaurants by the year-end

Haidilao, the China-based hotpot restaurant chain, has reportedly announced plans to suspend or shut down operations for more than over 300 of its poorly performing restaurants, after aggressively expanding its presence through the last two years.

The Hong Kong-listed firm said in an exchange filing on Friday last week that some establishments will be closed until further notice for no more than two years and will reopen ‘at appropriate intervals’.

No personnel will be laid off, and those who are affected will be reassigned within the company.

According to reports, the closures will primarily affect stores in China, though some cutbacks will be made in countries where the company has expanded.

Although Haidilao did not identify which markets would be affected in its bourse filing, the move comes after a tremendous expansion over the past couple of years.

The hot pot chain had 1,597 restaurants worldwide, with 1,491 on mainland China as of the end of June. This is a more than 70% increase over the 935 restaurants it had a year earlier, including 868 in mainland China.

Haidilao has 18 restaurants in Singapore, with the 19th set to open at Punggol's new neighborhood center, Northshore Plaza.

In a recent report released in September this year, Haidilao stated that variables influencing its profitability during the first half of this year include the time it takes for recently opened locations to break even. Restaurants were still dealing with the aftermath of the Covid-19 outbreak.

In recent weeks, the company's stock has suffered a series of setbacks, including a nine-day losing streak in late October and early November, during which the stock lost about a third of its worth due to a surge in Covid-19 cases in China. On Friday last week, when shares closed at HK$21.05., the market was down roughly 65% for the year.

Last week, Haidilao said that it has decided to implement a plan named Woodpecker to boost company performance.

The plan's efforts involve paying close attention to restaurants with poor operational outcomes, particularly those in other countries, and taking corrective action. The company's business expansion goals will also be slowed.

Source credit: https://www.straitstimes.com/business/companies-markets/hot-pot-giant-haidilao-to-close-or-suspend-300-stores-by-year-end

About the author

Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.