Yangcheng Evening News reporter Hu Yan
On February 21, Haidilao, a star brand in the hot pot restaurant industry, issued a profit warning stating that the net loss in 2021 will be about 3.8 billion to 4.5 billion yuan; revenue is expected to exceed 40 billion yuan, an increase of more than 40%.
On February 23, Standard & Poor's placed Haidilao's rating on a negative watch list.
The behavior of top brands is a "barometer" that indicates the development of the industry. Under the impact of the epidemic, it is easy to open a store and difficult to maintain, and the hot pot industry will continue to face challenges.
The myth of fast store expansion is busted
Haidilao was established in 1994, mainly operating Sichuan-style hot pot, and its founder is Zhang Yong.
In September 2018, Haidilao (06862.HK), which was founded 24 years ago, was listed in Hong Kong. Since then, it has made great progress, and Zhang Yong has also jumped to the Singapore Rich List.
On February 21 this year, Haidilao announced that its revenue in 2021 is expected to exceed 40 billion yuan, a year-on-year increase of more than 40%; the net loss is about 3.8 billion to 4.5 billion yuan.
On February 23, Standard & Poor's, an international authoritative credit rating agency, placed Haidilao's rating on a negative watch list.
According to the announcement, the expected loss is mainly attributable to these aspects.
On the one hand, in 2021, the closing down of more than 300 restaurants in Haidilao and the decline in restaurant operating performance will result in a total of 3.3 billion to 3.9 billion yuan in one-off losses and impairment losses on the disposal of long-term assets. Changes and repeated epidemics, the rapid expansion of the store network in 2020 and 2021, and the internal management of Haidilao will have an impact on the operation of Haidilao restaurants.
2020 is a period of rapid expansion of offline stores of Haidilao. Under the circumstance that people are not optimistic, Zhang Yong predicted that the epidemic will end in September of that year, and made the decision to open a store at the top.
In 2020, the total number of Haidilao stores in the world has reached 1,298, and it has also tested the Jian fast food track, and launched several sub-brands such as "18 Bian" noodle house and Fanfanlin.
Online, Haidilao also rescues itself through hot pot takeout and new retail.
In the second half of the year, Haidilao turned the tide and achieved a net profit of 309 million yuan for the whole year, but it was still down about 90% from the net profit of 2.347 billion yuan in the previous year.
"Buy the bottom" failed
Some analysts believe that under the epidemic, the rental cost of shops is relatively low, and Haidilao's expansion is a "bottom-hunting action".
As of June 30, 2021, Haidilao has opened 1,597 directly-operated restaurants around the world.
However, the rapid expansion of stores in the second half of 2020 and the first half of 2021 did not result in a sustained turnaround for Haidilao.
At the June 2021 shareholders' meeting, Zhang Yong reflected: "... The plan to expand the store seems to be blind now. When I realized the problem, it was already January this year, and it was March when I responded. already."
In fact, Haidilao's contrarian expansion has also responded to investor demand.
In 2020, the research report written by Guosen Securities was titled "The most difficult time may have passed."
The hot pot industry is suffering under the tide of store closures
From the perspective of market share, according to Sullivan data, Haidilao is the leading enterprise in my country's hot pot industry.
According to data from the China Hotel Association, Haidilao ranks first in the list of hot pot companies in my country in 2020.
According to public information, in 2018, my country's hot pot industry is mainly dominated by Haidilao, Dezhuang, Xiabuxiabu, Xiaolongkan, and Liu Yishou.
Among them, the market share of Haidilao is 3.4%, which is much higher than that of other brands.
Previously, other catering brands have also "rolled over" one after another, closing their stores significantly to "broken arms to stop bleeding".
Xiabuxiabu, the "King of Small Hot Pot", has had a declining turnover rate since 2016, and will drop to 2.3 in 2020.
Last year, Xiabuxiabu announced the closure of 200 loss-making stores. The person in charge said in an interview that the store had a wrong location and would not expand stores within the year.
According to iiMedia Research, about half of the hot pot catering companies in my country do not survive for five years, and about 30% of the hot pot catering companies close down within two years.
According to Qichacha data, from January to November 2021, the catering industry revoked or cancelled 809,000 stores.
Where does the "pain" in the hot pot industry come from?
In addition to the "black swan" of the epidemic, on the one hand, the dense network of stores has diluted part of the passenger flow.
Stores also need to compete with takeaways and the like.
The turnover rate of Haidilao, Xiabuxiabu and Laowang has gradually decreased in recent years.
On the other hand, Haidilao's "people-oriented" management strategy means that the labor cost is higher than the industry average. It not only needs to provide general services, but also needs to provide additional special services such as "coaxing guests to be happy" and "dine-in performances".
Last year, Haidilao was exposed to food safety problems, shortages of two pounds, and higher prices, and it has been on the hot search several times.
Staff salaries, higher costs of hot pot raw materials and consumables, and a damaged brand image are all likely reasons for the drop in profits.
The behavior of top brands is a "barometer" that indicates the development of the industry.
Next, other catering companies may also slow down the pace of expansion.