Haidilao down most since April after hotpot chain sales decline
Consumers in China are turning frugal as concerns around a slowing economy affect investment and consumption
[BEIJING] Haidilao International Holding slumped the most intraday since Apr 7, after the Chinese hotpot restaurant chain reported a second consecutive drop in half-year sales amid fierce competition and weak consumer sentiment.
Shares were down as much as 6.5 per cent in Hong Kong on Tuesday (Aug 26).
Revenue fell 3.7 per cent to 20.7 billion yuan (S$3.7 billion) in the six months ended June, according to an exchange filing on Monday, matching analysts’ estimate. Net income for the period declined 14 per cent to 1.8 billion yuan.
Consumers in China are turning frugal as concerns around a slowing economy affect investment and consumption, including spending on dine-ins at premium eateries such as Haidilao. Compounding the challenge is the price competition among major food delivery platforms offering one-yuan drinks, free delivery and flash discounts that can incentivise frugal diners to stay home.
The table turnover rate at Haidilao’s restaurants dropped 9.5 per cent year on year, the company said, partly citing intensified competition in the catering market. Guest visits to its restaurants also declined in the period.
The hotpot chain continued to shut down underperforming restaurants, with self-operated stores dropping to 1,322 from 1,343 a year ago.
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The pressure on sales is driven mainly by “traffic and table turn amid the weak macro climate and lower dine-in demand from delivery platform price war”, Morgan Stanley said in a July note. Its revenue growth is expected to resume in the second half from a lower base, with a boost from new catering brands and formats. BLOOMBERG
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