In addition, problems such as the shrinkage of Haidilao's self-operated stores and the continued decline in unit price per customer have become prominent. In 2024, Haidilao will close 19 self-operated stores, and the unit price per customer will further decline to 97.5 yuan.
Although the price-for-volume strategy has led to a rebound in passenger traffic, the catering industry as a whole is under pressure, and Haidilao's path to breakthrough is still full of uncertainty. In the context of increasingly picky consumers and increasingly fierce competition, whether Haidilao's multi-brand and franchise attempts can become a new growth engine remains to be tested by the market.
Performance growth slows down, franchise revenue enters financial report for the first time
In 2024, Haidilao will achieve revenue of 42.755 billion yuan, a year-on-year increase of 3.1%; net profit attributable to the parent company is 4.7 billion yuan, a year-on-year increase of 4.6%; core operating profit is 6.230 billion yuan, a year-on-year increase of 18.7%. So far, Haidilao has achieved continuous growth in revenue and net profit for two consecutive years.
However, due to the low base in 2022 due to the impact of the market environment, the growth rates of Haidilao's revenue and net profit attributable to the parent company in 2023 will be as high as 33.55% and 227.33% respectively. In contrast, Haidilao's performance growth will slow down significantly in 2024. Compared with the double-digit growth rate before 2019, Haidilao's current single-digit growth rate pales in comparison.
Let’s look specifically at the revenue structure. In 2024, Haidilao restaurant operations will achieve revenue of approximately 40.398 billion yuan, a slight increase of only 2.88% from 39.267 billion yuan in 2023. In other words, the business, which accounts for nearly 95% of revenue, has almost stagnated growth. The sales business of condiments and ingredients is also showing signs of weakness. Revenue in 2024 will be 575 million yuan, a year-on-year decrease of 27%, while revenue in 2023 will be 662 million yuan, a year-on-year increase of 19%.
Facing the growth bottleneck of its main hot pot business, Haidilao accelerated the "Pomegranate Plan" in August 2024 to incubate multiple brands to spread risks. Financial report data shows that as of the end of 2024, Haidilao has created a total of 74 stores of 11 catering brands including Yanqing Barbeque Shop, Flame Official, and Xiaohai Hotpot through internal entrepreneurship, covering different consumption scenarios such as dinners, light meals, and fast food. In 2024, Haidilao's other restaurants will achieve revenue of 483 million yuan, a year-on-year increase of 39.6%.
In addition, for the takeout dining scene, starting from the second half of 2023, Haidilao's takeout business will launch "one-person meal" high-quality fast food. Thanks to the development of the above businesses, Haidilao's takeaway revenue will increase by 20.4% to 1.254 billion yuan in 2024.
It should be pointed out that in the 2024 performance report, Haidilao included the franchise business in the revenue segment for the first time. During the reporting period, this business achieved revenue of 16.7 million yuan.
In 2024, Haidilao changed its tradition of direct operation and opened franchises for the first time. By the end of 2024, it had completed the review and implementation of 13 franchise stores. Haidilao said that since the implementation of the franchise model, the sinking market has shown strong demand, with more than 70% of franchise applications coming from third-tier and below cities, many of which are from county-level cities.
Through the franchise model, Haidilao can quickly expand its scale and obtain relatively stable income with its light-asset model. However, Haidilao has many service links and high service requirements. If the franchise store control is slightly relaxed, problems may arise.
Jiang Han, a senior researcher at Pangu Think Tank, emphasized that in the process of opening up franchises, Haidilao needs to supervise standardized operations to ensure that franchise stores can follow Haidilao's service standards and operating procedures. At the same time, it needs to improve the customer complaint handling mechanism, respond to and solve consumer problems in a timely manner, and maintain the brand image.
19 self-operated stores have been closed, and the price per customer continues to decline.
Looking back from 2018 to 2020, Haidilao opened an average of more than 300 new stores every year, creating a catering myth with "extreme service + rapid replication". However, after radical expansion in 2021, many problems were left behind, and in the end it had to close stores through the "Woodpecker Plan" to stop the bleeding.
In July 2024, Yang Lijuan stepped down as CEO of Haidilao and was replaced by Gou Yiqun. This change is seen as a sign of Haidilao's shift from "radical expansion" to "refined operations." After taking office, Gou Yiqun clarified the rights and responsibilities of the headquarters, regions and stores, promoted the delegation of power to the front line, and encouraged independent innovation in stores.
As of the end of 2024, the Haidilao brand operates a total of 1,368 restaurants. Among them, there are 1,332 self-operated restaurants in mainland China and 23 in Hong Kong, Macao and Taiwan, totaling 1,355. At the end of 2023, the total number of Haidilao's self-operated restaurants was 1,374. Based on this calculation, Haidilao will close a total of 19 self-operated stores in 2024.
"The expansion of direct-operated stores has stagnated, and the focus has shifted to the franchise model," said Tian Guangli, strategic consultant of Longce Catering Think Tank. In 2019, Haidilao's average daily revenue per store was 142,600 yuan, which dropped to 84,400 yuan in 2024, a decrease of 40.8%. Against the background of the overall transformation of the industry, catering consumption has fluctuated significantly. The profits of Haidilao's directly-operated stores are likely to become smaller and smaller, and the risks will become greater and greater, which prompts Haidilao to change its business model.
From the perspective of unit price per customer, Haidilao still continues the downward trend that it has experienced for many years. In 2024, Haidilao’s per capita consumption will be 97.5 yuan. From 2020 to 2023, the per capita consumption levels of Haidilao were 110.1 yuan, 104.7 yuan, 104.9 yuan and 99.1 yuan respectively.
Tian Guangli said that catering consumption dropped significantly last year, and coupled with the impact of low-priced catering, Haidilao was forced to discount, promote, and adjust dishes to stimulate consumption and cope with competition. "This is a common phenomenon in the industry. Not only high-priced hotpots, but other categories also encounter the same situation. Most brands have adopted similar response measures to Haidilao."
The strategy of exchanging price for volume has indeed played a certain role in boosting Haidilao's operations. In 2024, Haidilao will receive a total of 415 million customers, with average daily passenger flow exceeding 1.1 million, an increase of 4.5% over the previous year. In addition, the average turnover rate rebounded from 3.8 times/day in 2023 to 4.1 times/day, which is close to the level of 4.8 times/day in 2019.
It is worth noting that Haidilao's operating status reflects the collective anxiety of the catering industry. When the demographic dividend fades and costs rise rigidly, the path of relying solely on scale expansion has become ineffective. Haidilao is actively promoting multi-brand, franchise and new business transformation attempts. However, at a time when consumers are becoming more picky and food safety risks are high, Haidilao's road to breakthrough may still be full of thorns.