After exhausting all efforts, how did HAIDILAO find certain growth?

The overall downturn in the catering industry has not allowed HAIDILAO to remain unscathed.

In the first half of 2025, the sales revenue of HAIDILAO's restaurant system decreased by 6.5% year-on-year, with total revenue recorded at 20.703 billion yuan, a year-on-year decline of 3.7%.

The restaurant operation segment, which is the core revenue source, recorded 18.58 billion yuan, a year-on-year decrease of 9%, marking the first time its proportion fell below 90%.

This is the first time since 2022 that HAIDILAO has reported a year-on-year decline in revenue in its semi-annual report.

Founder Daniel Zhang once regarded McDonald's standardization as a benchmark; the standardized and replicable efficient store model once constituted the core narrative of HAIDILAO in the capital market.

However, with changes in the competitive landscape and the peak of core business growth, HAIDILAO has had to break away from the standard model and shift towards a more personalized growth path.

In the first half of the year, HAIDILAO's layout in terms of products, scenarios, and store types has noticeably accelerated, showing a proactive attitude towards diversification:

Continuously expanding the coverage of average spending per customer, from high-end "selected stores" with an average of over 500 yuan per person to lunch buffets with an average of only 20 yuan.

In terms of scenarios, HAIDILAO is actively expanding themed stores such as late-night snacks, parent-child interaction, and pet-friendly, and has extended into multiple categories such as barbecue, fried chicken, skewers, hot pot, and iron pot stew through the "Pomegranate Plan," almost covering all mainstream chain dining formats.

Whether these numerous attempts, which inject freshness based on standardization, can gain widespread market recognition remains to be seen.

Not long ago, rumors circulated that HAIDILAO would "switch to a semi-self-service model and significantly reduce service," which was officially refuted, but still reflects consumers' complex emotions towards HAIDILAO's transformation.

Can HAIDILAO, step by step moving away from its traditional image, continue to gain consumer recognition?

Pressure Mounts

The pressure faced by HAIDILAO primarily stems from changes in the external market environment.

In the past six months, the growth rate of national catering revenue has continued to slow down, aligning with or even falling below the growth rate of total retail sales of consumer goods. Particularly in June of this year, the revenue of catering enterprises above designated size was 137.2 billion yuan, a year-on-year decline of 0.4%, marking the first negative growth of the year.

Against the backdrop of many peers choosing to "exchange price for volume" to cope with market sluggishness, HAIDILAO has maintained a rising trend in average spending per customer for over a year.

In the first half of 2025, the average consumption per customer at HAIDILAO's nationwide stores slightly increased from 97.4 yuan in the same period last year to 97.9 yuan, with growth generally observed across all tier cities. Among them, first-tier cities showed the most significant performance, with a year-on-year increase of 1.1%, reaching an average consumption of 105.2 yuan.

Nevertheless, the current overall average spending still lags behind the same period in 2023 by 5 yuan.

HAIDILAO CEO Gou Yiqun candidly stated at the earnings meeting: "Consumers are increasingly pursuing extreme cost-effectiveness, differentiation, personalization, and emotional value. Competitors launching higher cost-performance new products have attracted some consumers, which has had a certain impact on HAIDILAO's dine-in business."

After actively giving up the most direct customer acquisition strategy of "exchanging price for volume," the decline in HAIDILAO's customer flow can be anticipated.

In the first half of the year, HAIDILAO's average table turnover rate decreased from 4.2 times/day in the same period last year to 3.8 times/day, leading to a year-on-year decrease of 10% in same-store sales Fixed costs are difficult to effectively dilute, and labor costs have increased by 0.5 percentage points year-on-year, reaching 33.8%.

Although prices were not directly lowered, HAIDILAO increased the portion sizes and material input of its dishes, resulting in a 0.8 percentage point increase in the proportion of raw materials and consumables costs, reaching 39.8%.

Under the combined effect of the above factors, HAIDILAO's core operating profit in the first half of the year fell by 14% year-on-year, recording 2.4 billion yuan, a decrease of nearly 400 million yuan compared to the same period last year.

The table turnover rate of 3.8 times per day has also fallen below the "passing line" set by HAIDILAO for its operations.

HAIDILAO has previously stated that if the average turnover rate does not reach 4 times per day, it will suspend the large-scale opening of new stores and prioritize improving the operational efficiency of existing stores.

In the first half of the year, the total number of HAIDILAO stores decreased by 5 compared to the beginning of the year, with a total of 1,363 stores.

To boost same-store performance, HAIDILAO is continuously promoting diversified innovation in products and scenarios:

In terms of products, it has launched fresh-cut series and seasonal series, and encourages the development of personalized dishes with local characteristics; in terms of scenarios, it is actively creating night snack themes, parent-child themes, and pet-friendly stores.

HAIDILAO revealed that currently, each region introduces 60 to 80 new dishes every month; after the transformation of night snack scenario stores, the average turnover rate has increased by at least 10%-20% compared to before the transformation.

As of the end of June 2025, nearly 30 night snack scenario theme stores have been transformed nationwide, and more than 50 standard theme stores focusing on fresh-cut and live products have been put into operation. In the future, the scale of scenario theme stores will continue to expand.

At the same time, under the subsidies and traffic support of the takeaway war in the first half of the year, the takeaway business has accelerated its rise, growing by 60% year-on-year to 930 million yuan.

The growth of "single-person hot pot dishes" focusing on the one-person dining scene is particularly significant, contributing over 55% of takeaway revenue. New categories such as mixed rice and homemade beverages are also in the testing phase, expected to further enrich takeaway offerings.

This type of innovative transformation that creates incremental growth brings some pressure on profitability in the short term.

In the first half of the year, HAIDILAO's investment in promoting takeaway business and diversified marketing activities has significantly increased, with corresponding expenses rising by 150 million yuan.

Where is the space

Since the number of stores peaked in 2021 and the "Woodpecker Plan" was launched, HAIDILAO's story of "unlimited expansion" has become increasingly difficult to tell.

Some consumers have commented: "HAIDILAO hasn't really changed; the market has changed."

Amid the continuous emergence of similar restaurant competition, HAIDILAO's once-proud standardized operations, extreme service, and interactive experiences are gradually losing their uniqueness.

As pointed out by HAIDILAO's vice chairman Zhou Zhaocheng: "The consumer demographic has changed, and the restaurant market landscape has also changed. With an old map, one cannot find a new continent."

In addition to performance growth, HAIDILAO's expansion also faces a special internal pressure.

HAIDILAO adopts a master-apprentice incentive policy of "linking benefits and locking management." Store managers not only enjoy performance commissions from their own stores but can also receive a higher percentage of performance commissions from stores managed by their apprentices and grand-apprentices.

An important prerequisite for the effective operation of this mechanism is continuous store expansion. Once growth stops, the internal promotion channels for talent will narrow, the incentive effect will weaken, and it may even face the risk of failure As traditional self-operated stores encounter bottlenecks, HAIDILAO has accelerated the promotion of its franchise system and the "Pomegranate Plan" for store expansion in the first half of the year.

The "Pomegranate Plan" currently covers 14 restaurant brands including Yanqing Barbecue, Congqian Yinxing, and Xiao Hai Ai Zha, with a total of 126 restaurants under its umbrella. In contrast, when the annual report was disclosed last year, the plan only covered 11 brands and 74 stores.

Insiders close to HAIDILAO revealed that the "Pomegranate Plan" introduced a mechanism for bringing in excellent external entrepreneurial brands in the first half of the year. At this stage, multiple models such as internal entrepreneurship, co-creation with external entrepreneurial brands, and cooperation with external city brands are being implemented simultaneously.

In terms of franchise business, through the dual approach of converting old stores and developing new ones, 28 new franchise stores were added in the first half of the year, bringing the total to 41, surpassing the total number of openings for the entire previous year.

Emerging businesses currently contribute limited revenue to the total income.

In the first half of the year, the 41 franchise stores generated a total revenue of 91 million yuan, with an average contribution of about 2.2 million yuan per store, far below the 14 million yuan level of directly operated stores during the same period.

HAIDILAO's franchise adopts a strong management model, with unified management by the headquarters and a fixed percentage of profits charged as fees. Even if expansion continues in the future, the contribution to total revenue is expected to remain at a low proportion in the short term.

The "Other Restaurant Operations" segment, which includes multiple brands under the "Pomegranate Plan" as well as hot pot and camping dining scenarios, achieved a revenue of 597 million yuan in the first half of the year, a significant year-on-year increase of 227%.

The majority of this revenue came from the largest brand, "Yanqing." This brand added 46 new stores in the first half of the year, bringing the total to 70, generating nearly 200 million yuan in revenue.

Based on the accumulation of franchisee resources in the sinking market, HAIDILAO hopes to build a larger catering ecosystem through multi-brand synergy and business integration.

Zhou Zhaocheng has previously revealed such ambitions: once the franchise business of the main brand runs smoothly, many sub-brands under the "Pomegranate Plan" can also achieve scaled expansion through the franchise model.

Another possible direction for advancement is the integration of the takeaway system.

HAIDILAO clearly stated in its financial report that it will integrate multi-brand and multi-category resources to create a HAIDILAO takeaway super kitchen, exploring new models for satellite stores to drive both revenue and profit growth.

From the current scale proportion of franchise stores and other brand stores, it will take some time for the business model to truly validate and accumulate.

Jiang Xuefeng, an analyst at Huaxing Securities, believes that HAIDILAO's investment logic has smoothly transitioned from "earning performance money" to "earning dividend money," with performance being just one of the standards for measuring company value. Under the premise of unchanged operational fundamentals, the company's stock price will still fluctuate widely between 10 to 20 times PE, but "sustained stable high dividends" may become the second catalyst for the stock price.

In recent years, HAIDILAO has significantly increased shareholder returns.

Currently, HAIDILAO's dividend payout ratio has gradually increased from 40% in 2022 to 90% in 2023, and is expected to reach 95% by 2024.

In the mid-2025 period, a dividend of 0.338 Hong Kong dollars per share will be distributed, maintaining a high payout ratio of 95%