Net profit exceeds 4 billion yuan, with a market value evaporating over 8.6 billion yuan in a single day! What is the "hidden concern" for Haidilao?

Ask AI · Can Zhang Yong’s return help Haidilao regain growth momentum?

The market is not satisfied with Haidilao’s “answer sheet.”

On March 24, Haidilao, a leading catering company, released its 2025 financial report. The report shows that in 2025, Haidilao’s revenue was 43.225 billion yuan, up 1.1% year over year; net profit was 4.042 billion yuan, down 14% year over year.

Faced with a financial report that delivered revenue growth but no profit growth, the market responded with a major sell-off. The day after the report was released, Haidilao’s share price fell 11.07%, and its market value evaporated by more than HKD 9.8 billion in a single day, about RMB 8.65 billion.

In fact, this is the first time Haidilao has seen net profit decline since 2022.

Regarding the decline in net profit, Haidilao said it was mainly due to a drop in restaurant table-turn rates, a reduction in the number of company-operated restaurants, leading to lower operating revenue at core restaurants, and a combined result of multiple cost increases including raw material costs, marketing and promotion expenses, and administrative expenses.

Specifically, as of the end of 2025, Haidilao operated a total of 1,383 restaurants, including 1,304 company-operated outlets and 79 franchised outlets.

In addition to its main brand, “Haidilao,” Haidilao Group has continued to roll out new brand layouts across multiple sub-sectors such as seafood barbecue, sushi, hot pot mini restaurants, and Chinese fast food. Currently, it operates 20 catering brands and 207 restaurants.

In terms of results, these new brands have not been able to support the company’s second growth curve at present.

The financial report shows that restaurant operations remain Haidilao’s core source of revenue. In 2025, the company’s restaurant operating revenue was 39.063 billion yuan, down from 40.880 billion yuan in the same period last year.

The fundamental reason for this situation is the decline in the core table-turn rate of Haidilao’s main-brand outlets.

According to the financial report, in 2025, Haidilao’s overall table-turn rate at company-operated outlets was 3.9 times per day, slightly down from 4.1 times per day in 2024. Average customer spend was 97.7 yuan, essentially flat and slightly down from 97.5 yuan last year. Over the full year, it served approximately 384 million customer visits, down 7.5% year over year from 415 million in 2024—an decrease of about 30 million visits.

Jianjian Finance believes that the difficulties Haidilao is facing right now are also a common challenge for most catering companies. From an industry development perspective, changes in consumer preferences can easily give rise to phenomenon-level business formats. For example, the earlier boom in the hot pot segment generated a series of breakout hot pot brands such as Nine Malls, Ban Nu, and Happy Hotpot. Likewise, after new-style tea brands like Nayuki and Hey Tea became popular, the market then saw a succession of well-known tea brands such as Chatbot tea, Wangwang tea, and Guy Ming, and those segments also received relatively high market premiums within a certain period.

To achieve sustained revenue growth, continuously opening new stores or expanding into other sub-brands has become an inevitable choice for enterprises. Against this backdrop, this heavy-asset model of company-operated operations will bring significant financial pressure to the company. Therefore, opening up franchising and transforming toward supply-chain enterprises is also the optimal model for breaking through the growth bottleneck.

But it’s worth noting that consumer preferences are not static. As consumption preferences change, some catering formats will be eliminated by the market. The formats that get eliminated will create significant pressure for companies using the franchise model. Judging from Haidilao’s stance on opening up franchising, although it intends to pursue this direction, it is relatively restrained.

And the advantage of the company-operated model is that, in a counter-cyclical environment for the industry, a company’s ability to withstand risks is relatively stronger—something that has been proven in Haidilao’s case. However, it should be noted that once a company’s growth slows and its core business model is abandoned by the market, its valuation will drop significantly.

We can clearly see that since 2022, even though Haidilao’s performance has repeatedly hit new highs, its valuation level has still stayed low. Even if Haidilao has made many adjustments and efforts over the past three years, the market still does not buy in. To seek a breakthrough, Haidilao’s founder, Zhang Yong, has chosen to return to the frontline.

Some analysts believe that a founder’s return to lead from the front line is usually a clear signal that a company is launching strategic restructuring. It may strengthen the concentration of Haidilao’s strategic judgment and push the execution layer to shift toward result orientation, potentially leading the group to carry out more aggressive structural adjustments. Some media have also said that Zhang Yong’s return is intended to scale back the front line of diversified business lines, focus on the core hot pot business, optimize the strategy for secondary brands, and avoid blind trial and error.

Jianjian Finance believes that behind the frequent adjustments to management is this catering giant’s anxiety about future development. And besides focusing on the core business, the more diversified the company is, the more problems it will face in the future.

After the financial report was released, Morgan Stanley issued a research note stating that Haidilao’s 2025 revenue increased by 1% year over year to 42.8 billion yuan, while net profit was 4.05 billion yuan, in line with the firm’s and the market’s expectations.

Morgan Stanley believes that what most exceeded market expectations is that the company’s dividend payout ratio was lowered from 95% in 2024 to 86% in 2025. This adjustment may stem from the company’s plan to increase capital expenditures, with funds to be used for automated upgrades, improving operational efficiency, and opening new brand outlets. The firm will focus on management’s remarks in the performance call regarding same-store operating efficiency in 2026, plans to expand its store network, and guidance on profit margins. It expects the company’s stock price may face near-term pressure, but that this represents an opportunity to build positions at a low level, because the company is investing more for future growth. Based on this, Morgan Stanley maintains a “Buy” rating for Haidilao.

Citi analysts issued a research note saying that Haidilao’s outlook for 2026 performance is more optimistic than market expectations. The firm holds a positive view on the continued recovery of China’s casual dining sector, which aligns with the view of China Resources Beer, a beer manufacturer.

The analyst also said that Haidilao plans to increase capital expenditure to drive growth, which may be the reason it did not raise its dividend payout in 2025. Citi expects Haidilao’s revenue this year to achieve mid-to-high single-digit growth, and therefore maintains a “Buy” rating for Haidilao.

Author’s statement: The author’s views are personal and are for reference only.