Singapore — Hot pot chain giant Haidilao International Holding, spearheaded by the Haidilao Founder, announced it would close or suspend around 300 outlets due to poor performance following its rapid expansion in the last two years.
In an exchange filing, the Hong Kong-listed company said that it decided to adjust its restaurant expansion planning decisions after reviewing operating performance.
The company will begin shutting down or suspending operations at about 300 restaurants with relatively low customer traffic and “unsatisfying results of operations” by Dec 31, 2021.
Hadilao’s statement noted that some of the restaurants would only be temporarily closed for no more than two years and resume operations “inappropriate times.”
“The company will not lay off employees and will properly settle the employees of such restaurants,” it added, including redeploying affected employees within the group.
It was reported that the closures would mainly affect Hadilao’s China outlets, although several are located in the countries that the company expanded into. It was not revealed which markets specifically would be affected.
As of the end of June 2021, the hot pot chain has 1,597 restaurants, of which 1,491 are in mainland China.
The number shows a 70 percent jump from the 935 branches it had in 2020.
Haidilao has 18 outlets in Singapore, the 19th scheduled to open at Northshore Plaza, a new neighborhood center at Punggol.
In its statement, the company said it was launching the “Woodpecker” plan led by executive director and deputy chief executive officer Yang Lijuan.
The plan aims to focus more on branches with unsatisfying performance, including overseas outlets, and take improvement measures.
The plan also noted a “slowing down” of the group’s business expansion. “If the average table turnover rate of Haidilao restaurants of the group is less than four times a day, no new Haidilao restaurants will be opened on a large scale in principle.”
“Shareholders and potential investors of the company are advised to exercise caution when dealing in the shares of the company,” the statement added. /TISG