Hotpot chain Haidilao warns of worst performance for 2021

Chinese hotpot restaurant chain Haidilao International announced on Monday that the company is expected to record a net loss of about 3.8 billion yuan ($600 million) to 4.5 billion yuan for the last year, compared to the net profit of 309.5 million yuan for 2020.

A hotpot restaurant of Haidilao in Changzhou, east China’s Jiangshu Province, November 13, 2021. (Photo: CFP)

This is the hotpot chain's first loss for a year since it started making public its financials in 2015. As a result, the company's share price dropped 5.54 percent and closed at HK$19.08 on Monday.

The expected loss is mainly attributable to the closure and suspension of more than 300 restaurants in 2021, the decline in restaurant operating results, and the impacts of the recurring pandemic, the company said.

In particular, in the second half of 2021, Haidilao's restaurant operations were significantly affected by regional outbreaks and public health control measures around the world, the company said, noting in 2021, the overseas restaurants suffered from heavier loss.

But the revenue showed signs of recovery. According to the company's statement, the revenue of Haidilao is expected to exceed 40 billion in 2021, representing a year-on-year increase of more than 40 percent.

Last year, the total revenue of China's restaurants stood at 4.69 trillion yuan, with 18.6 percent year-on-year growth, but still lower than the pre-pandemic level of 4.67 trillion yuan in 2019, according to a report released by China Cuisine Association in January.

The report said that many restaurants are still at a loss due to the recurring outbreaks, suggesting those companies adjust operations, including shutting down some stores.