Haidilao (海底捞) may be popular among hotpot lovers but the company has not been doing well ever since the Covid-19 pandemic hit. As a result, Haidilao International Holding announced that it will be closing down or suspending 300 stores by 31st December 2021.
Despite the aggressive expansion in recent years, the Chinese hotpot chain has been under-performing due to low customer traffic and poor performance. In hindsight, the rapid roll-out strategy probably wasn’t a good idea.
In the past 2 years alone, Haidilao launched 308 new restaurants in 2019 and 544 in 2020. In the first half of this year alone, the company opened another 299 outlets. According to Global Times, Haidilao has reached a total of 1597 restaurants globally (as of 31st June 2021).
Thankfully, the closures will mainly affect the market in China (although some cuts will also be applied to certain restaurants that have been performing badly in other countries). “These outlets are below expectations, mainly due to the mass expansion strategy that was introduced in 2019, the outcomes include: error in choosing locations, change in organisational structure that is not understandable and tiring, inadequate number of excellent managers, and over-confidence in the profit KPI rate,” Haidilao said in a statement.
The news of Haidilao’s closure went viral on Weibo over the weekend, with many expressing that the company should scale down and improve its service instead. “The more stores you open, the less you focus on service, the surroundings of the newly-opened stores are not up to par, while prices are only rising,” a Weibo user wrote.
There are currently 9 Haidilao outlets in Malaysia. Seeing as how Haidilao’s share price has declined by 75% this year, the group will no longer be opening new Haidilao restaurants on a large scale.