There’s no denying the fact that the COVID-19 pandemic has decimated more than just a handful of businesses. With repeated lockdowns leading to a general state of economic slowdown, even regional titans such as hotpot brand Haidilao are beginning to feel the heat.
300 Haidilao restaurants to be closed or temporarily suspended
Well as it turns out, calls for increased social distancing have not meshed well with the communal aspect of hotpot dining after it has been announced that the popular hotpot chain will be closing upwards of 300 stores. Chinese Global Television Network reports that the closures will affect only underperforming stores with lower-than-expected business performance and reduced customer foot traffic .
This comes after reports from the year before where Haidilao had embarked upon a noticeably more aggressive business expansion strategy in 2020, which saw the chain opening over 544 new restaurants across the globe. This translates to roughly 1.5 new outlets opening every day for the calendar year according to the company’s 2021 interim report, bringing the total number of Haidilao restaurants to 1,597.
Most of the restaurants affected will be in China, but there are also international outlets in other regions where the company has expanded into that will also be closed or temporarily suspended for upwards of two years.
Table turnover rates have decreased drastically
The decision to shutter the underperforming restaurants is likely due to the reduced table turnover rates in Haidilao, which saw an average table turnover of three times every day in the first half of 2021, as compared to 4.8 times daily in 2019. This figure is said to be even worse off for newer restaurants, which only recorded a daily table turnover of 2.3 times daily.
In a voluntary report released by the company, should table turnover rates drop to lower than 4 per day, no new Haidilao restaurants will be opened until the number improves. The company has also vowed not to lay-off any members of staff from the affected outlets, and will instead reassign them to other departments or store locations within the company.
Even with the closures planned, Haidilao will still remain as the largest hotpot chain in China and one of the largest globally, with 1,297 restaurants still in operation.
But the restaurant chain has still taken a beating regardless, losing an estimated HKD $260 billion (RM138,792,226,638.00) in market value in four months. According to Global Times, the company’s share price has also taken a hit and fallen by over 75%. The restaurant chain initially grew into prominence due to its over-the-top hospitality, which includes manicure services and even massages for patrons while they waited for their tables.
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