Haidilao’s founder Zhang Yong has emerged from a four‑year management hiatus to take the helm again at a company that looks less like an unstoppable expansion story and more like a chain wrestling with a changed Chinese consumer. In the first half of 2025 the hotpot giant reported revenue down 3.7% year‑on‑year and net profit off 13.7%, while customer visits fell by 10 million and the daily table turnover rate slid to 3.8 from a self‑imposed 4.0 target.
What has unnerved Haidilao’s leadership is not only that fewer people are dining in, but that those who do are spending less. Average spend per customer has dropped below ¥100 from about ¥110 in 2020, and social media is awash with “value‑hacks” — viral posts on how to eat cheaply at Haidilao, and even anecdotes of patrons bringing their own meats to blind dates. The chain’s image as a temple of generous service and theatrical hospitality is colliding with a cohort of younger consumers who are price sensitive and pragmatic.
Market sentiment has followed suit. Haidilao’s market value has tumbled from its peak of roughly HK$430 billion to about HK$70 billion — an evaporation of more than 80% — exposing how quickly investor faith can ebb when growth assumptions are questioned. That fall has not been driven solely by episodic reputation hits; it reflects deeper doubts about the durability of Haidilao’s unit economics and growth model in a more cost‑conscious era.
The company has already tried several remedies. After aggressive expansion in the post‑IPO years — and particularly in 2020 when Haidilao rapidly opened many outlets — management found that more stores did not translate into better margins. The “Woodpecker” plan closed roughly 300 underperforming outlets to stabilise the business, but subsequent attempts to reopen and reaccelerate expansion have produced only limited benefit; net new stores were negative in H1 2025.
With price increases politically and commercially painful, Haidilao has leaned heavily on diversification. Its internal incubator, the “Red Pomegranate” plan, has spawned 14 brands and 126 outlets by mid‑2025 and lifted other‑restaurant revenue by 227% year‑on‑year. Yet the absolute scale of those revenues remains modest relative to Haidilao’s core hotpot business, and many incubated concepts have folded: among 26 brands spawned or acquired since the initiative began, more than half have closed and around a third lasted less than a year.
Parallel to incubation efforts, Haidilao has experimented with product and format innovation. It opened a higher‑end “Zhenxuan” store focused on premium seafood, trialled themed and night‑time concepts — from ‘mountain’ theme stores to outlets that double as nightlife venues — and launched theme‑specific counters such as fresh‑cut beef and seafood workshops. These moves aim to both climb the value ladder and offer fresh experiences, but so far they have not materially lifted overall footfall or per‑customer spend at scale.
At the heart of the problem is a cost structure shaped by Haidilao’s once‑distinctive service model. Labour accounts for around 30% of costs — roughly double that of many peers — which makes it hard to reconcile high service intensity with the margin squeeze. Industry data show consumers now prioritise price when choosing hotpot and are sceptical about paying premiums for intangible elements of service; national dine‑in ticket averages have reverted to levels last seen in 2015.
Zhang Yong’s return signals recognition that marginal tweaks are insufficient and that a heavyweight, top‑down push is needed to reconfigure the business. The immediate test is whether he can mobilise Haidilao’s scale to drive a genuine efficiency revolution: better leverage the group supply chain across brands, prune weak outlets ruthlessly, and recalibrate the core service offer so it still differentiates but costs less to deliver. How he balances trimming the excess without hollowing out the brand will determine whether Haidilao recovers growth or continues to lose ground.
Haidilao’s struggle is also a bellwether for China’s broader discretionary consumption recovery. If a brand built on theatrical service and rapid expansion cannot insulate itself from a more frugal, value‑seeking consumer, other full‑service chains may face similar reckonings. Investors and managers will be watching whether the founder‑led reset produces durable structural change or merely postpones another downcycle.