Haidilao, the undisputed titan of the Chinese hotpot industry, is currently grappling with a paradox of scale. Despite reaching a record revenue of 43.23 billion yuan in 2025, the company’s net profit plummeted by 14%, signaling that the brand's legendary 'service-first' model is hitting a ceiling. For years, Haidilao dominated the market by offering everything from free manicures to noodle-dancing performances, but in a tightening economic climate, these frills are becoming increasingly expensive to maintain.
The core of the problem lies in the 'table turnover rate,' the industry's most critical metric for operational efficiency. In 2025, Haidilao's average turnover fell to 3.9 times per day, down from 4.1 the previous year. This decline was accompanied by a 7.5% drop in total customer traffic, with mid-tier cities showing particularly sharp declines. When customer flow thins, the fixed costs of Haidilao’s high-touch service—such as labor and premium rent—become heavy anchors on the balance sheet.
Adding to the margin pressure is a noticeable shift in Chinese consumer behavior. The average spend per guest has stagnated at roughly 97.7 yuan, remaining below the 100-yuan threshold for three consecutive years. This suggests that while customers are still visiting, they are more price-sensitive and less willing to splurge on high-margin add-ons. Meanwhile, raw material and supply chain costs have risen to account for over 40% of revenue, further squeezing the profit envelope.
In a bid to find a second growth engine, Haidilao has launched the 'Pomegranate Project,' an aggressive diversification strategy. The company has birthed 20 sub-brands ranging from seafood stalls to budget-friendly fast food, resulting in a 214% revenue surge for its non-core businesses. However, these ventures are currently in a capital-intensive expansion phase. They are 'burning cash' to gain market share, meaning they have yet to provide the necessary profit cushion to offset the stagnation of the flagship hotpot brand.
The mounting pressure has led to a significant shake-up at the top. In early 2026, founder Zhang Yong resumed his role as CEO, a move seen by analysts as a desperate effort to stabilize the 'basic plate' of the company. Zhang’s return signals a strategic pivot away from blind expansion and toward a more rigorous focus on cost-efficiency and brand consolidation. The challenge ahead is whether he can reinvent a company built on extravagance for an era of 'rational consumption.'