For over two decades, Xiabu Xiabu was the undisputed king of China’s 'fast hotpot' scene, synonymous with the country's rapid urbanization and the rise of mall-based dining. However, the group’s 2025 financial report reveals a brand in a state of managed retreat. For the fifth consecutive year, the Hong Kong-listed company has reported a loss, bringing its cumulative deficit since 2021 to over 1.5 billion RMB. While the net loss narrowed to 296 million RMB, the underlying metrics suggest a business model that is cannibalizing itself to stay afloat.
The reduction in losses was not driven by organic growth but by draconian cost-cutting measures and a massive reduction in scale. Total revenue plummeted by over 20% to 3.79 billion RMB as the company shuttered more than 50 underperforming locations. Most tellingly, the group slashed its workforce by a staggering 25.4%, a move that highlights the desperation of the management to preserve liquidity. This 'contraction-style' recovery has left the company with a record-high debt-to-asset ratio of 92%, leaving little room for error as market conditions worsen.
Strategically, the group is caught in a paralyzing identity crisis between its two core brands. The flagship Xiabu Xiabu brand has attempted to chase volume by slashing prices, yet this has only succeeded in rebranding the chain as a low-end canteen, failing to stem a double-digit drop in revenue. Conversely, its premium sub-brand, Coucou, raised prices by 20% in a direct affront to China's 'rational consumption' trend. The result was a catastrophic drop in foot traffic and a 30% collapse in revenue, proving that Chinese diners are no longer willing to pay a premium for over-extended brands.
Investor confidence has effectively evaporated, with the stock price collapsing 98% from its 2021 peak. Even repeated share buybacks by the founding chairman, He Guangqi, have failed to floor the descent. As the company pivots toward new sub-brands like 'Xia Steak' and partner-led models, it faces a market dominated by the service-moat of Haidilao and the specialized appeal of upstarts like Banu. Without a fundamental rethink of its value proposition, Xiabu Xiabu risks becoming a cautionary tale of a market leader that lost its flavor in a changing China.