The increase in table turnover rate has paid off, with HAIDILAO's net profit in 2023 nearly doubling compared to pre-epidemic levels.

On February 20, HAIDILAO (6862.HK) released a profit forecast, expecting the full-year revenue in 2023 to be no less than 41.4 billion yuan, a year-on-year increase of no less than 33.3%; the net profit is expected to be no less than 4.4 billion yuan, a 168% increase compared to the net profit of 16.4 billion yuan excluding Special Sea International in 2022, and nearly doubled compared to the net profit of 2.345 billion yuan in 2019.

HAIDILAO attributes this to the improvement in table turnover rate and operational efficiency.

The announcement shows that HAIDILAO incurred a net exchange loss in the second half of 2023. Excluding the impact of exchange losses, HAIDILAO expects the net profit to increase by no less than 10% compared to the first half of 2023.

HAIDILAO stated in the announcement that due to the expansion of its stores, its revenue and net profit in 2023 are expected to increase by no less than 65.9% and 71.8%, respectively, compared to the pre-epidemic levels in 2019.

As of the first half of 2023, the number of HAIDILAO stores in mainland China has nearly doubled, with a net increase of 644 stores.

According to Lin Wenjia, an analyst at Guotai Junan International, HAIDILAO's overall table turnover rate in December last year had basically returned to the level of the same period in 2019. It opened 9 new stores throughout the year and reopened 20 to 30 "tough" stores (stores previously closed under the "Woodpecker Plan").

On February 21, HAIDILAO's stock price opened low and rose, closing up 1.59% at HKD 14.06 per share.

In 2023, despite HAIDILAO's previous announcement that it would not open new stores until the table turnover rate reached 4, it has made more attempts to expand its store formats, successively launching "HAIDILAO·Xiafan Cai Hot Pot Dish" adapted for takeout business, the affordable hot pot brand "Hailao", and the barbecue brand "Yanqing·Barbecue Shop".

Hailao, a cost-effective brand, is seen as the main force for HAIDILAO's expansion in the sinking market. Jiang Xuefeng, an analyst at Huaxing Securities, pointed out that the average customer spending at Hailao is 30% lower than at HAIDILAO stores, ranging from 70 to 80 yuan. Currently, the table turnover rate at the two stores in operation in Beijing exceeds 4 times per day.

Jiang Xuefeng believes that in the future, Hailao will be led by HAIDILAO headquarters to enter surrounding first-tier cities and third-tier and below cities. Referring to the over 200 stores of Xiabu Xiabu in third-tier and below markets, he believes that Hailao brand has certain room for long-term imagination.

TradeWind01 inquired with HAIDILAO officials about the next steps for Hailao, and they only mentioned that Hailao is still in the trial store stage and there are no further plans at the moment.

In terms of store operations, in addition to participating in the "price war", HAIDILAO has put a lot of effort into launching new products.

TradeWind01 learned from HAIDILAO officials that regional coaches (responsible for managing all HAIDILAO stores in a region) were given greater autonomy in 2023, directly resulting in HAIDILAO launching over three hundred new products throughout the year. For example, in Hainan stores, they have introduced "Seafood Fermented Vinegar Hotpot Base", while in Beijing and Northeast regions, they offer Sour Cabbage and Pork Hotpot Base. In Henan, there's Spicy Soup, and in Suzhou, there's Stir-Fried Rice with Crayfish.

This may be the key to what HAIDILAO has yet to master, and the market is looking forward to seeing this capability being reused in other brands like Heytea, across more stores, as the dining consumption trend heats up again.