Haidilao's Mr. and Mrs. Zhang Yong secured their fourth IPO

Author | Cao Anxun

Editor | Zhou Zhiyu

Under the leadership of the founders Zhang Yong and his wife, Haidilao achieved its fourth IPO with TeHai International, shortly after its dual listing on Nasdaq. On May 24th, Eastern Time, TeHai International experienced its second strong surge since going public, with a 5.59% increase in stock price, reaching a market value of $1.27 billion.

Previously, Haidilao, Yihai International, and TeHai International were listed in Hong Kong one after another.

As the main operator of Haidilao's overseas business, TeHai International carries the expectations of accelerating Haidilao's international expansion.

The $57 million raised by TeHai International this time will be allocated with approximately 70% for strengthening the brand and expanding the global store network; about 10% for investing in supply chain management capabilities, about 10% for research and development to enhance store management, and about 10% for daily operations.

The board of directors of Haidilao believes that the international market for Chinese hotpot will continue to grow significantly. The dual listing of TeHai International in two locations will help expand the shareholder base, attract more capital, and enhance the company's influence in the international capital market.

Many Chinese expatriates and students have expressed their expectations for Haidilao's overseas layout on social media.

Financial reports show that after experiencing losses from 2019 to 2022, TeHai International turned a profit just last year. In 2023, TeHai International's revenue was $686 million, a 23% year-on-year increase; the attributable net profit for the year was $25.653 million; the operating profit margin at the restaurant level was 9%, a 4.9 percentage point increase year-on-year.

Since opening its first store in Singapore in 2012, as of the first quarter of this year, Haidilao has 119 self-operated stores in 13 countries across four continents globally, with 70 in Southeast Asia, 17 in East Asia, and 18 in North America.

In recent years, as the trend of Chinese cuisine going global has risen, domestic representative catering companies such as Haidilao, Xiabu Xiabu, CoCo Fresh Tea & Juice, Jiumaojiu, and Mikel have accelerated their overseas expansion and even gone public.

They are eager to explore a "blue ocean" market overseas after the increasingly intense competition and saturation in the domestic catering industry, seeking a second growth curve for themselves.

Some hedge fund analysts believe that due to differences in dietary habits, service awareness, and other factors, developing Chinese restaurant brands overseas is not necessarily the best choice, but more of a response to the intense competition in the domestic market.

Frost & Sullivan predicts that by 2026, the overseas Chinese catering market is expected to reach $409.8 billion, approximately RMB 3 trillion, with a compound annual growth rate of 9.4% from 2021 to 2026.

Among them, TeHai International, as a leading overseas Chinese restaurant brand, is highly regarded by many domestic securities firms. Zheshang Securities stated that it has opened hundreds of stores in over 10 countries overseas, demonstrating strong profitability abroad and promising prospects.

However, bidding farewell to the familiar domestic market, Chinese restaurant brands face a series of localization challenges, needing to adapt to cultural differences, consumer habits, food standards, regional preferences, labor regulations in new overseas markets, while ensuring stable supply chains, product quality, and service standards The above-mentioned hedge fund analyst stated that Chinese restaurants going global cannot only do business for Chinese people. Taking Haidilao as an example, there is no hotpot culture abroad, and people are not used to eating spicy food, so in order to open up overseas markets, Haidilao needs to make localized changes, including a combination of Chinese and Western flavors.

East China Securities pointed out that chain catering is a business of scale and standardization. Although Chinese catering companies often can achieve a breakthrough from 0 to 1 by forming a "dimensional reduction strike" through high-quality products after going global, whether they can sustain expansion tests the internal strength of brand supply chain management, and the difficulty of standardization determines the speed of expansion from 1 to N.

"Focusing on local consumer demand in product and supply chain, store operations, talent team, and other aspects of localization is the key to success, and it is also the ultimate goal of brand localization," analyzed East China Securities.

For Haidilao, although it has made a name for itself in China and has a loyal customer base overseas, it is not satisfied with this.

The announcement shows that the goal of Haidilao International is to have the proportion of local customers in non-Chinese communities reach over 60% in its stores. In other words, Haidilao hopes to attract more local customers overseas, truly capture the taste buds of local people, rather than just being a "paradise for international students."

This is a grand goal. However, if achieved, Haidilao will have truly taken root overseas. As one of the top three Chinese restaurant brands globally, this is an encouragement for all major Chinese restaurant brands going global