Net profit of 4 billion but the stock plunged 11%! Haidilao's table turnover rate declined, has growth peaked?

The market is not satisfied with this "report card" from Haidilao.

On March 24, leading restaurant chain Haidilao released its 2025 financial report. The report shows that in 2025, Haidilao's revenue was RMB 432.25 billion, a year-on-year increase of 1.1%; net profit was RMB 40.42 billion, a year-on-year decline of 14%.

Faced with this report of increased revenue but not profit, the market responded with a sharp drop. The day after the report was released, Haidilao's stock price plunged 11.07%, with its market value evaporating over HKD 98 billion in a single day, equivalent to approximately RMB 86.5 billion.

In fact, this is the first time Haidilao has experienced a decline in net profit since 2022.

Regarding the decline in net profit, Haidilao stated that it was mainly due to a decrease in restaurant table turnover rate, a reduction in the number of self-operated restaurants leading to a decline in core restaurant operating income, and a significant increase in multiple costs including raw material costs, marketing and promotion expenses, and administrative expenses.

Specifically, as of the end of 2025, Haidilao operated a total of 1,383 restaurants, including 1,304 self-operated stores and 79 franchised stores.

In addition to its main brand "Haidilao," the Haidilao Group continues to advance the layout of new brands in multiple segments such as seafood street food stalls, sushi, small hot pot, and Chinese fast food. It currently operates 20 restaurant brands and 207 restaurants.

In terms of results, these new brands have so far failed to support the company's second growth curve.

The financial report shows that restaurant operations remain the core source of income for Haidilao. In 2025, the company's restaurant operating income was RMB 390.63 billion, down from RMB 408.80 billion in the same period last year.

The fundamental reason for this situation is the decline in the core table turnover rate of the main Haidilao brand stores.

According to the report, in 2025, the overall table turnover rate for Haidilao's self-operated stores was 3.9 times/day, a slight decrease compared to 4.1 times/day in 2024; the average customer spending was RMB 97.7, basically flat with the previous year's RMB 97.5, with a slight decline. The total number of customers served for the year was approximately 384 million, a year-on-year decrease of 7.5% compared to 415 million in 2024, a reduction of about 30 million customers.

Kan Jian Finance believes that the difficulties currently faced by Haidilao are also common challenges for most restaurant enterprises. From the perspective of industry development, changes in consumer preferences easily give rise to phenomenal business formats. For example, the previous popularity of the hot pot track spawned a series of hit hot pot brands such as Jiumaojiu, Banu Tripe Hotpot, and Xiabu Xiabu; similarly, after the rise of new-style tea drink brands like Nayuki and Heytea, the market has successively seen the emergence of well-known tea drink brands such as Chabaidao, Chagee, and Guming, and the related tracks have even gained relatively high market premiums within a certain period.

To achieve sustained revenue growth, continuously opening stores or expanding other sub-brands has become an inevitable choice for enterprises. Against this backdrop, the self-operated heavy-asset model brings huge financial pressure to the company. Therefore, opening up to franchising and transforming into a supply chain enterprise have become the optimal models to break through the growth bottleneck.

However, it is worth noting that consumer preferences are not static. As consumption preferences change, some restaurant formats will also be eliminated by the market. Ultimately, the eliminated formats will have a significant impact on franchising model enterprises. Judging from Haidilao's attitude towards opening up to franchising, although it intends to lay out in this direction, it remains relatively restrained.

The advantage of the self-operated model lies in the fact that in a counter-cyclical industry environment, enterprises' ability to withstand risks is relatively stronger, which has been verified in Haidilao's case. However, it should be noted that once a company's growth slows down and its core business model is abandoned by the market, its valuation level will shrink significantly.

We can clearly see that since 2022, although Haidilao's performance has repeatedly hit new highs, its valuation level has remained low. Even though Haidilao has made many adjustments and efforts over the past three years, the market still doesn't buy it. To seek a breakthrough, Haidilao founder Zhang Yong chose to return to the helm.

Some analysts believe that the founder's return to the front line to steer the ship is usually a clear signal for the company to initiate strategic restructuring, which is expected to strengthen the concentration of Haidilao's strategic judgment, promote the execution level to shift towards result orientation, and may trigger more radical structural adjustments within the group. Some media also reported that Zhang Yong's return this time aims to shrink the diversified business front, focus on the core hot pot business, optimize the sub-brand strategy, and avoid blind trial and error.

Kan Jian Finance believes that behind the frequent adjustments of management is this restaurant giant's anxiety about future development. And besides focusing on the main business, the more diversified the company's layout, the more problems it will face in the future.

After the release of the financial report, Morgan Stanley released a research report stating that Haidilao's 2025 revenue increased by 1% year-on-year to RMB 428 billion, with a net profit of RMB 40.5 billion, in line with the bank's and market expectations.

Morgan Stanley believes that the most surprising aspect beyond market expectations was the company's reduction of its dividend payout ratio from 95% in 2024 to 86% in 2025. This adjustment may stem from the company's plan to increase capital expenditure, intending to invest funds in automation upgrades, operational efficiency improvements, and the opening of new brand stores. The bank will focus on management's statements at the earnings conference regarding same-store operating efficiency, store network expansion plans, and profit margin guidance for 2026; it expects the company's stock price to face short-term pressure but sees it as an opportunity for low-position deployment, as the company is increasing investment for future growth. Accordingly, Morgan Stanley maintains its "Overweight" rating on Haidilao.

Citigroup analysts released a research report stating that Haidilao's performance outlook for 2026 is more optimistic than market expectations. The bank holds a positive view on the continued recovery of China's casual dining industry, a judgment consistent with the views of beer manufacturer China Resources Beer.

The analyst also stated that Haidilao's plan to increase capital expenditure to drive growth might be the reason it did not raise its dividend in 2025. Citigroup expects Haidilao's revenue to achieve mid-to-high single-digit growth this year, therefore maintaining its "Buy" rating on Haidilao.