Haidilao's CN¥ 4.16B Loss Masked +43.7% Revenue Growth

Executive Summary

Haidilao (海底捞) achieved CN¥ 41.1 billion in operating revenue in 2021, growing +43.7% year-on-year (YoY), yet recorded a net loss of CN¥ 4.16 billion after shuttering 276 underperforming restaurants.^[1] The CN¥ 3.65 billion restructuring charge overshadowed what was otherwise a strong operational recovery, with the core restaurant business hitting a three-year compound annual growth rate (CAGR) of +16% against 2019 benchmarks. This analysis examines the paradox of Haidilao's 2021 financial performance and how the leaner footprint positioned the hotpot giant for margin recovery heading into 2022.

Strong Top-Line Growth Despite Bottom-Line Pain

Haidilao International Holding Ltd. (6862.HK) delivered CN¥ 41.1 billion in operating revenue in 2021, marking +43.7% YoY growth that confirmed underlying demand for its dining experience remained robust. The revenue recovery tracked expectations across all major segments, driven by the core restaurant business which generated CN¥ 39.46 billion at +43.9% YoY.

However, the bottom line told a different story. The net loss of CN¥ 4.16 billion was driven primarily by one-time losses and impairment charges exceeding CN¥ 3.65 billion stemming from the store closure program. These non-recurring charges for long-lived asset disposal and impairment reflected the cost of unwinding Haidilao's over-expansion during the early pandemic recovery period.

Two primary pressures drove the swing from profit to loss:

• Store closure charges --- the shuttering of 276 restaurants generated substantial non-recurring costs for asset disposal and lease termination
• Pandemic-compressed margins --- ongoing restrictions weighed on restaurant utilization rates while rigid cost structures, including lease obligations and staffing commitments, limited operating flexibility

The 276-Store Closure Program

Haidilao closed 276 underperforming locations in 2021, a decisive move that investors and industry watchers recognized as a necessary course correction. The company had expanded aggressively during the early pandemic period, betting on a swift dining recovery that materialized unevenly across China's cities.

The closure program, while painful in the short term, served a clear strategic purpose. By eliminating underperforming locations, Haidilao reduced fixed cost exposure and concentrated resources on its highest-performing restaurants.^[2] The leaner footprint positioned the business for margin recovery as China's dining sector normalized heading into the January-November 2022 reporting period.

Management's willingness to absorb a significant one-time loss signaled prioritization of long-term unit economics over short-term revenue growth --- a shift in posture that contrasted with the expansion-first approach of prior years. The closures affected locations across multiple city tiers, with Tier 2 and Tier 3+ cities bearing the brunt of closures where foot traffic had not recovered to pre-pandemic levels. Analysts noted that the surviving restaurant portfolio concentrated on Tier 1 and strong Tier 2 locations where consumer spending resilience supported higher average ticket sizes and more consistent utilization rates.

Revenue Breakdown Reveals Operational Resilience

The segment-level revenue breakdown demonstrated that Haidilao's core business remained fundamentally healthy despite the headline loss.

Restaurant operations dominate at 96% of revenue

Three-Year CAGR Confirms Underlying Strength

The +16% three-year CAGR against 2019 benchmarks provided the clearest signal of Haidilao's operational resilience. Comparing 2021 performance against the pre-pandemic baseline eliminated the distortions of pandemic-era volatility and revealed that underlying demand for Haidilao's dining experience continued growing through a period of unprecedented disruption.

This compound growth rate outpaced many peers in China's competitive hotpot market. The brand's ability to sustain double-digit compound growth through rolling lockdowns, social distancing mandates, and shifting consumer behavior spoke to the enduring strength of its brand positioning. Key drivers of this resilience included:

• Haidilao's signature service model, which maintained high customer satisfaction and repeat visits
• Menu innovation that kept the dining experience fresh for regular patrons
• Loyalty program enhancements that deepened customer engagement across channels
• Brand equity that converted dine-in loyalty into online retail purchases

Looking Ahead: A Leaner Haidilao Enters 2022

The restructured restaurant network that entered 2022 carried significantly lower fixed cost exposure than the peak fleet. With 276 underperforming locations removed, the remaining portfolio concentrated on higher-traffic, higher-margin sites. This positioning proved strategically sound as China's dining sector continued to face intermittent disruptions through 2022, including Shanghai's two-month lockdown from April to June.

The +43.7% revenue growth, combined with the decisive store closure program, painted a picture of a company willing to sacrifice short-term optics for long-term competitive positioning. The company simultaneously accelerated its online retail strategy, with the "Future Food Laboratory" initiative launching new product categories and e-commerce channels on Tmall (天猫) and JD.com (京东) gaining traction.

For industry observers, the key question heading into 2022 was whether Haidilao could translate its leaner footprint into sustainable margin recovery while simultaneously building out new revenue streams through online retail channels. The early data from condiment sales and the multi-brand segment suggested that the diversification strategy had momentum, even as the core dine-in business continued to face macro headwinds from China's evolving pandemic response.

Key Takeaways

• Haidilao achieved CN¥ 41.1 billion in operating revenue in 2021, growing +43.7% YoY despite posting a CN¥ 4.16 billion net loss
• The 276-store closure program generated CN¥ 3.65 billion in one-time restructuring charges that drove the loss
• Core restaurant business hit +16% three-year CAGR against 2019 benchmarks, confirming underlying demand resilience
• Restaurant operations commanded 96% of revenue at CN¥ 39.46 billion (+43.9% YoY)
• The leaner restaurant footprint positioned Haidilao for margin recovery heading into 2022

## About the Data

This analysis draws on Moojing Market Intelligence data covering January-November 2022, combined with Haidilao International Holding Ltd. (6862.HK) financial disclosures. Moojing tracks 400,000+ brands across 30+ e-commerce platforms, representing 58-65% of China's online retail GMV. For full methodology and additional insights, see the complete Haidilao Online Market report.