Haidilao International Holding, a chain of hot pot restaurants, announced a plan to close about 300 restaurants operating inefficiently by the end of this year.
Haidilao has become a popular spot among diners in recent years. However, many Haidilao stores in Shanghai and Beijing have been “temporarily closed.”
While food businesses worldwide were severely affected by the COVID-19 pandemic, Haidilao, known as the “king of the hot pot industry,” did the opposite and accelerated new store openings.
Haidilao’s rapid expansion has affected the company’s share price, according to Sound of Hope.
Data shows that Haidilao’s share price hit a record high of $11 per share in early 2021. Since then, its share price has declined almost 80%, closing at $2.30 per share on Dec. 10.
Currently, its market value has dropped to below $12.80 billion.
Statistics show that, by June 30, Haidilao has about 1,597 stores worldwide. In 2021, the company opened 544 new stores during peak time.
After subtracting about 300 stores that are about to close, there are still about 1,300 Haidilao stores worldwide.
Haidilao’s founder said at the June 2021 shareholder meeting that Haidilao suffered significant losses due to mistakes in strategic planning.
Zhang Yong said he misjudged market volatility, assuming that the COVID-19 pandemic would end in September 2020.
Therefore, in June 2020, he continued developing and opening many brand-new stores.
However, many Haidilao stores in the Asia-Pacific region are still closed.
Some netizens said that Haidilao misjudged the epidemic situation and did not care about the ongoing economic and political crisis. These include power cuts, foreign capital withdrawal, shrinking industries, and a sharp increase in the unemployment rate.