Blue Whale News, August 29th (Reporter Sun Yu) Recently, two listed hot pot companies, Haidilao (6862. HK) and Xiabu Xiabu (0520. HK), have released their 2024 semi annual reports.
In terms of performance, Haidilao achieved a revenue of 21.5 billion yuan in the first half of the year, an increase of 13.8% compared to the same period last year; Net profit was 2 billion yuan, a year-on-year decrease of 10%. Haidilao said that the decline in profits was due to changes in exchange gains and losses and the cancellation of preferential policies for value-added tax deduction in Chinese Mainland.
Xiabu Xiabu's revenue in the first half of the year was 2.395 billion yuan, a year-on-year decrease of 15.9%; Net profit of 274 million yuan, converted from profit to loss. When it comes to the reasons for the losses, Xiabu Xiabu stated that the store revenue has decreased compared to the same period last year. In addition, it is expected to close restaurants that continue to suffer losses, and a provision for impairment of 200 million yuan will be made.
Haidilao prefers lower tier markets, with a large number of newly opened stores in Xiabu Xiabu
The competition among hot pot giants can be seen from the differences in restaurant area layout and the number of expansion stores, indicating the differences in management's planning.
In terms of the number of restaurants, as of June 30, Haidilao operated 1343 restaurants, 1320 of which were located in Chinese Mainland and 23 in Hong Kong, Macao and Taiwan. Xiabu Xiabu operates 1072 restaurants in total, 1051 of which are located in Chinese Mainland and 21 are located in other markets.
It is worth mentioning that the franchise situation of Hai Di Lao's stores has received a lot of attention. The management will reveal in the semi annual performance report that since the introduction of franchise in March this year, the company has received more than 10000 franchise applications, and opened one franchise restaurant in the first half of the year. It is expected that this number will increase in the second half of the year.
Focusing on the market situation in Chinese Mainland, there are more Haidilao restaurants in the second and third tier cities, with a total of 1094 restaurants, accounting for more than 80%; Xiabu Xiabu Group is more inclined to open restaurants in first and second tier cities, with Xiabu Xiabu restaurants accounting for over 76% of the first and second tier cities, and Gougou restaurants accounting for over 96% of the first and second tier cities.
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From the opening and closing situation, Haidilao opened 11 new restaurants and closed 43 restaurants in the first half of the year. When it comes to the reasons for closing the store, Hai Di Lao stated that on the one hand, it was due to underperformance and insufficient growth potential, and on the other hand, it was due to property adjustments.
Xiabu Xiabu Group opened 41 new Xiabu Xiabu restaurants in the first half of this year, all of which were newly opened in Chinese Mainland, and 11 new Chubu restaurants were opened, including 9 in Chinese Mainland. Due to commercial reasons, 48 Xiabu Xiabu restaurants, 23 Congqian restaurants, and 7 Seishao restaurants were closed in the first half of the year.
Haidilao Restaurant performs better than Xiabu Xiabu in terms of business performance
Specifically regarding restaurant operations, the semi annual report data shows that the average consumption per customer of Hai Di Lao is 97.4 yuan, a decrease of 5.5 yuan compared to the same period last year, but there is not much difference in the overall average customer price compared to last year; The restaurant's turnover rate was 4.2 times per day, higher than the 3.3 times per day in the same period last year, and the same store sales were 19.6 billion yuan.
In the semi annual report of Xiabu Xiabu Group, the operating conditions of Xiabu Xiabu Restaurant and Cong Cong Restaurant are presented separately. In the first half of the year, the per capita consumption of Xiabu Xiabu Restaurant was 59.6 yuan, slightly higher than the same period last year. The restaurant's turnover rate was 2.3 times/day, lower than the 2.4 times/day in the same period last year. The same store sales were 826 million yuan. In the first half of the year, the average per capita consumption of the restaurant was 137.8 yuan, a decrease of 4.4 yuan from the same period last year. The restaurant's turnover rate was 1.6 times per day, lower than the 2.1 times per day in the same period last year. The same store sales were 750 million yuan.
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From the cost composition of the two hotpot enterprises, the cost of raw materials and consumables at Hai Di Lao Restaurant accounts for 39% of revenue, employee costs account for 33.3%, and rent, utilities, and related expenses account for 4.4%. The cost of raw materials and consumables accounts for 34.6% of the company's revenue, employee costs account for 34%, and property rent and related expenses account for 6.7%.
The second half plans of the two major hotpot giants
From the semi annual report, it can be seen that Haidilao is betting on the cultivation and growth of new product categories for future performance, while Xiabu hopes to optimize the paid membership card program to firmly lock in old customers.
Haidilao stated that it will continue to adopt a bottom-up approach to opening stores in the second half of the year, and it is expected that the number of stores will increase significantly compared to the first half. In addition, the management of Hai Di Lao recently emphasized the "Pomegranate Plan", which is a plan to encourage the incubation and development of more new catering brands.
The management stated that Hai Di Lao had a total of 5 entrepreneurial projects in operation in the first half of the year, including "Yan Please Barbecue Shop" barbecue and "Xiao Hi Hot Pot". Among them, "Yan Please Barbecue Shop" is mainly located in new first tier cities, focusing on the integration of barbecue tracks. The management team has a preliminary plan to open more than 100 restaurants in the next three years.
In addition, the fact that Zhang Junjie, the founder of Bawang Tea Lady, "joined" Hai Di Lao as an independent director has attracted market attention. Industry insiders believe that Hai Di Lao may strengthen its layout in tea beverage related businesses in the future.
Xiabu Xiabu stated that it will continue to vigorously promote its paid membership business in the second half of the year. The company's confidence lies in the good sales of paid membership cards in the first half of the year. Data shows that in the first half of the year, the sales of cards reached 140 million yuan, and the daily average number of cards sold in stores increased by 1.8 times from 2.9 in 2023. In addition, paying members have driven consumption of 540 million yuan here, with an average per capita consumption of 432 yuan and a consumption frequency of 4.9 times, which is 2.7 times higher than that of ordinary members who have consumed 1.8 times.
From the opening and closing plan, Xiabu Xiabu stated that it will continue to strengthen its layout in new first and second tier cities in the second half of the year. In addition, we will continuously optimize our business model and gradually withdraw from large-scale restaurants in old commercial districts, with the goal of achieving profitability for the entire store in the second half of 2024.
Xiabu Xiabu also mentioned its tea beverage business in its plan for the second half of the year. The company stated that it plans to launch seasonal new products that are suitable for the general public's taste in the second half of the year, thereby driving the sustained growth of the tea beverage business.
It should be pointed out that although Haidilao and Xiabu Xiabu are currently the two largest hotpot enterprises, the hotpot market is still very broad and the competition is extremely fierce. Sullivan's research points out that by the end of 2023, the number of hotpot restaurants in China will exceed 500000, and the industry concentration is still relatively low. From the overall revenue of the hotpot industry, it is expected to exceed 750 billion yuan by 2028.
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