By MA Yue
Hotpot chain Haidilao is considering spinning off its overseas business and listing it in Hong Kong. Operations outside China will come under the umbrella of Super Hi International Holding Ltd., which may seek to go public separately from the already listed parent company.
Haidilao said the spin-off would be “in the interests of the company and its shareholders,” and that the two entities would generate more value operating and trading independently. The separation hasn’t started. Nothing has been filed with the stock exchange so far.
Haidilao opened its first restaurant outside China in 2012, in Singapore’s Clarke Quay. The following year, it entered North America. As of the end of 2021, 114 of Haidilao’s 1443 restaurants are in Hong Kong, Macau, Taiwan, and places outside the Chinese mainland.
Most are in big cities with large Chinese populations, and the chain has largely refrained from opening new restaurants too quickly as it did in China over the past two years.
Overseas restaurants contribute only 7 percent of Haidilao’s revenue (the number was 8 percent in 2020). The average spend per customer is nearly twice as high (198 yuan vs 101 yuan), but table turnover is lower, at 2.3 times a day versus three inside China.
Rent and labor costs are higher overseas. Consumer habits and business environments are also different. But the steady stream of income generated by the overseas operations is increasingly crucial as lockdowns and pandemic control measures continue to pose uncertainty to restaurants in China.
Haidilao is still trying to recover from its overly aggressive expansion that started in the second half of 2020. The chain almost doubled its size in less than a year but has since been closing stores and cutting back investment in the face of mounting losses.
It lost 4.2 billion yuan in 2021, 3.7 billion of which came from write-offs. Last November, it announced a major initiative to cut costs, improve efficiency and streamline its organizational structure.
An increasing number of Chinese retailers and food businesses are seeking growth overseas. Miniso, which sells toys and household items, has opened stores in premium locations across North America and Europe. Its overseas revenue increased 17 percent in Q1 2022. The retailer also plans a second listing in Hong Kong.
