Shares in China's hot pot chain Haidilao jump after plan to shut stores

Haidilao International Holding

08/11/2021 03:16

BEIJING, Nov 8 (Reuters) - Shares in Chinese hot pot chain
Haidilao International  6862.HK  surged on Monday after the
company announced it would suspend or shut down 300 stores by
the end of the year, slamming the brakes on a rapid expansion it
undertook during the COVID-19 pandemic. 
    China's largest hot pot chain said late on Friday it would
shut down restaurants with relatively low customer traffic and
unsatisfying results and would launch a new plan focused on
improving its operations of existing stores. 
    Its shares jumped more than 11% on Monday to hit their
highest since Oct. 28.  urn:newsml:reuters.com:*:nL1N2RZ023
    Reuters reported last month that Haidilao planned to slow
its growth after its expansion and softening consumer appetite
in China left it with falling table turnover rates and profits.
 urn:newsml:reuters.com:*:nL1N2QD03A
    Haidilao, which became so popular in recent years that it
appeased customers in hours-long queues for its soups by
providing free manicures, snacks and shoe shines, was initially
undeterred by the pandemic. The company embarked on an expansion
drive in early 2020 that doubled its outlets since then to
almost 1,600 currently.
    Citi analysts said they expected Haidilao to incur one-off
provisions or write-downs for its store assets or leases in the
second-half but that the closures would reduce its start-up
losses and boost performance at nearby stores. 
    "We expect this restructuring plan to boost its table turn
of existing stores in (2022)," they said. 

 (Reporting by Sophie Yu and Brenda Goh; Editing by Jacqueline
Wong)
 ((brenda.goh@thomsonreuters.com; +86 (0) 21 2083 0088; Reuters
Messaging: brenda.goh.thomsonreuters.com@reuters.net))