Hotpot chain Haidilao is expected to see its net profit plunge by 90 per cent for the year ending on Dec. 31, 2020.
90% dip in profits
According to a release by Haidilao International on Mar. 1, they announced that they are expecting a 90 per cent decrease in profit from 2019, where they saw a profit of RMB2.347 billion (S$483 million).
These numbers are also preliminary estimates, they said.
Haidilao attributed this plunge in performance to two main reasons:
- Outbreak of Covid-19, and subsequent Covid-19 disease prevention restrictions imposed on the consumer industry
- The net foreign exchange loss due to fluctuations in the exchange rate of the U.S. dollar against the renminbi
In response to the epidemic, they voluntarily suspended all dine-in services on the Chinese mainland from January 26 to March 12, 2020, Xinhuanet reported.
Previously, in Aug. 2020, it was reported that the hotpot chain experienced a slump in dine-in services, but rising revenue from the takeaway food business.
Expansion in 2020
Despite the economic downturn, the group has expanded with new restaurant openings all over the world in 2020.
Haidilao said on Mar. 1 that they took "active measures" to control their operating costs and will "ensure healthy cash flow and a strong cash position".
An Inside Retail article in Nov. 2020 reported that most of the new restaurants will be opened in mainland China, and less than 10 per cent overseas.
Their chief strategy officer, Zhou Zhaocheng, also said that the pandemic has offered an "opportunity" for them to expand as other restauranteurs have shut down.
Top photo via Haidilao/FB.