Hotpot restaurant chain Haidilao will be closing or suspending 300 underperforming stores by the end of this year, it announced on its Weibo on Friday (Nov. 5).
The company admitted that it had expanded too quickly in 2019, which led to poor performance in many of its stores.
The closures are believed to affect stores mainly in China, as well as some countries where the restaurant has expanded into.
Locally, in Singapore, Haidilao has continued to expand by opening new outlets, such as one of its latest in City Square Mall in Farrer Park.
Not enough good restaurant managers, badly chosen locations
In its Weibo post, Haidilao listed reasons for why its stores might be failing to meet performance goals.
It admitted that it had expanded too aggressively in 2019 and is now facing a series of problems.
It cited poorly chosen store locations, different levels of management being unable to understand or cope with organisational structure changes, not having enough good restaurant managers, and too much focus placed on hitting KPIs, instead of fostering company culture.
Some stores may reopen in two years, will not lay off staff
According to a business update to the Hong Kong Stock Exchange, where the company is listed, Haidilao said the 300 stores that will be closed or suspended are those with "relatively low customer traffic and unsatisfying results of operations".
However, some stores may reopen within two years, at "appropriate times".
Haidilao also said it will not lay off any staff affected by the closures, and will instead reassign them to different positions within the company.
Will slow expansion plans if average table turnover rate falls below four per day
Haidilao said it will be launching its "Woodpecker" plan, which aims to improve the operating performance of the company.
The plan will pay special attention to underperforming outlets, including those overseas, and will take "improvement measures accordingly".
It also aims to improve various departments in the company, as well as foster a stronger company culture among employees.
The plan also stated in principle that no new restaurants will be opened "on a large scale" if the average table turnover rate is less than four times a day.
According to China Global Television Network, Haidilao's average table turnover rate has fallen drastically over the last two years.
The average table turnover rate was three times per day in the first half of 2021, down from 4.8 in 2019.
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Top image via Haidilao Singapore/FB and Haidilao/Weibo