Haidilao To Close Or Suspend 300 Stores By End Of 2021 After Expanding Too Quickly

The global hotpot chain admitted their rapid expansion affected company performance.

Cover image via Global Times & Bloomberg/The Straits Times

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Hotpot chain Haidilao will be closing or suspending 300 stores by the end of this year, it announced on Friday, 5 November

On Weibo, Haidilao International Holding said it expanded too aggressively in the past two years, which led to the poor performance of many of its stores.

"Some restaurants will be temporarily closed for no more than two years, and resume operations 'in appropriate times'," said the company.

The closures will reportedly affect outlets mainly in China, though some cuts will happen in other countries the chain has expanded into.

In Malaysia, Haidilao has nine restaurants across Kuala Lumpur, Selangor, Penang, and Johor – with locals sighting a probable new outlet in Dataran Pahlawan, Melaka.

The first Haidilao outlet in Malaysia at Sunway Pyramid.

Image via Sunway Hotels

Its notice said no employees will be laid off but will instead be reassigned to other roles within the group

According to The Straits Times, the hotpot giant has 1,597 restaurants globally as of June, where 1,491 of them are in mainland China. This is over a 70% jump from the 935 restaurants it only had globally just a year ago.

The company cited a series of problems that came with expanding too quickly, such as poorly chosen store locations, not giving management time to cope with changes in organisational structure, not having good enough outlet managers, and placing too much focus on achieving key performance indicators (KPIs).

"The operating performance was not up to the management's expectations, reflecting that the internal management and operations need to be corrected and improved on a best-effort basis," they said.

Haidilao said it will be launching a plan, dubbed 'the Woodpecker strategy', to improve the company's operations

The plan states that they will pay special attention to underperforming outlets, including those overseas, and will take measures to improve accordingly.

The group said it will also aim to improve various departments within the company and foster a better work culture for its employees.

They will also be slowing down on expansion until the average table turnover rate of all Haidilao restaurants becomes less than four times a day.

The line at the restaurant was hours long when Haidilao opened its first outlet in Malaysia at Sunway Pyramid:

Meanwhile, these other famed eateries recently announced their closures after business was affected by the pandemic: