Haidilao Battles Delivery Disruption and Cautious Consumers in China

In the first half of 2025, Haidilao International Holding Ltd., a prominent Chinese restaurant chain, faced a second consecutive drop in sales as changing consumer preferences continue to reshape the dining landscape in China. The company's revenue fell 3.7% year-over-year to 20.7 billion yuan ($2.9 billion), matching analysts' estimates, while net income slipped 14% to 1.76 billion yuan.

Haidilao's management is navigating a challenging environment, where slowing economic growth has pushed many consumers toward cheaper food options and away from premium dine-in experiences. Adding to the pressure, China's food delivery platforms have intensified their price war, offering one-yuan drinks, free delivery, and deep flash discounts. These tactics have drawn customers away from Haidilao's restaurants, affecting both foot traffic and table turnover rates.

Looking ahead, the company could see an improvement in the second half of the year. Morgan Stanley expects Haidilao's revenue growth to recover from a lower base, supported by its expansion into new catering brands and dining formats. While competitive pricing pressures and consumer sentiment remain important risks, management's strategy suggests potential for stabilization if execution aligns with expectations. Investors will likely watch closely for signs of a turnaround in traffic and profitability momentum heading into the end of 2025.