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Shares of the Chinese hot pot chain declined after reporting a drop in earnings for the first half of the year, despite rapid growth in its delivery segment.
The company’s stock was down 2.2%, trading at HKD 14.56 (about USD 1.86) as of 2 p.m. local time, after falling as much as 6.5% earlier in the day.
Net profit decreased by 14%, totaling CNY 1.8 billion (approximately USD 245.3 million) for the six months ending June 30, mainly driven by a reduced table turnover rate and the initial adjustment phase for new product and service models, according to a statement released yesterday.
Revenue saw a slight decline of 3.7%, reaching CNY 20.7 billion (roughly USD 2.9 billion). The restaurant operations, which make up about 90% of total revenue, fell 9% to CNY 15.6 billion.
Conversely, the delivery business, contributing only 4.5% of overall revenue, experienced a significant 60% increase, totaling CNY 581.2 million (around USD 81.2 million).
As of June 30, the company operated 1,363 locations, including 1,299 self-operated restaurants across Mainland China and 23 in Hong Kong, Macao, and Taiwan. The other 41 outlets were franchised.
The average daily table turnover for self-operated restaurants was 3.8 times per day in the first half, down from 4.2 times a day a year earlier. This decrease was primarily due to heightened competition in the foodservices industry and changing consumer preferences.
The company plans to improve its dining experience, diversify its business approach, leverage new technologies to optimize organizational structures, expand franchise opportunities, and pursue high-quality asset acquisitions to further broaden its customer base and restaurant models.
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