Haidilao’s net profit fell by 90% but its stock price doubled, and it still insisted on opening thousands of stores despite the epidemic.

The private room camera controversy has not subsided, and the topic of Haidilao (Hong Kong stock 06862) (06862.HK)'s performance plummeting has become hot again.

On the evening of March 1, Sichuan Haidilao Catering Co., Ltd. (hereinafter referred to as "Haidilao") issued an announcement that its net profit in 2020 is expected to drop by approximately 90% compared to 2019. This performance caused an uproar in the market and was once on the Weibo hot search list.

Faced with a steep decline in performance, Haidilao’s explanation was that the restrictions imposed on consumption venues due to the new crown epidemic prevention and control measures had a significant impact on the group’s operations. In addition, due to the fluctuation of the exchange rate between the US dollar and the RMB, there were exchange rate fluctuations. The loss was 235 million yuan.

Although the epidemic has had a certain impact on Haidilao's operations, it does not seem to have affected its pace of store openings. In the first half of 2020, Haidilao opened 173 new stores, and the total number of stores worldwide increased from 768 at the beginning of the year. 935 at the end of June. Haidilao's management stated that it will add thousands of stores in the next 2-3 years.

In addition to the annual report warning, it has recently been revealed that many Haidilao stores have installed cameras in private rooms, which has also triggered heated discussions among netizens.

So, can Haidilao install cameras in private rooms? Industry insiders believe that restaurants need to fulfill their obligation to inform, protect consumers’ right to know, and give consumers the right to choose private dining rooms. If it is under the "informed-consent" model, the initiative is still in the hands of consumers.

Net profit still plummeted after price increase

On March 1, Haidilao issued its latest profit warning, predicting net profit in 2020 of 2.347 billion yuan, a year-on-year decrease of approximately 90%. As for the reasons for the decline in performance, Haidilao said it was mainly caused by the epidemic and restrictions on consumption venues in various places.

As a consumer company that relies heavily on offline store scenarios, Haidilao has been "significantly affected" from the beginning of the epidemic. It once closed hundreds of stores across the country for 45 days, severely damaging its performance. In order to reverse the decline, Haidilao not only promotes smart stores to improve operational efficiency, but also develops multiple online sales channels such as takeout.

But currently, Haidilao, which was once so popular that people had to queue up every day, is no longer so popular. In one of the most important data in the catering industry - table turnover rate (table reuse rate), Haidilao has dropped from the highest of 5.4 times/day in 2018 to 3.3 times/day in the first half of 2020.

However, according to the financial report for the first half of 2020, the unit price of Haidilaoke has indeed increased, with per capita consumption rising from 104.4 yuan in the first half of 2019 to 112.8 yuan, a year-on-year increase of more than 8%.

Although the epidemic has had a certain impact on Haidilao's operations, it does not seem to have affected its pace of store openings. In the first half of 2020, Haidilao opened 173 new stores, and the total number of stores worldwide increased from 768 at the beginning of the year. There were 935 stores at the end of June, of which 868 stores were located in 164 cities in China. Haidilao's management stated that it will add thousands of stores in the next 2-3 years.

Caught in a vortex of public opinion

In addition to the sharp decline in performance, Haidilao has recently been hotly debated by netizens for installing cameras in its boxes. Some consumers believe this move is a serious violation of personal privacy.

In this regard, Haidilao explained that this is to ensure the safety of consumers when dining. At the same time, Haidilao pays attention to protecting customer privacy. The company has relevant systems and processes for monitoring and management, and at the same time strengthens it through technical means. Control and protect consumer rights.

It is worth noting that Haidilao is not the only one to install cameras in private rooms. Previously, some media conducted field surveys and found that 19 of 30 hot pot restaurants had cameras in their private rooms; among 14 non-hot pot restaurants, 2 had cameras in their private rooms.

In fact, the focus of controversy over the installation of cameras in private rooms is whether it infringes on consumers' privacy. Therefore, it is extremely critical to clearly draw the public and private boundaries between private rooms.

Although Haidilao customer service previously stated that the private room belongs to the restaurant and is also part of the public place, and the camera is installed to record the situation. But in reality, many restaurants have installed cameras but have not fulfilled their obligation to inform them. In this case, consumers lose their right to know and choose, and are in a completely passive position.

This article comes from Changjiang Business Daily