Haidilao Faces Heat as Sales Slide Again -- Can New Strategies Spark a Turnaround?

Haidilao International Holding Ltd. (HDALF) reported a second straight drop in sales as shifting consumer behavior continues to reshape China's dining landscape. Revenue fell 3.7% year-over-year to 20.7 billion yuan ($2.9 billion) in the first six months, matching analysts' estimates, while net income slipped 14% to 1.76 billion yuan. Management is navigating a cautious spending environment, where slowing economic growth has pushed many consumers toward cheaper food options and away from premium dine-in experiences.

Adding to the challenge, China's food delivery platforms have triggered an aggressive price war, rolling out one-yuan drinks, free delivery, and deep flash discounts. These tactics have drawn customers away from Haidilao's restaurants, affecting both traffic and table turnover rates. Morgan Stanley, in a July note, highlighted that weaker macro conditions combined with heightened competition from delivery services are weighing on short-term performance and shaping near-term investor sentiment.

Looking ahead, the company could see an inflection point in the second half of the year. Morgan Stanley expects revenue growth may recover from a lower base, supported by Haidilao's 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 year-end.