Super Hi's Margin Inflection and CEO Transition Point to a More Mature Overseas Haidilao
Super Hi International, the overseas operator of Haidilao, delivered a quarter that feels like the payoff of a two-year strategy. Revenue grew 14.2% year-over-year to RMB 226 million, same-store sales rose 4%, and operating margin expanded to 6.2% from 4.1% a year ago. CEO Yu Li opened the call by noting that “the company's operations maintained a positive improvement trend with all core operating metrics achieving simultaneous increases.” — Yu Li, Executive Director and CEO · 2026-05-20 This is a continuation of the recovery that built through 2025, but the composition of the quarter suggests the business is entering a more mature phase.
Operating Leverage: The Payoff of Patience
The margin improvement is the headline. CFO Cong Qu attributed it to both revenue growth and cost structure optimization. Employee costs fell to 34% of revenue, down 130bp, while depreciation and amortization dropped 90bp to 9.2% of revenue. Raw material cost as a percentage of revenue actually ticked up slightly to 33.9%, but overall gross margin held at 66.1%. The average check rose 1.1% to RMB 25.3, helped by FX, while table turnover hit 4 turns/day. The CFO's block quote captures the operating leverage:
Operating profit reached HKD 13.99 million, a year-over-year increase of 78.7% with an operating margin of 6.2% a year-over-year increase of 2.6 percentage points.
The company's focus on dining scenarios — kids' meal sets, late-night spicy braised dishes, and summer combos — is driving customer traffic. Total customer visits exceeded 8.1 million, up 3.8%, and the company is now confident enough to note that the proactive investments in employees and customer experience made last year are yielding returns. In the Q&A, the CFO reiterated the foundational principle: “We have always maintained to ensuring customer experience and service quality is the most important.” — Cong Qu, Financial Controller and Board Secretary · 2026-05-20
Leadership Transition: Continuity Under a New CEO
This was the first earnings call under CEO Yu Li, following the departure of Lijuan Yang, who had led the overseas entity through its formative years. Analysts immediately probed whether the strategy would shift. Li Yu's response was definitive: “Mr. Young's departure will not affect the Deep embedded strategy of prioritizing customer and the employee benefits.” — Yu Li, Executive Director and CEO · 2026-05-20 The company's commitment to employee welfare and customer value is not new — it was a recurring theme in prior calls. On the 2026-03-31 call, then-CFO Qu had said “We continue to focus on bottom to up and we're not going to have a specific target.” — Cong Qu, CFO and Secretary of the Board · 2026-03-31 The continuity is deliberate: the bottom-up, quality-first approach to store expansion remains intact, as does the profit-sharing and training system. This transition looks less like a pivot and more like a passing of the baton to a management team that has been deeply involved in executing that strategy.
The Red Pomegranate Engine Takes Shape
Beyond the core hotpot brand, the Red Pomegranate plant is quietly becoming a growth driver. The company now operates 10 brands across 18 stores, including Canadian malatang, Indonesian hotpot, Japanese izakaya, and Korean BBQ. Other business revenue surged 166.7% year-over-year, driven by central kitchen external sales and new brand restaurants. This diversification is a deliberate response to market saturation in core hotpot and a way to capture different dining occasions and price points. The company is still in incubation mode — it has not given formal store count targets, but the pipeline of signed locations is in the double digits. In the 2025-11-26 call, CEO Lijuan Yang had outlined the cautious expansion logic: “We emphasize customer and employee focus while embracing technological advancement and AI to gradually strengthen our mid- platform.” — Lijuan Yang, CEO and Executive Director · 2025-11-26 That platform is now being applied to brand incubation, with regional managers given autonomy to test local concepts.
Geopolitical Crosswinds
Not all regions are firing on all cylinders. East Asia was the standout, with customer traffic up 18.2% and same-store sales growth of 10.6%. Southeast Asia remained stable, but North America saw same-store sales decline 5.1% due to severe winter weather and the ramp-up of new stores. The bigger drag is the Middle East: the company noted that geopolitical volatility had a significant impact on store operations in "other regions," where table turnover fell 0.4x year-over-year. This is not new — the prior call had already flagged the Middle East as a headwind, and the global keyword trajectory shows War in Iran and Middle East situation as rising themes across the market. The company's response has been to implement more prudent cost control locally, a move consistent with its bottom-up, country-manager-led approach.
Looking ahead, the company's medium-term story hinges on executing its quality-first expansion while extracting more leverage from same-store growth. The management transition raises a question: can the new CEO maintain the delicate balance between employee investment and margin expansion? The early evidence — a 260bp operating margin improvement in one quarter — suggests the system, not the individual, is now driving performance. The Red Pomegranate initiative adds optionality, and the company's willingness to let regional managers experiment while the headquarters builds a central platform for brand replication is a sensible path. As consumers overseas become more value-conscious, Haidilao's strategy of offering memorable experiences rather than pure discounts seems well positioned. The stock remains a mid-cap story, but this quarter shows the operational engine is working.