Super Hi International Q4 2025 Earnings Call Transcript

Quartr
Provided by Quartr
March 31, 2026

Key Takeaways

  • Positive Sentiment: Q4 revenue rose 10.2% year over year to $230 million, while full-year revenue increased 8% to $840.8 million. Customer traffic reached 8.31 million in Q4, and average table turnover improved to four turns per day.
  • Positive Sentiment: Operational momentum and profitability improved in the second half: operating margin recovered from 1.9% in Q2 to 5.7% in Q4. Management expects more targeted investment in 2026, with employee-cost ratios potentially easing as revenue grows.
  • Positive Sentiment: Growth initiatives gained traction, including takeout revenue up 68.1% for the year and other business revenue up 61.4%. Several Pomegranate Plan concepts, including barbecue, spicy hot pot, and Japanese izakaya formats, achieved single-store profitability, although management said large-scale replication is not yet ready.
  • Neutral Sentiment: The company opened 13 Haidilao restaurants and closed nine in 2025, ending the year with 126 overseas stores. Expansion will remain bottom-up and cautious, with East Asia the strongest area, while Southeast Asia focuses on improving existing stores and geopolitical risks may slow Middle East and European development.
  • Negative Sentiment: Cost investments continued to pressure margins: raw-material costs rose to 33.6% of revenue, employee costs to 33.9%, and full-year operating margin fell to 4.4%. Q4 also recorded a $3.8 million net exchange loss, reducing after-tax profit to $4.47 million.
AI Generated. May Contain Errors.
Earnings Conference Call
Super Hi International Q4 2025
00:00 / 00:00

There are 9 speakers on the call.

Operator

Dear investors and analysts, good evening. Thank you for attending today's Super Hi International 2025 Q4 and full year earning conference. The company leaders present to the conference are Ms. Yang Lijuan, Executive Director and CEO, and Ms. Qu Cong, CFO and the Secretary of the Board. The content of today's meeting may contain forward-looking statements, including but not limited to the company's statements on its strategies and business plans, as well as the outlook for its performance. The content released at this earnings conference, as well as the comments and responses to your questions, only represent the views of the management as of today. Please refer to the latest safe harbor statement in the earnings press release, which applies to all the conference calls. The meeting is conducted in Chinese with an external institution providing simultaneous English translation. In case of any discrepancies, the Chinese content shall prevail.

Speaker 1

The meeting presentation materials have been uploaded to the company's investor relations page for your reference. Now, we invite Ms. Yang Lijuan, Executive Director and CEO of Super Hi International, to review the company's performance in fourth quarter 2025. Thank you, host. Dear investors and analysts, good evening. I am Yang Lijuan, Executive Director and CEO of Super Hi International. I'm here to brief you on the company's performance in the fourth quarter and the full year of 2025. In 2025, under the strategy of focusing on both employees and customers, the company took the initiative to offer benefits to these core groups. We have witnessed a sustained growth in revenue and customer traffic with the quality of growth improving in the fourth quarter of 2025. The company's overall operation continued the recovery trend of the first three quarters.

Speaker 1

The customer traffic of the Haidilao restaurant reached 8.31 million persons times in this quarter, driving the overall average table turnover rate of a Haidilao restaurant to four turns per day, an increase of 0.1 turns per day year-on-year. At the same time, the company's delivery business and other businesses continue to contribute to revenue in this quarter. Company's total revenue reached $230 million, an increase of 10.2% compared with the $208.8 million in the same period last year, and a month-over-month increase of about 7.5% from the third quarter, indicating that our investment in optimizing product cost performance ratio and reaching consumption scenarios and improving service experience have gradually been recognized by customers. Looking back at the full year of 2025, Haidilao restaurants operated by the company received a total of 32 million diners.

Speaker 1

The overall average table turnover rate of the restaurant reached 3.9 turns per day. In the same store, average table turnover rate reached four turns per day, both an increase of 0.1 turns per day compared with the same period last year. Total revenue 2025 was $841 million, an increase of 8% year-on-year. Now I share with you some of our continuous efforts in business improvement. First, adhere to offering benefits to customer and employees and consolidate the foundation of store management. In 2025, on the basis of focusing on both employees and customers, we further clarified and implemented the proactive strategy of offering benefits to customers and employees throughout the year. In terms of employee development, we have continuously optimized from multiple dimensions, such as the salary and welfare, daily care, and training and development, enhancing the sense of belonging of the diversified team.

Speaker 1

Up to now, we have about 90 reserve backbones and nearly half of whom are foreign key staff, laying a talented foundation for diversified management. In the frontline management, on the basis of formulating core red line principles, we have turned the focus of work to frontline stores in the regional divisions, allowing them to focus more on the market, customers, and employees themselves. This transformation has released very obviously frontline vitality in the second half of the year, and many excellent service cases and management practices have been spontaneously created by regional divisions in stores. At the same time, we also encourage management team in various regions to conduct cross-departmental and cross-city store inspections to conduct comparison, learning, and reflection in on-site work. In conjunction with the dual store management and multi-store management policies, we expand excellent management capabilities to more stores and further expand the talent training ashram.

Speaker 1

Second, create a unique Haidilao and continue to invest in customer experience. This year in our work of focusing on customers, we have formulated the differentiated service plans for different scenarios such as birthdays, parent-child activities, the diners, and the late-night snacks, and implemented the scenario-based services in openings such as dishes, peripheral products, and decorations with more substantial investments. In terms of products, we have continued to promote localized new product launches in various countries with a total of more than 1,000 optimized new launches throughout the year. This year, we focused on the implementation of a fresh cut food scenario. Fresh cut meat is quite novel for overseas consumers. We have simultaneously equipped with the decoration of open kitchen fresh cut workshop, which can bring a better consumption upgrade experience.

Speaker 1

At present, there are a total of 57 SKUs of fresh cut beef and pork series covering 13 countries. As of December 31st, the average click-through rate of the fresh cut meat series products in overseas countries have reached 12.21%. This year, we have continued to innovate in the takeout scenario, launching faster food categories such as the spicy boiled fruit cups, fried snacks, and rice and noodles. At the same time, we launched and promoted on multiple platforms and expanded the delivery coverage. The annual takeout revenue increased by 68.1% year-on-year, effectively reaching customer groups beyond dine-in meals. In terms of space and service, we selected some pilot stores to carry out the transformation of nightclub-style scenarios. Upgrading lighting, sound effects, and interactive experience. The improvement of table turnover rate during late-night snack hours in pilot stores is more obvious than that of similar stores around us.

Speaker 1

In addition, we have actively explored innovative marketing models in many countries and driven a certain degree of talk of town popularity and customer traffic support locally through the dual-track strategies of celebrity co-branding and IP authorization. In terms of cost-performance ratio, we have authorized the teams in various countries to make reasonable adjustments in pricing, portion size, and plating, allowing customers to better feel the cost-performance ratio. This is also one of the important reasons why our table turnover rate remained stable in the traditional off-season in the first half of the year. Thirdly, enhance the capability of the headquarters and promote the upgrading of organizational efficiency and digitalization. We have made several important progress in the capacity building of the headquarter this year.

Speaker 1

In terms of supply chain, we have continuously increased the production capacity of our own central kitchens, strengthened the hierarchical management, and the bargaining power of global suppliers. The continuous efficiency improvement of the supply chain since this year has offset the gross profit pressure brought by the customer benefit strategy to a certain extent. Proportion of the employee cost has also gradually approached the level of the same period last year. In terms of digitalization and organizational efficiency, we have actively explored the application of AI technology in management to improve the operational efficiency of the headquarters and stores. We have also further integrated the coordination mechanisms of product and marketing-guided menu optimization and data evaluation, and formed a normalized product management cycle of new launch evaluation and iteration.

Speaker 1

Up to now, the scale of our overseas members has continued to expand, and the application of digital tools in the members' activation and scenarios reach has gradually deepened. As of the end of 2025, the number of overseas members of Haidilao has exceeded 8.5 million. Fourthly, the expansion of store network and the Woodpecker Plan are promoted in parallel. In terms of expansion, we still adhere to the bottom-up strategy where country managers are responsible for site selection and implementation. The headquarters controls the quality and pace. In 2025, we opened a total of 13 Haidilao stores throughout the year, covering 9 countries including Malaysia, South Korea, Indonesia, Japan, United States, Australia, Canada, UAE, and the Philippines. In the meantime, we continued to optimize the store network layout and make adjustments at the right time.

Speaker 1

In 2025, we closed a total of 9 stores in Singapore, Thailand, Malaysia, and Japan. Some due to lease expiration, others are due to active adjustments. Among them, 3 locations have completed the format transformation from Haidilao to the second brand and have been incorporated into the Pomegranate Plan for unified operation. As of the end of 2025, we operated a total of 126 Haidilao stores overseas. In terms of store opening quality, the number of stores we have signed contracts for and to be opened still remains in double digits. With a steady overall expansion pace, we have not relaxed the requirements for profitability and implementation of quality of new stores. Fifthly, in terms of the Pomegranate Plan, we have implemented it at a steady pace of advancing gradually and verifying whilst polishing the plan.

Speaker 1

As we go along this year, we continue to incubate prototype stores in the second brand projects in different countries around multiple catering tracks such as the hot pot, barbecue, and smart spicy cups. In terms of the implementation mechanism, we adhere to bottom-up approach. The teams in various countries identify, track, and promote the site selections and implementation based on the local market, whilst the headquarters focuses on the construction of the middle office capabilities such as product R&D, brand marketing, informatization, and business analysis, forming front-end and back-end coordination. We can also show you some of the results this year. In terms of progress, we have some specific achievements that we report to you this year.

Speaker 1

Projects such as Sparkle BBQ, Haidilao Canada, Malatang, and the Japanese Izakaya are progressing as planned, some of which have achieved a single store profitability, proving that our exploration of a new format overseas is feasible. In addition, three original Haidilao locations were transformed into second brand operations throughout 2025, and the Pomegranate Plan has begun to link with the optimization of the existing store network rather than being an isolated new thing. From the perspective of operating data, the revenue contribution of a related business has also continued to increase. Other business revenue increased by 61.4% year-on-year, and the substantive contributions have begun to be seen in reaching the revenue structure and expanding the customer base.

Speaker 1

Next, we'll still adhere to a prudent pace of advancement to continue to polish the proven projects, build up information digitalization in the middle office support capabilities, and on this basis, gradually improve replication efficiencies and enrich the company's format layout and growth sources. Looking forward into the future, we take becoming a leading global comprehensive catering group as our long-term development goal, and continue to improve in five aspects: the customer experience, the restaurant network, operational improvement, new business, and headquarter capabilities. The above is my introduction to the business development and situation. Now please welcome Ms. Qu Cong to introduce the financial situation to you all. Thank you, Ms. Yang. Next, I will report to you on the financials of the company. Our total revenue for the full year 2025 was $840.8 million, an increase of 8% compared with the same period last year.

Speaker 2

Operating revenue of the Haidilao restaurants was $790 million, accounting for about 94% of the company's total revenue, an increase of 5.7% compared with last year. Takeout revenue, $19 million, increase of 68.1% year-on-year. Other business revenue was $31.8 million, increase of 61.4% year-on-year, mainly due to the continuous expansion of the revenue contribution from restaurants incubated under the Pomegranate Plan, and the continuous penetration of peripheral products such as hot pot condiments among local consumers and in retail channels. Full year table turnover rate of Haidilao restaurants was 3.9 turns per day, and the same store turnover rate was 4 turns per day, both an increase of 0.1 turns as compared with 2021, and achieving steady improvement in operating quantities against the background of a continuous expansion of the store network.

Speaker 2

From the perspective of the annual rhythm, the year-on-year revenue growth rate of each quarter was 5.4%, 8.5%, 7.8%, and 10.2% respectively, with the growth momentum strengthening quarter by quarter and reaching the annual high in the fourth quarter, reflecting that our continuous investment in optimizing product cost performance ratio, enriching consumption scenarios, and improving service experience. In terms of the raw material costs accounted for 33.6% of revenue, increase of 0.5% over last year due to our access optimization, restaurant dish quality, and increase in the proportion of fresh products, which brought certain fluctuations in raw material cost in the short term. Employee costs accounted for 33.9%, increase of 0.6 percentage over last year. In 2025, we systematically raised the salary and welfare for the frontline employees and increased the investment in employees' daily care.

Speaker 2

Rental accounted for 2.9% of revenue, an increase of 0.3 percentage points compared with the same period last year. Water and electricity expenses are 3.4% for revenue, a decrease of 0.2 percentage points compared with last year. Depreciation and amortization accounted for 9.8% of the revenue, a decrease of 0.6 percentage points compared with last year. Above changes are mainly due to dilution of a proportion of relevant expenses by the increase in revenue. Other operation-related expenses accounted for 11.3% of the revenue, an increase of 1.4 percentage points over last year, mainly due to the increase in our outsourcing services fees for restaurants, as well as the company's increased investment in continuous promotion of the Pomegranate Plan, and the brand building regional expansion. In 2025, our full year operating profit was $37.4 million, operating profit margin 4.4% decrease compared with 2024.

Speaker 2

From the perspective of quarterly trends against the background of actively increased investment in the first half of the year, operating profit margin hit a low of 1.9% in the second quarter, recovered significantly from the third quarter, and rebounded to 5.9% and 5.7% in the third and fourth quarters respectively, with a clear recovery trend in the second half of this year. This resulted in line with our forecast at the beginning of the year, and this has laid a solid foundation for the company's long-term healthy development under the comprehensive influence of above factors. After-tax net profit in 2025 was $36.3 million, a substantial increase compared with 2024. Significant improvement in net profit, and is mainly due to the favorable impact of 2025 global exchange trend on the company's multi-currency asset and liabilities.

Speaker 2

Looking at Q4, achieved a total revenue of $230 million, an increase of 10.2% compared with the same period last year, month-on-month is 7.5% from the third quarter, mainly due to expansion of the store network as compared with last year. Continuous improvement of the table turnover rate. The peak season effect, driving double growth over customer traffic and average customer spending. Among them, operating revenue of a Haidilao restaurant with $211.9 million, accounting for 92.1% of company's total revenue, an increase of 6% compared with the same period last year. Takeout revenue was $6.8 million, a substantial increase of 94.3% as compared with the same period last year, continued high-speed growth. Other business revenue was $11.3 million, an increase of 109.3% compared with the same period last year. We can continue to see that the success of a Pomegranate Plan with further evidence in the first quarter.

Speaker 2

First quarter of 2025, raw material cost is $76 million, a gross margin 66.6%, a decrease about one percentage point compared with the same period of last year, mainly due to the short-term cost increase brought by optimization of food material structure. Employee cost was $74 million, accounting for 32.2% of revenue, basically same as the same period last year. Improvement compared with the third quarter, mainly benefiting from the increase in revenue scale in the fourth quarter. Rent expenses is $6 million, accounting for 2.8% of the revenue, basically same as the same period of last year. Water and electricity expenses is $7 million, accounting for 3.1% of revenue. Decrease of 0.3 percentage point compared with the same period last year. Depreciation and amortization was $21.5 million, accounting for 9.4% of the revenue, a decrease of about 0.9 percentage point compared with the same period last year.

Speaker 2

Total revenue and other operating expenses, $29 million, accounting for 11.7% of revenue, increased about 1.1 percentage point, and mainly due to the promotion of Pomegranate Plan building and store expansion. 24 companies operating profit was $12.98 million. Operating profit margin 5.7%, decreased about 2.7 percentage points, and basically the same as third quarter. The decline in the profit margin is mainly due to active investment on the cost side, which is in line with our overall rhythm of continuously offering benefits to customers and employees. Net exchange losses in the fourth quarter was $3.8 million, mainly due to the revaluation impact of exchange rate fluctuation.

Speaker 2

Under this impact, taking Q4, our after-tax net profit was $4.47 million, achieving profitability by end of 2025, and our capital reserve is $270 million compared with $250 million at the end of 2024, mainly due to net cash inflow generated from annual operating activities. In terms of performance of the restaurants in Q4, we have served a total of 8.31 million customers, increase of 3.89% compared with the same period 2024. Companies average table turnover rate was 4 turns per day, increase of 0.01 turns compared with the same period of last year. Our average customer spending was $25.4, an increase of $0.04 compared with the same period last year, mainly because we continued to optimize the dish structure and the marketing measures, providing consumers with more differentiated choices. Average daily revenue per restaurant was $18,800, slight increase from the same period last year.

Speaker 2

We can see that East Asia performance is the most outstanding. It has increased about 0.3 turns compared to the same period of last year, reaching 5.1 turns. This is many thanks to the operating efficiency in Japan and South Korea markets, as well as the incremental contribution of newly opened stores. The average customer spending remaining at $28.5. North America, roughly the same as last year at 4.1 turns per day. In terms of average daily revenue per restaurant is $24,100 the same period, roughly the same as same period of last year. Average customer spending in North American market was $41.4, a rebound from $41 in the same period. Net increase of 2 Haidilao restaurants in North America in this quarter supported the revenue growth.

Speaker 2

Other regions, the table turnover rate in the fourth quarter were 3.9 turns per day, affected by ramping up period of newly opened restaurants during the same period. Average daily revenue per restaurant is $24,300, a slight adjustment from $26,100. Average customer spending, $40. Southeast Asia total of 5.3 million customers. In terms of the average customer spending, $19.3, slightly the same as last year, maintaining stable operation overall. In the fourth quarter, same period revenue was $195.4 million, an increase of 2.3% for the same store growth, achieving positive growth for Southeast Asia, we can see 12.8% year-on-year growth. For other regions, they are at 1%, 0.2%, 0.5% year-on-year for North America, Southeast Asia. For regional same-store performance is pretty much consistent with the overall trend, and I'm not going to go into further details. This concludes our presentation.

Operator

We now go into the QA session. Let's wait for the first question to come through. The first question comes from Zhong Ye Zhong from Zheshang Securities. Ms. Yang and Ms. Chu, this is Zhong Ye Zhong from Zheshang Securities. I have 2 questions. The first one is on store opening. May I please ask for the next 3 years, what is your store opening plan? Looking at the different regions, what is the approximate quantity? Given that there are certain global geopolitical changes, will this affect your current store opening plans? My second question is on the brand equity. What indicators do you use to judge the strength of your brand in terms of Haidilao brand in various countries? What is the strength for the countries that you are not doing so well in, and how would you further strengthen your brand equity in those countries? Thank you.

Speaker 3

Ms. Zhong, I will answer your first question in terms of store opening. For store opening, we continue to focus on bottom to top, and we are not going to have a specific target. In terms of our selection of the stores and in terms of the business district maturity preparation for the local team, those are more important. At present, most of these plans, they will be opened up in 2026. In terms of regions, East Asia is where we have the most confidence. We can see that single store model in Japan and South Korea have been very fine-tuned. We have also noticed that North America achieved a net increase in the fourth quarter. For Southeast Asia, we have a large base, and the focus is on optimizing the existing stock and improving quality of single stores.

Speaker 2

Middle East, Europe, Australia, we will be following and watching the market closely. You also talked about the geopolitical frictions and the war going on at the moment. For our Middle East deployment, of course, for the short term, that will come as a headwind. In terms of geopolitics, our approach is that we will not be making unifying decisions on contractions or accelerations, but it is really the country managers to make their judgment call because they are the ones who know the best about the local situation. Again, it is still bottom to top, and we will maintain very prudent. In terms of your second question, how do we evaluate our brand power? I will have Ms. Yang to answer this question. You can see that these would be reflected in our internal indicators, and we mainly look at the following areas.

Speaker 1

For instance, number 1 is the quality of natural growth of members. The customer registered voluntarily and repurchase without relying on promotions or discounts. Second, steady growth of table turnover rate in peak seasons, which reflects the customer's willingness to visit. Certainly continues the increase in the proportion of local customers. If a market mainly relies on the Chinese customers, then the brand barrier is fragile. Number 4 is the spread of word-of-mouth. We continually follow the natural discussions, volume, and the emotional tendency on local social media in each market. By market, in the mature markets such as South Korea and Southeast Asia, the brand awareness is high and the local customer base is solid. Japan is growing rapidly with remarkable progress in the past year.

Speaker 1

In addition, in some markets where we have entered a short time and the brand awareness is still in the early stage and Asian customers are still the main support. For markets with a relatively weaker brand power, our strategy has several levels. First, localized products and services to make local consumers feel that Haidilao's dishes are made for them. Second is scenario-based marketing strategies such as star co-branding and IP authorization have a higher leverage effect in the market with a weak brand awareness. Number three, be patient. We will not easily abandon a market because of a poor short-term data, but we will carefully evaluate which stores need adjustment based on performance. Thank you. Thank you, Ms. Yang, and thank you, Ms. Chu. Thank you for your question. The next question comes from CITIC Securities. Wei Zhao, please go ahead. Thank you.

Speaker 4

I have two questions for the management team. Number one is with respect to the Pomegranate Plan. Ms. Yang has mentioned this in detail. Could you please share with us about some of the single store models and the profit levels of the representative brands in this area? What are the subsequent development plans? My second question is about 2026 to 2027. How do you look at this in terms of customer experience and employee benefits? How do you look at this, and how will this be reflected in operating indicators such as expense ratio? Okay. Thank you, Mr. Wei, for your question. The first question, we'll have Ms. Yang to answer your question. Thank you, Mr. Wei. The Pomegranate Plan has achieved some specific results this year.

Speaker 1

Sparkle BBQ, Canada's Hi Ball Spicy Hot Pot, and the Japanese Izakaya are all progressing as planned, and some of them have already achieved single-store profitability. This is a very important signal for us, proving that it is feasible to build a second brand overseas. For single-store models, there are great differences among different brands and markets. At the moment, it's difficult to give a unified figure because we're now basically are literally crossing the river by touching the stones. It is not yet the time for large-scale replication. For we consider there are mainly three factors whether a brand is worth promoting. First, whether a single store can make a profit without headquarter subsidies. Second, whether the model can be replicated to open a second store in the same market. Thirdly, whether the local team has the ability to operate independently.

Speaker 1

Only when all three conditions are met will we consider accelerating the expansion. The other business revenues increased by 61.4% year-on-year in 2025, with the substantive contributions starting to emerge behind this growth. In the follow-up, we will adhere to a proven pace. First, to polish the successful projects and build the middle platform to support capacity and gradually improve the replication efficiency. At this stage, we still focus on independent research and incubation selection. No clear acquisition plans at the moment. Thank you, Ms. Yang. Thank you for your question, and let's wait for the next question. I'll take your second question. 2025, this is a year of our active investment, concentrated in the first half of the year.

Speaker 2

Operating profit margin hit a bottom of 1.9% in the second quarter, but rebounded to 5.9% and 5.7% in third and fourth quarters of the second half of the year, showing a clear recovery trend. Entering into 2026, our investment strategy has shifted from increasing to optimizing. The established employee benefits standards and customer service quality will not be reduced. We will continue to pay attention to any unreasonable aspects in dish and the pricing. However, the strategy running in period has passed. The COVID correction has been greatly improved, as the investment direction will be more precise and more attention will be paid to the input/output ratio reflected in the expense ratio. The ratio of the employee cost of revenues is expected to gradually thin out with the revenue growth.

Speaker 2

The continued efficiency improvement of supply chain will support the proportion of the raw materials as a fee of food delivery platforms will rise with the business growth. But the investment in brand building and consulting will be more focused. Overall speaking, the expense ratio structure in 2024 will be optimized to a certain extent compared with the 2025, but we will not set a specific profit margin target and then reverse deduce business behavior. We will not shrink investment in customers and employees for the sake of short-term good profit margins, but they will be more precise. Thank you. Thank you, management team. We now go into the next question. Mr. Lai Shengwei from CRCC. Can I please ask about raw material cost? We can see that price of beef and mutton has risen sharply recently, and there are external environmental disturbances.

Speaker 5

How do you look at the future growth of profit margin trends? How will the company hedge against the pressure of rising raw material cost? My second question is about the different store-level operating profit margin across different regions. Which regions may perform relatively poorly in 2026, and what further improvement measures that the management might take? Thank you, Mr. Lai, for your question. So first question, on raw material, this is our key focus. 2025 raw material accounted for 33.6% of revenue for the whole year, an increase of 0.5 percentage points compared with 2024, mainly due to the increase in food material costs driven by business expansion. For instance, we have introduced fresh cut food. Our response measures are mainly in threefold.

Speaker 2

First, centralized procurement and hierarchical supplier management to continue to strengthen the bargaining power with global suppliers. Some of the scale effect has already been partially reflected in 2025. Secondly, continuously to improve the production capacity of our central kitchens, reduce the dependence on external processing. Number three, menu structure optimization. We have established an evaluation system of click-through rate, coverage rate, gross profit margin, and continuously iterate the items with a low gross profit contribution to avoid inefficient SKUs occupying procurement resources. Overall, we expect the ratio of raw materials to revenue will remain basically stable in 2026. Your second question, in terms of store level profit margin by region separately. We do not disclose those, but we can give you some directional judgment. East Asia is the region with the healthiest single store model at present, with a table turnover rate of 5.1 times.

Speaker 2

In Q4, average revenue of $20,800 per single store. Profit contribution at the restaurant level has improved significantly. North America remains above $24,000 with a high absolute value, but the rent and labor costs are correspondingly higher. Southeast Asia has a large base of stores with great individual differences. Some mature stores perform very well, and a few individual stores are still in the adjustment stage. If we look at the future improvement potential, the table turnover rate of some stores in Southeast Asia has not reached the expected level in 2026. We will focus on promoting the operational improvement of these stores, including deepening of product localization and operating of the service scenarios. The newly opened stores in North America need time to ramp up their performance, and we have expectations and patience for this.

Speaker 6

The improvement direction of each region in 2026 is clear and will not change our long-term judgment call on any of the regions due to short-term fluctuation. Thank you. That is very clear. Next question, we have Ms. Li Jenny from Fangyuan Securities. Thank you for this opportunity. I have three questions here to ask the management team. The first one is short-term, we can see that right now, Sino-Japanese relations are being affected, and so I do not know whether this would affect your table turnover rate performance. Second, about average customer spending. We can see that 2025 average customer spending trending downwards has helped with the increase in the customer traffic. In 2026, what about your pricing? Would you continue to reduce your price? In terms of the mid and long term, how do you balance this short-term profit concessions and as well as profit margin balance?

Speaker 1

How do you strike a balance between those two? My next question is on the stores, because in 2025, you have closed certain stores, underperforming stores. Right now, what is the proportion of the current store network that are still in loss or have a low operating profit margin? Going forward, how would the company evaluate those companies when you consider whether those stores should be closed or not? What are the key indicators? Thank you. Thank you, Ms. Li, for your question. Your first question. The performance of the Japanese region in terms of what we can see right now, our operation has not been affected and our table turnover rate is maintaining stable in terms of proportions of local customers continue to rise. Consumption scenarios are also relatively rich. Impact of short-term external fluctuations on the overall operation is limited.

Speaker 1

This is the result of our persistent localization operation and in-depth cultivation of local customers. We have not yet been impacted, but we will continue to follow up on the external environment closely. In terms of the adjustments or reduction in average customer spending in 2025, this is not simply about a price reduction. This is about making customers feel better in terms of cost performance, such as pricing rationality, portion size, plating, and service experience. Some of those are our active adjustments and some of these are superimposed with structural changes. On the other hand, such as the number of stores in different countries, increase in local customers, changes in average number of people per table, and so on.

Speaker 1

Our direction in 2026 remains to ensure Haidilao's position as a mid to high-end restaurant, while subordinating to the improvement of customer perceived value of healthier and fresher dishes, better new product launch experience, and more dimensional consumption choices. In the mid and long term, profit concession and profit margins are not an opposing relationship. The customer flow growth and customer stickiness brought by profit concessions are the foundation for the long-term improvement of profit margin. For every 0.1 increase in the table turnover rate, the positive impact on the store level profit margin is quite considerable. The profit concessions and the probabilities form a positive cycle with a time lag. In 2025, we have closed down 9 shops, and 3 of those have actually changed to a second brand. For us, it is not giving up on those companies.

Speaker 1

Out of these 126 companies that we are running, overall speaking, overall quality is improving. We are not really able to disclose to you about the specific number of the ones that are not doing so well or underperforming stores, but I can give you some guidance. When we look at a store, whether any adjustment needs to be made, it is mainly 3 aspects. Number 1 is to see whether there is any visible improvement pathways. Second, the trend of the table turnover rate, not only just at a single time point, but also in the past 6 to 12 months.

Speaker 1

For instance, a store with a continuously declining table turn rate, even if it is not in loss at the current stage, we will also intervene. In terms of the ones that we are seeing a positive turnaround, we will encourage the local managers and the division head to further improve. Number 3, we look at whether the problems are management related, which we will change and update the management. If it is about the market related, then we will review our overall market strategy and make adjustment accordingly. That is my answer. Thank you. We also hope that the company can achieve better results in the future. Thank you for your answers. Thank you. My first question is about your strategy on focusing on both customers and employees. We can see that in Q4, the table turnover rate has improved.

Speaker 7

If I look at this strategy itself, in terms of the strategy itself, how will this drive the table turnover rate? Secondly, how do you look at the customer satisfaction? Because in 2026, in terms of this strategy, how would you continue on with the customer satisfaction strategy? My next question is still asking about the Middle East impact on your business. For the Middle East, of course, that market will be affected. For European, how do you look at the European market expansion and deployment? Those are my 2 questions. Thank you, Hildy, for your question. The first one, with respect to focusing on both customers and employees, and giving profit concessions to customers and our employees. We not only look at the numbers, but also customer behavior. Last year, our overseas members has exceeded 8.5 million with continuous natural growth.

Speaker 2

The second, overall overseas table turnover rate has been rising continuously. Customers' willingness to visit actively is increasing, whether it is a repeat purchase or new customers, they are both increasing. The number 3 same-store sales growth rate has maintained positive growth throughout the year, reaching 2.2% in the fourth quarter. Among them, the same-store growth in East Asia was at 12.8%, indicating that our store have closer connections with the surrounding customers and our overall grasp of the business district customer group is improving. In terms of the local customers, we have seen that there is an increase in the number and the proportion of customers who place orders in local languages. For instance, in South Korean market, the proportion of bills placed in Korea exceeds 90%, which is the most direct signal of brand localization, and the performance of the repurchase rate varies across the regions.

Speaker 2

In the regions with a strong growth momentum, both customer acquisition and the repurchase performance are improving simultaneously. In relatively mature regions, the contribution of our regular customers is more prominent. We have not disclosed the specific figures of the repeat purchase, but the repeat behavior of members is a core indicator that our system continuously tracks. For 2026, the customer base construction brought by profit concession strategy will continue to take effect. This we have believed last year, this is a long-term investment and not just simply a short-term move. For your next question on Middle East and Europe. Yes, indeed. Geopolitics is indeed an unavoidable external variable for our overseas restaurant operation. We have a business and deployment in Middle East and Europe. We have a true source in the Middle East at the moment.

Speaker 2

For the short term, in terms of some of the projects that we are working on, it has been affected negatively, but we also have authorized to the country manager. They are the ones who know the market very well and to ask them to determine the pace and the timing. In Europe, we also focus on different stores, and we are constantly visiting those stores. But whether we will design the contract or not is depending on the location, such as customer footfalls and looking at the country's macro economy as well as the number of the population, et cetera. There are quite a lot that we need to consider. It is all about the bottom to up, and we are very prudent, but we are very positive as well for the market. Thank you, Ms. Chu, for your answer. Thank you, Ms. Chu.

Speaker 8

We also hope that next year we will see better results from your strategies. Next question comes from Zeng Jin from Huahai Securities. How do you look at the customer satisfaction? At the moment, do you think that the table turnover rate is already quite satisfied? Can you please also share with us in terms of the same-store improvement for the future, how to consider the price dimension? Thank you, Ms. Zeng. Stability of table turnover rate is a result of our continuous investment in the past 2 years. There are several directions we can continue to tap into the potential. Number 1 is optimization of the time period structure. To present our potential for improving table turnover is mainly in off-peak hours, especially the late-night snack scenarios. We have carried out a nightclub style scene transformation in some pilot stores.

Speaker 2

Going forward, we will be looking at some other different investment methods or different types of sales to help us better promote the transformation. The second is on the customer stickiness. We already have done quite well, but we do believe that there is a lot of improvement. For instance, using digital tools to reactivate the members and to be able to reach them precisely. We will want to make the customers change from knowing Haidilao to being used to coming to Haidilao. Number three is the enrichment of scenarios. Not only are the birthdays, the parent-child activities, the dinners, the late-night snacks, each have an independent customer group. This is the most direct way to improve the table turnover rate based on different customers at different time periods.

Speaker 2

In terms of the pricing, we are not going to actively raise the average customer spending, nor are we going to offer disorderly profit concessions in pursuit of customer flow. I think that the headquarters does not have a one-size-fits-all approach, and will continue to monitor the markets, which is more sustainable than simply a price adjustment. Thank you, Ms. Zeng. Thank you, Ms. Chu. That is all very clear, and I also wish the company a bright future going forward. Thank you, Ms. Zeng. Thank you, analysts and investors online. We will see you next time. That concludes our conference result announcement today, and thank you everyone for joining us on the call. Thank you. Goodbye.

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