Super Hi International NASDAQ: HDL reported higher second-quarter revenue and operating profit as customer traffic, table turnover and delivery-related sales increased, though foreign-exchange movements contributed to a quarterly net loss.
CEO and Executive Director Yu Li said the company’s earlier investments in employees and customers began translating into improved operating efficiency during the quarter. Haidilao restaurants served 8.1 million customer visits, up 5.2% from a year earlier, while overall table turnover rose to 3.9 turns per day. Same-store turnover reached 4.0 turns per day, with both measures improving by 0.1 turn year over year.
Total second-quarter revenue rose 10% year over year to $219 million. Operating profit increased 118.9% to $8.1 million, and operating margin expanded to 3.7% from 1.9% in the prior-year period.
Delivery and Other Businesses Expand
Haidilao restaurant operating revenue was $198 million, an increase of 4.6% from a year earlier, according to CFO and Board Secretary Cong Qu. The company added a net three Haidilao restaurants compared with the same period last year.
Non-restaurant revenue sources grew more rapidly. Delivery service revenue more than doubled, rising 105% year over year to $7.56 million. Other business revenue increased 119.7% to $13.39 million, aided by sales of Haidilao-branded food and seasonings, central-kitchen sales and development of restaurant concepts under the company’s Pomegranate Plan.
Combined delivery and other business revenue totaled about $21 million, up 114.3% year over year. Those businesses accounted for nearly 9.6% of total revenue, compared with about 5% in the prior-year period.
Li said the company has adjusted menus to reflect local preferences, including introducing flavors such as lemongrass, satay and basil in Southeast Asia. The company also expanded product combinations across soup bases, snacks and beverages to support cross-selling and improve customer trial.
As of the end of June, Super Hi had 9.246 million overseas members. Management said it is using localized marketing activities, membership benefits and customer communications to improve retention, repeat visits and referrals.
Costs, Cash Flow and Foreign Exchange
Qu said operating efficiency improved as employee and several operating-expense ratios declined. Employee costs totaled $74.51 million, with the employee-cost-to-revenue ratio declining by approximately one percentage point from the prior-year period. Rent and related expenses accounted for approximately 2.6% of revenue, down about 0.4 percentage point, while utility costs and depreciation and amortization ratios also declined year over year.
Raw material and consumable costs were $74 million, and the gross margin was 65.9%, down slightly from a year earlier. Qu said restaurant-level gross margin remained stable, while the growth of central kitchen and supply-chain businesses affected the overall mix.
Despite the improvement in operating profit, Super Hi reported an after-tax net loss of $1.93 million, compared with net income of $16.39 million a year earlier. The change was largely attributed to foreign exchange. The company recorded a $4.34 million foreign-exchange loss in the second quarter, compared with a $16.33 million gain in the prior-year quarter.
Qu characterized the currency impact as a non-operating, non-cash translation effect and said management remains focused on operating profit measures. The company reported operating cash inflow of $28 million, up 6.2% year over year, and held approximately $266 million in cash as of June 30.
Regional Results Showed Divergence
Southeast Asia restaurant revenue rose 3.9% to $98.66 million, supported by customer traffic, while average spending per customer was flat at $18.60. East Asia revenue increased 9.9% to $33.7 million, and turnover improved to 4.9 turns per day from 4.8 turns. Reported average spending in East Asia declined to $27.40 from $29.40, although Qu said spending increased on a constant-currency basis.
North America restaurant revenue increased 6.6% to approximately $40 million, with the store count rising to 22 from 20. Average customer spending increased to $41 from $39.10, but turnover was 4.0 turns per day and management said the higher check did not fully offset lower traffic.
In other regions, restaurant revenue declined 1.8% to $25.1 million and turnover fell by 0.2 turn to 3.7 turns per day. Qu cited continuing geopolitical volatility in the Middle East, though he said the impact appeared to be gradually diminishing.
Same-store sales across 111 restaurants were about $179 million, down 0.8%. Same-store sales grew in Southeast Asia and East Asia but declined in North America and other regions.
Expansion and New Concepts
The company opened one Haidilao restaurant in South Korea and one in Vietnam during the second quarter, bringing its overseas Haidilao restaurant count to 129. It opened three restaurants in the first half and expects double-digit new store openings for the full year. Management said signed but unopened stores remained in the double digits.
Qu said the company expects double-digit openings in North America, East Asia and Southeast Asia during the second half. Stores in North America and the United Kingdom are in construction and are expected to open successively over the next two years. Management said there is no definite plan to enter new countries.
The Pomegranate Plan had operated a cumulative 12 brands and 22 second-brand restaurants overseas as of the quarter’s end. Li highlighted the Hi Bowl Malatang format, which has locations in Canada and Japan, and an izakaya concept in Japan that is preparing a second location in Osaka.
Management said it will continue to test new concepts with one or two stores before committing significant replication resources. Qu said the company is targeting a standard new-store payback period of roughly three to four years, with faster returns in Southeast Asia and slower returns in Europe and North America.
About Super Hi International (NASDAQ:HDL)
Super Hi International Holding Ltd., an investment holding company, operates Haidilao branded Chinese cuisine restaurants in Asia, North America, and internationally. The company is involved in the food delivery business. It also engages in sale of hot pot condiment products and food ingredients. The company was incorporated in 2022 and is based in Singapore.
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