- Haidilao said it is suspending or shutting 300 stores due to low customer traffic and unsatisfying results.
- The chain's founder, Zhang Yong, has seen his net worth plunge almost 40% since 2019 to about $8.8 billion now.
- Haidilao's shares in Hong Kong surged as much as 11% today on news of the shop closures. But, they are still down 66% year-to-date.
Chinese hot pot giant Haidilao said it is suspending or shutting 300 stores by the end of this year, reversing course from an aggressive expansion plan amid the pandemic.
In a filing to the Hong Kong Stock Exchange on Friday, the chain said the move is due to "relatively low customer traffic and unsatisfying results of operations." Suspended restaurants will be closed for up to two years, Haidilao added.
The company did not specify in the announcement which locations it would be shutting down. Haidilao did not immediately respond to Insider's request for comment for this story.
It's been a bumpy ride for Chinese-born Haidilao founder Zhang Yong, who once earned $14 a month in a factory job but rose to become the wealthiest restaurateur in the country in recent years, according to Forbes.
His hot pot restaurant chain is known for top-notch customer service and experiences, such as providing manicures and shoe shine services to customers who are sometimes stuck in hours-long queues. The brand was founded in 1994 and has branches in countries including Singapore, Japan, and Canada.
Zhang, who is now a Singapore citizen, was worth almost $14 billion in 2019, but his net worth has fallen about 37% to about $8.8 billion on the back of falling share prices, according to Forbes.
After closing 300 stores, Haidilao would still be China's biggest hot pot chain, with 1,300 stores, per China Communist Party's Global Times. This comes after the company doubled outlet numbers last year, as it saw opportunities in the crisis.
"This is a comfortable pace for us, and we don't see any issues," Haidilao's chief strategy officer, Zhou Zhaocheng, told Reuters last November.
However, cautious diners, social distancing restrictions, and the COVID-19 resurgence in China have hit the restaurant's communal dining experience. The chain had issued a first-half profit warning in July this year, Bloomberg reported.
Haidilao's shares in Hong Kong surged as much as 11% today on news of the shop closures. But, they are still down 66% year-to-date.