(Yicai Global) May 18 -- Haidilao International Holding Ltd., which runs one of China's most popular restaurant chains, has applied to go public in Hong Kong in a bid to fund the expansion of its hotpot empire.
Hailing from Sichuan, a Chinese province renowned for its spicy food, Haidilao earned more than any other Chinese restaurant worldwide in 2017, the company said in its filing, citing a report by market researcher Frost & Sullivan. It had net profit of almost CNY1.2 billion (USD188 million) last year, marking a 70.5 percent compound annual profit growth over the past three years, on revenue of CNY10.6 billion.
Set up in 1994 by former manual worker Zhang Yong, Haidilao has grown into one of the country's biggest restaurant operators, with a total 320 outlets, of which 296 are in the mainland. The chain enjoys high brand recognition in China and is much loved for its spicy hotpots and astounding service.
The IPO's size has yet to be divulged, but the Jianyang-based company is expected to garner between USD600 million and USD700 million.
The funds will help finance expansion as the company plans to open between 180 and 220 eateries at home and abroad this year. Targeted markets include existing overseas locations such as Singapore, South Korea, Japan and the US, as well as new ones with large Chinese communities such as the UK, Canada and Australia. It aims to tailor menus and soup bases to better meet local tastes.
Haidilao also aims to tap growth in China. Frost & Sullivan believes the domestic market will grow at a compound rate of 10.2 percent between 2017 and 2022, with mid- to high-end restaurants growing the fastest and collecting a total CNY211 billion (USD33 billion) in revenue in 2022.
The company has been improving on-floor efficiency and has taken table turnover to five a day last year from four in 2015. It opened 98 new restaurants in 2017 and they quickly found their footing, reaching a daily turnover rate of 4.6.
Editor: James Boynton