Former Haidilao CEO Yang Lijuan, known as the 'Fire Captain', has once again played a role.
According to the third quarter 2024 performance released by TechSea International on the evening of November 25th, the company's revenue was $198.6 million, a year-on-year increase of 14.6%; The net profit attributable to the parent company was $37.724 million, with a loss of $1.39 million in the same period last year, achieving a turnaround from loss to profit.
On July 1st this year, Yang Lijuan took office as the new Executive Director and CEO of Techsea International, mainly responsible for coordinating the management and strategic development of Techsea International. This is also her first quarterly financial report during her tenure.
Te Hai International is the overseas business of Hai Di Lao. It went public on the Hong Kong stock market in December 2022 and was listed on the US stock market in May 2024. As of September 30, 2024, this company has 121 self operated Haidilao restaurants in 13 countries across four continents. According to data from the countries covered by self operated restaurants, Haidilao is the largest Chinese restaurant brand in the international market.
However, the profitability level of Haidilao's massive overseas business is not yet high, and it has been in a loss making situation in the past few years. According to financial report data, from 2019 to 2022, TechSea International's net losses were 33 million US dollars, 54 million US dollars, 151 million US dollars, and 41 million US dollars, respectively. Achieve profitability in 2023 with a net profit of $25.3 million. But in the first half of 2024, it turned into a net loss of 4.6 million US dollars.
Yang Lijuan once led the overseas expansion of the Hai Di Lao brand, successfully laying out in Singapore and the United States in 2012 and 2013 respectively, laying the foundation for the operation of Te Hai International in the international market.
Prior to this, Yang Lijuan, who first joined Haidilao as a waiter, took over from founder Zhang Yong in March 2022 and became the CEO of Haidilao. Under a series of reform measures involving internal management, assessment, and improvement of business conditions led by Yang Lijuan, such as the "Woodpecker Plan" and the "Hardbone Plan", Haidilao's performance in 2023 has recovered and far exceeded that before the epidemic, and will continue its growth momentum in the first half of 2024.
It is not difficult to see that appointing Yang Lijuan as the head of international business may also be due to her ability to "put out fires".
In the third quarter of this year, the total number of international customer traffic in TeHai exceeded 7.4 million, an increase of 4.2% compared to the same period last year. The same store sales growth rate was 5.6%, and it has also achieved sustained growth in the operation of existing stores. The overall average turnover rate reached 3.8 times per day, an increase from the 3.7 times per day in the same period of 2023.
Similar to the idea of temporarily suspending the opening of new stores and closing underperforming stores during Haidilao's reform in China, Haidilao has also maintained a cautious pace in opening stores overseas. The financial report stated that there were no new store openings in the third quarter of 2024, and a restaurant located in Southeast Asia was temporarily closed. It is planned to reopen as a second brand restaurant in the near future.
Among the 121 overseas stores as of September 30th this year, 73 are located in Southeast Asia, 18 in East Asia, 20 in North America, and 10 in other regions.
According to the third quarter earnings conference call, TechSea International opened 9 new stores throughout the year, with the latest one being the first store in Cambodia that opened in October. During the year, the company also closed some underperforming stores.
During the conference call, it was stated that the company would focus its resources on improving its stores. Regarding the plan to open a store in 2025, more than 10 projects have been reserved and are currently being renovated. There are still some existing market sinking encryption projects in the process of site selection and contract signing. From the distribution of regions, new projects are being promoted in North America, Southeast Asia, East Asia, the Middle East, and Europe.
But its management also emphasized, "We don't have a specific target for the number of stores to avoid deviating from the contract
From the perspective of different regional markets, East Asia had the most outstanding performance in the third quarter, with a turnover rate of 4.3 times per day, which is higher than other overseas markets and the overall level. Compared to the situation of Haidilao in the Chinese market, its turnover rate in the first half of the year was 4.2 times per day.
Regarding the growth of revenue in East Asia, the management of TeHai International stated in the performance exchange that the main reason is to adjust the prices of dishes, allowing some dishes to return to the price range, thereby achieving an increase in turnover rate and revenue.
Yang Lijuan has also applied Haidilao's management experience in the Chinese market to its overseas business, such as continuing the strategy of "linking interests and locking in management", while emphasizing the use of "customer satisfaction" and "restaurant operating efficiency" as key performance indicators to motivate personnel.
For Yang Lijuan, who excels in improving business performance through internal management and reform, overseas management may also need to be achieved in a more refined way.
At the third quarter performance exchange meeting, Yang Lijuan stated, "We are very clear internally that the main responsibility for management is the store manager, making it clearer and more accurate for the store manager to focus on customers, employees, business ideas, and actions." She further explained that Techsea International also maintains a low base salary and high dividend structure, and has increased the dividend ratio for national managers and excellent store managers, especially A-level store managers, in the third quarter; In addition, the dual management policy has made the incentives for excellent managers more significant.
When the responsible party really takes action, both the on-site store and operational efficiency can be improved, so all indicators in the third quarter have been improved year-on-year, "she said.
The "Pomegranate Plan" implemented by Haidilao in the Chinese market to incubate new brands and promote innovation in catering services has also been adopted in overseas markets.
Yang Lijuan mentioned at the performance meeting that TeHai International encourages outstanding national managers to participate in the Pomegranate Plan and open barbecue, fast food, or other types of hot pot restaurants. Some of the implemented projects include noodle shops and halal hotpot. As early as 2020, this company acquired the American noodle shop Hao Noodle. According to Yang Lijuan, American noodle shops have turned losses into profits after rectification, and halal hotpot is close to breakeven; But halal hotpot and noodle shops are continuously refining their products and single store models, and their products and services still need to be improved.