Super Hi International (HDL) Q2 2026: Operating Profit Margin Nearly Doubles on 10% Revenue Growth
Super Hi International’s strategic investments in employee development and operational efficiency drove a 118.9% increase in operating profit despite modest revenue growth. The company’s focus on localized menu innovation and diversified revenue streams, including delivery and secondary brands, is strengthening its international foothold. Expansion plans remain steady with a disciplined approach to store openings and brand incubation under the “Pomegranate Plan.”
Summary
- Operational Efficiency Gains: Employee cost ratio declined alongside improved table turnover, fueling substantial margin expansion.
- Revenue Diversification: Delivery and other businesses more than doubled revenue, enhancing business mix beyond core restaurant sales.
- Measured Expansion Strategy: New store openings continue steadily with focus on quality site selection and brand model validation.
Business Overview
Super Hi International operates the Haidilao brand of Chinese hot pot restaurants across international markets, generating revenue primarily from restaurant operations, delivery services, and related product sales. The company’s business model centers on delivering a high-quality dining experience while expanding through new store openings and incubating secondary brands under the “Pomegranate Plan.” Key segments include Haidilao restaurant operations, delivery business, and other businesses such as condiment products and secondary branded restaurants.
Performance Analysis
Super Hi International posted a 10% year-over-year revenue increase to $218.8 million in Q2 2026, driven by a 4.6% rise in Haidilao restaurant revenues and more than doubling of delivery and other business revenues. The company served 8.1 million guest visits, up 5.2% year-over-year, with a 0.1 increase in average table turnover rates both overall and at same-store locations, signaling improved operational throughput. Despite relatively modest revenue growth, operating profit surged 118.9% to $8.1 million, lifting the operating margin from 1.9% to 3.7% through enhanced labor efficiency and cost control.
Delivery revenue doubled to $7.6 million, reflecting strategic investments in product innovation and strengthened partnerships with local delivery platforms. Other business revenues, including sales of Haidilao-branded condiments and secondary brand restaurants, rose nearly 120%, contributing to a more diversified revenue base now accounting for nearly 9.6% of total revenue, up from 5% a year earlier. Cost of goods sold and staff costs increased in absolute terms but declined as a percentage of revenue, underscoring improved operating leverage. However, the company recorded a net loss of $1.9 million due to a $20 million negative swing in foreign exchange impacts compared to a gain in the prior year, highlighting currency volatility as a material non-operating risk.
- Regional Performance Divergence: Southeast Asia and East Asia markets showed revenue and turnover improvements, while North America and other regions faced challenges in customer traffic and geopolitical headwinds.
- Same-Store Sales Dynamics: Same-store sales were slightly down by 0.8% overall, with growth in Southeast Asia and East Asia offset by declines in North America and other regions.
- Cash Flow and Liquidity: Operating cash flow increased 6.2% to $28.2 million, supporting ongoing expansion and liquidity with $266 million in cash reserves.
Overall, the quarter reflects a business transitioning from investment to operational efficiency, with revenue diversification and disciplined expansion underpinning sustainable growth despite external currency pressures.
Executive Commentary
"Through our sustained commitment to the 'Dual Focus on Employees and Customers' strategy, the initiatives and investments we have made over the past year in employee development, customer experience, and restaurant management have further strengthened our operational foundation and are gradually translating into greater operational resilience and efficiency."
Li Yu, CEO and Executive Director
"Although operating profit improved significantly, non-operating items in this quarter were mainly affected by exchange rate fluctuations. The same period of last year, there was a net foreign exchange gain of $16.33 million. For this quarter, there was a loss of $4.34 million, a negative swing of more than $20 million year-over-year."
Qu Song, CFO and Board Secretary
Strategic Positioning
1. Operational Excellence Through Localized Management and Digital Tools
Super Hi International empowers regional teams to adapt operating strategies to local market conditions while strengthening headquarters’ capabilities in digital systems and data analytics. This dual approach enhances precision in menu offerings, marketing, and labor scheduling, driving improved table turnover and customer traffic. The company’s investment in digital transformation supports better resource allocation and operational reviews, positioning it to sustain efficiency gains.
2. Revenue Diversification via Delivery and Secondary Brands
The company significantly expanded its delivery business, leveraging product innovation and local delivery partnerships to more than double revenue in this segment. Concurrently, the “Pomegranate Plan” incubates multiple secondary brands and food products, broadening the company’s revenue streams and reducing reliance on core restaurant operations. This diversification is critical for long-term growth and resilience in varying market conditions.
3. Disciplined Store Expansion and Brand Incubation
Super Hi opened two new Haidilao restaurants this quarter and plans double-digit openings for the full year, focusing on quality site selection and market-specific strategies. The company maintains a cautious approach to entering new countries, prioritizing replicable store models and proven brand concepts before scaling. This measured expansion mitigates risk while supporting sustainable growth.
4. Customer-Centric Menu Innovation and Membership Growth
Menu optimization incorporates local tastes and consumption trends, introducing regional flavors and product combinations to enhance customer appeal. The company’s membership base reached over 9.2 million overseas members, with tiered membership programs and localized marketing driving customer retention and repeat visits. This focus on customer satisfaction underpins brand loyalty and revenue stability.
5. Currency Risk Management and Financial Discipline
Management acknowledges foreign exchange volatility as a significant non-operating risk, with losses impacting net profit despite operational improvements. The company adopts a cautious approach to currency hedging, avoiding speculative activities while monitoring exposures. Financial discipline also extends to controlling store-level investment and optimizing supply chain and procurement efficiencies.
Key Considerations
The quarter highlights Super Hi’s transition from investment-heavy growth to operational leverage realization within a complex international environment.
- Labor Efficiency Gains: Declining staff cost ratio reflects successful employee development and store management initiatives.
- Market-Specific Challenges: North America and other regions require focused efforts to diversify customer base and improve traffic amid external headwinds.
- Delivery and Secondary Brands Momentum: Rapid growth in these segments enhances revenue mix and reduces dependence on traditional dining.
- Exchange Rate Volatility: Significant forex losses underscore the need for prudent risk management in multinational operations.
- Store Payback Periods: New stores show improved ramp-up speed, with payback periods around three to four years, reflecting disciplined site selection and format design.
Risks
Foreign exchange fluctuations remain a material risk, as evidenced by the substantial negative swing in non-operating results this quarter. Geopolitical tensions and regional market volatility, particularly in North America and the Middle East, could further disrupt operations. Additionally, intensified competition in overseas markets and the challenge of replicating brand appeal across diverse cultures pose ongoing risks to growth and profitability.
Forward Outlook
For Q3 2026, Super Hi expects continued double-digit new store openings across North America, East Asia, and Southeast Asia, with several stores in the UK and North America under construction. Management does not plan uniform price increases but will adjust pricing autonomously by market based on customer acceptance and competitive environment. The company anticipates further operational leverage benefits as customer traffic sustains through the peak season.
Takeaways
Super Hi International’s Q2 results reveal a maturing international restaurant operator leveraging operational improvements and revenue diversification to enhance profitability despite challenging currency dynamics.
- Operational Leverage Realization: Improved labor efficiency and cost control translated prior investments into a near doubling of operating margin, signaling scalable growth potential.
- Strategic Revenue Mix Shift: Delivery and secondary brand businesses now represent a meaningful share of revenue, cushioning risks inherent in core restaurant operations.
- Expansion Discipline and Localization: The company balances growth with quality through localized management, rigorous site selection, and cautious brand replication, mitigating risks in diverse international markets.
Conclusion
Super Hi International’s second quarter performance underscores the effectiveness of its dual focus on employees and customers, driving operational efficiency and diversified growth. While foreign exchange headwinds weighed on net profit, the company’s strategic initiatives and measured expansion approach position it well for sustainable international growth.
Industry Read-Through
The company’s results highlight the growing importance of operational efficiency and revenue diversification in international restaurant chains, particularly amid currency volatility and geopolitical uncertainties. The expansion of delivery and secondary brand segments signals a broader industry trend toward omni-channel and multi-brand strategies to enhance resilience. Furthermore, Super Hi’s emphasis on localized management and digital transformation reflects a competitive imperative for global chains seeking to adapt to diverse consumer preferences and market conditions.