Core Insights - The recent National Day and Mid-Autumn Festival holiday saw a significant increase in restaurant sales and customer traffic, surpassing last year's figures, with traditional dishes and hot pot being popular choices among consumers [1][2][3] Group 1: Restaurant Performance - Quanjude Group reported long queues at multiple locations, with the highest number of waiting tickets exceeding 1,000 at the Ping'an Men store, and several stores achieving record-high revenues [2] - The overall revenue of Huajia Yiyuan increased by 7.4% year-on-year, with customer traffic up by 7.59%, highlighting the strong demand for family gatherings and weddings during the holiday [3] - Hai Di Lao experienced a surge in customer traffic, with one store in Shijiazhuang hosting a wedding banquet for nearly 300 guests, showcasing a shift in wedding venues to more casual dining settings [3] Group 2: Future Reservations - Several restaurants have already begun accepting reservations for the 2026 New Year's Eve dinner, indicating a proactive approach to catering to consumer demand [4] - The design of New Year's Eve dinner packages is focusing on value for money, with a projected 10% decrease in prices compared to previous years, catering to smaller family gatherings [4] Group 3: Hot Pot Popularity - The cooler weather during the holiday led to an increase in hot pot consumption, with Hai Di Lao reporting over 1.8 million customers served during the holiday, a 5% increase compared to last year [5][6] - The average daily consumption of fresh beef at Hai Di Lao exceeded 35 tons during the first seven days of the holiday, indicating strong demand for fresh ingredients [6] Group 4: Market Expansion - Hai Di Lao has expanded its presence in lower-tier cities, opening over 20 new stores in various regions, including Tibet and other smaller markets [7] - The overall customer traffic in cities like Harbin and Zhengzhou has shown significant growth, with some stores reporting revenue increases of over 200% compared to pre-holiday levels [7]

Company Overview - The company is currently focusing on optimizing customer and employee experiences, which may lead to short-term profit pressure, but it is expected that the peak summer season and operational improvements will drive recovery [1] - As of July, the table turnover rate has turned positive year-on-year, suggesting a need to continue monitoring the trend [1] Comments - The focus on enhancing customer and employee experiences has resulted in short-term profit margin pressure due to observed declines in internal operational management quality [1] - The company is implementing the "Different Haidilao" concept by creating diverse store environments, launching differentiated products, and restoring the supply of certain items, which may increase material costs [1] - Increased brand marketing investments, including celebrity endorsements and IP collaborations, aim to attract consumers [1] - Employee welfare investments have been increased since Q2 to enhance employee satisfaction and service quality, which may negatively impact short-term profit margins due to rising employee costs [1] Performance Insights - In the first half of 2025, the brand's table turnover rate is estimated to have declined by a high single-digit percentage year-on-year due to last year's high base, consumer environment pressures, and operational management quality issues [2] - However, the table turnover rate has shown positive growth since July, driven by the summer peak season and various adjustments [2] - The company has a strong organizational iteration capability and has historically managed to reverse difficult situations, indicating a positive long-term outlook [2] New Brand and Franchise Developments - The company is focusing on the "Pomegranate Plan" and franchise progress, with expectations of approximately 70 new "Yanqing" barbecue stores by the end of June and around 100 by year-end [2] - The company plans to enhance service quality at existing stores while moderating the pace of new openings [2] - The franchise business is steadily advancing, with an estimated 25 direct stores transitioning to franchises in the first half of 2025 and approximately 41 franchise stores by the end of June [2] Profit Forecast and Valuation - Due to the short-term profit pressure from optimizing customer and employee experiences, the net profit estimates for 2025 and 2026 have been reduced by 17% and 12% to 4.15 billion and 4.81 billion respectively [2] - The current stock price corresponds to 17x and 15x P/E for 2025 and 2026 [2] - The target price has been lowered by 18% to 16 HKD, reflecting a potential upside of 15% based on 20x and 17x P/E for 2025 and 2026 [2]