In the wave of globalization, Chinese dining brands are stepping onto the world stage at an unprecedented speed and scale. As the influence of Chinese culture continues to expand, more and more overseas consumers are developing a strong interest in traditional Chinese cuisine. From street food to exquisite dishes, Chinese dining culture attracts global attention with its unique charm.

There are three main factors for the global popularity of Chinese dining culture:

First, reviewing the time when South Korean and Japanese dining culture became popular worldwide coincides with a period when South Korea and Japan had significant international influence. In recent years, China's international influence has also been increasing year by year, and Chinese dining offers a richer variety of dishes and beverages to the world, attracting the favor of global diners.

Second, the overseas expansion of dining brands is an incremental choice in the context of fierce domestic competition. Domestic e-commerce has impacted offline outfits and other delayed consumption stores, leading to the replacement of offline stores by a few instant consumption businesses like dining, resulting in more and more dining outlets.

Third, the domestic dining brands have built a strong supply chain system through years of refinement in the domestic market, giving these dining brands greater competitiveness overseas and serving as a new round of capability validation for dining companies.

Chinese dining enterprises are vigorously expanding overseas, with Southeast Asia as the primary choice for international ventures.

Most dining and tea brands started their overseas expansion around 2018. After several years of development, they have already taken shape.

In terms of tea beverages, in 2018, Bawang Chaji established its overseas division and set up a joint venture in Malaysia. By 2024, the total number of Bawang Chaji stores in Malaysia has exceeded 130, with multiple stores also in Singapore. In 2018, Mixue Ice City opened its first overseas store in Vietnam. As of April 2024, Mixue Ice City has expanded to 11 countries overseas, with nearly 5,000 stores mainly concentrated in Southeast Asia, including Vietnam, Indonesia, Singapore, Malaysia, Thailand, and the Philippines. Among these, there are over 2,000 stores in Vietnam, about 1,500 in Indonesia, and more than 300 in Malaysia.

In terms of main meals, in 2017, Yang Guofu opened its first overseas franchise in Vancouver, Canada. By 2024, the number of Yang Guofu Spicy Hot Pot overseas stores has exceeded 100. Taier opened its first store in Singapore in 2021 and has now expanded to Canada, Malaysia, Singapore, Thailand, and the USA. HAIDILAO has deeply cultivated the Southeast Asian market, and by September 30, 2024, HAIDILAO has 121 stores overseas.

Southeast Asia, as the region with the highest concentration of overseas Chinese, has unique market advantages, becoming the natural first choice for Chinese restaurants going abroad. According to incomplete statistics, Southeast Asia ranks first with 32.7% in the outbound rate of Chinese dining businesses, followed by Europe and the USA.

According to a report by Mordor Intelligence, the market size of the Southeast Asian dining service industry is estimated to be 192.43 billion USD in 2024, and it is projected to reach 349.05 billion USD by 2029, with a compound annual growth rate of 12.65% during the period from 2024 to 2029.

Looking globally, as of June 30, 2024, McDonald's had 0.042 million stores worldwide. According to the WeChat public account "USA Dining Column" statistics from November, Subway has over 41,600 stores globally, and Pizza Hut has 0.018 million stores worldwide.

In comparison, domestic chain dining enterprises still have a significant gap in numbers, even when including domestic stores. Yang Guofu Spicy Hot Pot has over 7,000 locations in China, while only over a hundred overseas; HAIDILAO has 1,320 locations in China, but only 121 overseas. Therefore, with the continuous enhancement of China's comprehensive strength, Chinese dining enterprises can develop a market space globally that is comparable to that of China's market.

Among many dining enterprises going abroad, SUPER HI (09658, HDL.US), a subsidiary responsible for overseas operations under HAIDILAO, began its globalization journey in 2018. After overcoming initial challenges, it successfully achieved a significant breakthrough in performance by becoming profitable in the third quarter of 2024. Following the announcement of the results, SUPER HI's stock price has risen significantly, with an accumulated increase of nearly 70%.

It is worth mentioning that at the same time last year, SUPER HI had a loss of 1.4 million USD, but within just one year, it has turned around this loss. What actions did SUPER HI take during this year, and what insights can this provide to dining enterprises heading abroad?

Refined management led to a rise in both volume and price, turning profits in the third quarter.

In the third quarter of 2024, SUPER HI achieved revenue of 0.199 billion USD, a year-on-year growth of 14.6%; operating profit of 0.015 billion USD, a year-on-year increase of 52.0%; operating profit margin of 7.5%, up 1.8 percentage points year-on-year; net income attributable to the parent company was 37.72 million USD, turning around from losses year-on-year, with a net margin of 19.0%. The net inflow of operating cash was 40.7 million USD.

Thanks to the improvement in operational quality, SUPER HI's same-store average selling price (ASP) and table turnover both increased in the third quarter, driving growth in both revenue and profits. In terms of turnover rate, the overall average was 3.8 times/day in 2024 Q3, compared to 3.7 times/day in the same period last year; the turnover rates for Southeast Asia, East Asia, North America, and other regions were 3.6 times/day, 4.3 times/day, 3.9 times/day, and 3.8 times/day respectively. The overall customer unit price was 25.8 USD, an increase of 8.9% year-on-year, with Southeast Asia, East Asia, North America, and others at 20.4 USD, 29.2 USD, 43.5 USD, and 43 USD, increasing by 9.1%, 12.3%, 5.6%, and 10.8% year-on-year, respectively.

The third quarter is a traditional peak season, with the total customer traffic in restaurants for 24 Q3 at approximately 7.4 million people, a year-on-year growth of 4.2%. With increased traffic, delivery and other businesses also maintained growth, with delivery revenue of 2.6 million USD in Q3, a year-on-year increase of 8.3%, and other revenue of 5.1 million USD, a year-on-year growth of 21.4%.

In terms of store numbers, in 2024 Q3, SUPER HI did not open any new stores and temporarily closed one store located in Southeast Asia, planning to reopen it as a second brand restaurant in the future; the net increase of HAIDILAO stores was 6 over the first three quarters, bringing the total to 121 HAIDILAO stores by the end of September 2024.

Since 2018, SUPER HI has been opening stores globally. From Southeast Asia to North America and then to Europe, the speed of expansion has been quite rapid.

However, the rapid expansion did not bring good returns for SUPER HI, as it recorded losses for four consecutive years from 2019 to 2022. The losses during this period amounted to $33.019 million, $53.76 million, $0.15 billion, and $41.248 million, with a cumulative loss exceeding $0.2 billion over the four years.

The losses of SUPER HI are not difficult to understand. Firstly, there are cultural differences. Hot pot represents social dining in China, but abroad, especially in Europe and the USA, the hot pot dining method is both troublesome and unfamiliar to many people. Secondly, the operational costs are high. Rent, utilities, and labor costs are significantly higher abroad than in China, coupled with supply chain management pressures, resulting in years of losses.

In July this year, Yang Lijuan took over as CEO of SUPER HI. Her first action upon assuming office was to stop blind expansion and focus on improving the operational efficiency of existing stores. The business data from the third quarter confirmed the accuracy of this decision, as SUPER HI's table turnover rate and average spend per customer improved, with the turnover rate increasing from 3.7 times last year to 3.8 times this year, and the average spend rising from $23.7 last year to $25.8 this year. Behind these numbers are a series of refined management measures implemented by Yang Lijuan, such as supply chain optimization, cost control, and menu adjustments.

Moreover, Yang Lijuan launched a project called the "Pomegranate Project." The core of this plan is to incubate more dining brands, such as barbecue, halal hot pot, and fast food, in addition to the existing hot pot business. They also acquired an American noodle restaurant "Hao Noodle," which has achieved profitability after adjustments.

It can be said that the recent performance rebound of SUPER HI relies mainly on two factors: first, the improvement in operational efficiency, and second, the increase in average spend per customer. In the third quarter, the company's gross margin reached 67%, and the proportion of rent and utility costs significantly decreased. This indicates that SUPER HI has shifted from its previous strategy of "blind expansion" to a model of "deep cultivation of existing markets."

However, whether this model can be sustained will depend on future operational performance. Especially in the markets of Europe and the USA, the acceptance of hot pot as a dining format remains low, and SUPER HI still faces considerable challenges. Although Yang Lijuan's "Pomegranate Project" has made a good start, incubating new brands takes time, and significant effects may not be seen in the short term.

Conclusion

In the context of globalization, the overseas expansion of Chinese dining brands is not only a reflection of the internationalization of Chinese enterprises but also an important carrier of Chinese cultural dissemination. From SUPER HI's successful turnaround to profitability to the rapid rise of brands like霸王茶姬 and 蜜雪冰城 in Southeast Asia, the practices of these enterprises demonstrate the importance of refined management and innovative strategies. Despite the challenges in overseas markets, such as cultural differences and high operational costs, Chinese dining enterprises are gradually overcoming these obstacles through supply chain optimization, menu adjustments to cater to local tastes, and the incubation of new dining brands, thereby winning the favor of more overseas consumers.

Although the acceptance of traditional Chinese dining forms like hotpot in the USA and Europe still needs improvement, Chinese companies are expected to further expand their international market presence with flexible market strategies and continuous product innovation. Additionally, initiatives like the 'Pomegranate Plan' provide valuable exploratory experience for future brand incubation. In conclusion, the success of Chinese dining enterprises in overseas markets is not only a commercial victory but also symbolizes the growing charm and influence of Chinese culinary culture.