Over RMB 1.3 Billion in Losses Across Five Years—Has Xiabu Xiabu Lost Its Flavor?

As Xiabu Xiabu continues to report losses, the question arises: how can the brand still entice diners?

On August 4, Xiabu Xiabu, recognized as the first publicly listed hotpot chain, issued an announcement via the Hong Kong Stock Exchange. The company anticipates revenue of approximately RMB 1.9 billion for the period ending June 30, 2025, with a projected net loss ranging between RMB 80 million and RMB 100 million. Since 2021, Xiabu Xiabu has been operating at a deficit. By the first half of 2025, its cumulative losses over five years have reached roughly RMB 1.326 billion.

While Xiabu Xiabu grapples with financial strain, Banux Hotpot, which positions itself as China’s largest premium hotpot brand, is actively preparing for a public listing. In 2024, Banux recorded revenue of RMB 2.307 billion and adjusted profit of RMB 196 million. For the first quarter of 2025, ending March 31, the company reported revenue of RMB 709 million and adjusted profit of RMB 76.7 million. Banux’s thriving tripe hotpot business stands in stark contrast to Xiabu Xiabu’s current subdued performance.

Looking back at Xiabu Xiabu’s trajectory, the brand began with single-serving hotpot originating from Taiwan, expanded rapidly to over a thousand outlets, and debuted on the stock exchange with considerable fanfare. However, in just a few years, the company has transitioned from peak success to persistent losses and widespread store closures.

The high-end sub-brand Coucou, once expected to drive growth, has instead become a liability. In 2024, Coucou accounted for nearly 90 percent of the group’s losses, with both average customer spending and table turnover declining. Meanwhile, the core Xiabu Xiabu brand has shifted toward a higher price range, resulting in an awkward market position—neither premium nor budget-friendly—ultimately losing its foothold in the affordable single-serving hotpot segment.

Investor sentiment has reflected this downturn. Xiabu Xiabu’s share price has fallen to HK$0.77, and its market capitalization has dropped from HK$29 billion to HK$830 million, a fraction of its former valuation. The brand once hailed as the leading hotpot chain now faces questions about its appeal.

Xiabu Xiabu’s financial difficulties have persisted for several years. According to its financial statements, the company reported net losses of RMB 293 million in 2021, RMB 353 million in 2022, RMB 199 million in 2023, and RMB 401 million in 2024. The first half of 2025 added another RMB 80 million in losses. Altogether, the company has accumulated losses of RMB 1.3 billion over the past five years.

Xiabu Xiabu’s revenue primarily stems from its two main brands: Xiabu Xiabu and Coucou. In recent years, performance under the Xiabu Xiabu brand has weakened. Coucou, positioned as a mid-to-high-end offering, was once seen as a growth catalyst but has struggled to deliver.

In 2024, Coucou’s revenue declined significantly, and its losses expanded to RMB 353 million, becoming the primary drag on group performance. According to Jiedian Caijing, three factors contributed to this outcome.

Coucou’s concept of combining hotpot and tea beverages lacked competitiveness against specialized tea brands such as Heytea and Nayuki. Simultaneously, its hotpot offerings faced pressure from established players like Haidilao, resulting in unclear customer targeting.

Aggressive expansion led to poor site selection and low operational efficiency. Subsequent closures triggered asset impairments that further eroded profitability. In 2024, Coucou generated RMB 1.948 billion in revenue, a 26 percent decline year-on-year, with net losses reaching RMB 353 million—nearly 90 percent of the company’s total losses. Average customer spending fell from RMB 142.3 to RMB 123.5, and table turnover dropped from 2 times to 1.6 times, weakening overall revenue capacity. These financial setbacks have also impacted Xiabu Xiabu’s performance in the secondary market.

The company was listed on the main board of the Hong Kong Stock Exchange on December 17, 2014, with an IPO price of HK$4.7. In February 2021, its share price peaked at HK$27.15. Today, it trades at HK$0.77. Once a dominant force in the hotpot industry, Xiabu Xiabu now finds itself mired in financial difficulty.

Xiabu Xiabu’s losses have coincided with a contraction in its store network. Between 2018 and 2021, the company pursued an aggressive expansion strategy, increasing its store count from fewer than 700 to nearly 1,200. However, beginning in 2021, the company reversed course and began downsizing. Jiedian Caijing attributes this shift to three primary causes.

Rapid expansion led to widespread store-level losses. From 2015 to 2019, Xiabu Xiabu opened more than 100 new outlets annually, maintaining this pace even during the pandemic. This “land grab” approach compromised site quality and diluted individual store performance, resulting in widespread losses.

Operational inefficiencies further weakened profitability. In 2024, same-store sales declined by 23.3 percent, and daily table turnover dropped from 2.6 to 2.5. With average spending down and turnover stagnant, store efficiency remained low, limiting customer attraction and profitability.

A pivotal moment came in 2021, when Xiabu Xiabu halted its high-growth strategy and began large-scale closures. By the end of 2024, the company’s total number of restaurants had fallen below 1,000, reaching 957—a net reduction of 133 stores compared to 2023.

Unclear brand positioning also hindered transformation efforts. Xiabu Xiabu attempted to shift from fast food to light casual dining, raising average spending and losing its value-for-money appeal. The transformation failed, and efforts to return to the mass market created a fragmented brand image, confusing consumers and weakening brand loyalty. As a result of these compounded challenges, the brand that once held 51.9 percent of the hotpot market has gradually faded from consumer consciousness.

According to iiMedia Research, China’s hotpot industry is projected to reach RMB 668.9 billion in market size by 2025. However, growth is expected to slow from 10 percent in 2019 to 4.3 percent in 2025. As dining formats diversify, hotpot’s market share is being diluted. Although the overall market continues to expand, the pace is decelerating.

Xiabu Xiabu operates in a fiercely competitive segment. In recent years, emerging brands have further compressed its market space. Jiedian Caijing identifies three major competitive pressures facing the company.

Fast-food hotpot brands such as Yuanji Dumplings and Jixiang Wonton have introduced affordable hotpot sets, offering lower prices and more convenient formats that appeal to mass-market consumers.

Regional mini-hotpot brands, including Guoquan Shihui with its dine-in and delivery model, have captured market share in lower-tier cities by leveraging lower operating costs and deeper market penetration.

Premium hotpot brands have attracted mid-to-high-end consumers. Haidilao, for example, has introduced immersive experiences and personalized services that appeal to this demographic. Coucou’s unclear positioning has weakened its competitiveness, making it difficult for Xiabu Xiabu to retain customers in the premium segment.

Jiedian Caijing observes that the hotpot industry is undergoing segmentation. Premium hotpot is losing relevance due to high prices and shifting consumer habits. Trend-driven hotpot brands suffer from low quality and short lifespans. The affordable hotpot segment is overcrowded, leading to intense price competition. Numerous players are vying for consumer attention.

Banux’s tripe hotpot business offers a compelling example. Despite intensifying price competition, Banux’s adjusted net profit margin has steadily improved. From 2022 to 2024, its margins were 2.9 percent, 6.8 percent, and 8.5 percent, respectively. In the first quarter of 2025, the figure reached 10.8 percent.

As competition in the food service market intensifies, brands must differentiate themselves in product, service, and pricing. Leading brands like Banux are growing rapidly, further diverting Xiabu Xiabu’s customer base and compressing its market share.

Consumer preferences are also evolving, with greater emphasis on quality and value. According to Narrow Gate Restaurant Eye, 185,835 new hotpot restaurants opened in the past year, but the net growth was negative—29,676 fewer stores overall—indicating that more than 210,000 outlets exited the market.

In such a competitive environment, brands lacking distinctive products or services struggle to gain traction. For Xiabu Xiabu, responding to changing consumer demands, innovating its offerings, and enhancing service quality will be essential to restoring performance and regaining consumer loyalty.