Revenue decline, losses narrowing: The "active slimming" behind XIABUXIABU (00520) and the existing market game.

As the catering industry enters a transformation period characterized by stock competition, traditional hot pot giant XIABUXIABU (00520) is seeking new avenues amid profit warnings. Recently, XIABUXIABU issued a performance forecast for the first half of 2026: it expects revenue of approximately 1.5 billion yuan (RMB, the same below), a year-on-year decline of 23%; however, net losses are expected to narrow to between 29 million and 39 million yuan, a substantial reduction of 51% to 64% compared to last year's loss of 81 million yuan. This phenomenon of revenue declining sharply while losses are reduced significantly reflects XIABUXIABU's proactive push for structural optimization of its stores and its departure from an era of extensive expansion. In light of several years of continual losses, can XIABUXIABU successfully achieve profitability through "doing subtraction"? The Logic Behind Loss Reduction It is noted that in recent years, XIABUXIABU's performance has been consistently volatile. In terms of revenue scale, although the company saw a brief rebound in revenue due to the strong recovery of the catering industry post-pandemic, over a longer period, revenue has decreased from a peak of 6.147 billion yuan in 2021 to 3.789 billion yuan in 2025, representing a nearly 40% reduction over five years. Specifically, revenue is expected to decline by 19.65% and 20.32% in 2024 and 2025, respectively, indicating that market demand and company operations are experiencing ongoing challenges. From a net profit perspective, the company has been in a state of loss since first reporting an annual loss in 2021. Although losses in 2025 were reduced from 398 million yuan in 2024 to 296 million yuan, reversing the trend of continuous losses and stopping the decline in revenue remains the largest challenge it faces. XIABUXIABU's further "loss reduction" in the first half of 2026 is primarily due to the management's decision to redistribute resources based on economic outcomes. In 2025, the group opened 57 new stores while closing 109, resulting in a net decrease of 52 stores, with its upscale brand, COUCOU, down by 53 stores. Notably, the mass-market hot pot brand XIABUXIABU only had a net decrease of two stores during this period. This contraction strategy is expected to continue into the first half of 2026, with the company stating in its latest profit warning that it anticipates a year-on-year reduction of approximately 30% in the asset impairment losses related to closed and persistently unprofitable restaurants. This "doing subtraction" strategy at the store level signifies a departure from scale worship towards refined management. In fact, such a trend has gained consensus across the entire leading hot pot industry. Another industry leader, HAIDILAO, also closed or relocated 85 underperforming stores in 2025. As the industry shifts from a scale-oriented approach to one focused on efficiency, closing stores is no longer a passive damage control measure following expansion failures, but a proactive move to maintain profitability. For XIABUXIABU, shutting down inefficient stores not only alleviates the burden of losses but also allows for a "light-loaded" financial statement. Structural Challenges to Address If closing stores to reduce losses is a temporary solution, the continued downturn of its key brand, particularly COUCOU, poses a persistent structural ailment that XIABUXIABU must confront. It is understood that in 2016, to explore new business growth, the company officially launched the upscale brand "COUCOU," innovating the hot pot + beverage model to create a complementary difference with the XIABUXIABU brand. COUCOU's average consumption price is 2-3 times that of XIABUXIABU; at that time, the higher price point not only did not hinder COUCOU's expansion but also led to an ideal turnover rate, making it a revenue powerhouse for XIABUXIABU and paving the way for its subsequent upscale initiatives. However, as a once crucial growth curve, COUCOU has become a heavy burden on the group's development as its turnover rate and same-store sales growth have cooled in recent years. Performance-wise, in 2025, COUCOU's revenue plummeted by 30.8%, with an operating loss reaching 252 million yuan. In comparison, although XIABUXIABU's revenue fell by 13.3% during the same period, this division still managed to achieve a profit of 16.648 million yuan. This indicates that COUCOU has become the biggest variable dragging down the overall performance of the group. Amid the intensifying trend of consumer segmentation, COUCOU faces an awkward positioning of "high but not enough"its average bill remains at a mid-to-high level of 148.8 yuan, yet it cannot offer the ultimate service experience that HAIDILAO provides nor compete on cost efficiency with emerging budget hot pot brands, leading to declines in both turnover rate and same-store sales. According to financial reports, COUCOU's turnover rate fell from 1.6 times in 2024 to 1.4 times in 2025, in stark contrast to XIABUXIABU's turnover rate of 2.8 times. Seeking a Breakthrough Under the significant pressure of stock competition, XIABUXIABU has not remained passive; while "doing subtraction" in terms of scale, the company is also attempting to optimize its performance through various strategies, including deepening supply chain utilization and accelerating the rollout of budget sub-brands. From the supply chain perspective, XIABUXIABU does possess a certain competitive edge. In 2026, the group's fresh meat production line in Tongliao, Inner Mongolia began operations, achieving same-day slaughter and delivery of fresh beef. It is noted that once fresh beef was introduced, product ordering rates increased by 33%. This not only enhances product competitiveness but also helps reduce marginal costs in multi-brand operations through supply chain reuse. The company states that this integrated supply chain, from procurement to logistics, is a core barrier to collaborative operation among multiple brands. In response to COUCOU's slowdown in the high-end market, the company has shifted its strategy, subsequently launching two new formats: "Xiabao Ranch" and "Xia Beef Steak." The former features a self-selection hot pot starting from 29.8 yuan, targeting the lightweight and high-cost performance single-serve market; the latter aims to fill the market gap in Western-style self-service with a model of "hundred-yuan steak + 158 free dishes." This multi-category layout aims to cover all price points and dining scenarios, alongside the benefits of member interconnectivity and shared traffic to amplify scale effects. However, it is important to note that the exploration of new business formats is not without challenges. Although multi-brand strategies can cover more scenarios, they also place higher demands on the company's supply chain, research and development, and organizational collaboration. Currently, "Xia Beef Steak" is still in the model refinement stage, and its ability to achieve the goal of opening a hundred stores in three years remains to be tested over time. In reality, the fluctuating performance of XIABUXIABU reflects a microcosm of the transformation period in China's catering industry. Data from the National Bureau of Statistics shows that in the first half of 2026, national catering revenue reached 28.255 billion yuan, with growth rate falling back to 2.8%. It is evident that as the industry enters a new phase of structural restructuring and accelerating differentiation, consumers are less willing to pay premiums for overly packaged environments and complex services and are instead pursuing stable, convenient, and transparently priced dining experiences. So, after the clearance of inefficient stores, can XIABUXIABU establish a sustainable single-store return model? Its historical burden of five consecutive years of losses, along with the ongoing profitability challenges faced by the COUCOU brand, are operational questions that the management cannot evade. Furthermore, in a saturated market, the uncertainty of whether new brands can truly stand out remains. XIABUXIABU's founder, He Guangqi, has stated: "There are no shortcuts in the catering industry; only by solidly managing cost control, user operations, and product innovation can one transcend the cycles." After experiencing the growing pains of extensive expansion, XIABUXIABU is recalibrating the value of each store. This "loss reduction" report card is a proactive selection towards high-quality development, but the legendary hot pot giant still faces a long road to truly turn profitable.