Super Hi (HDL) Q3 2025 earnings review
Traffic Rises, but Profits Collapse on Discounting and FX Headwinds
Super Hi reported a mixed quarter, successfully driving traffic but at a significant cost to profitability. Revenue grew 7.8% YoY, fueled by a 9.5% increase in guest visits as the company's value-focused strategy resonated with consumers. However, this volume was 'bought' through discounting, with average spend per guest falling 4.7%. The strategy, combined with higher operating costs and a massive negative swing in foreign exchange rates, caused Operating Profit to fall 15% and Net Profit to collapse by over 90% to just $3.6 million from $37.7 million a year ago. While management is encouraged by the sequential margin improvement from Q2, the severe YoY profit deterioration and FX volatility are major concerns.
🐂 Bull Case
The 9.5% YoY growth in guest visits and marginal increase in table turnover (3.9x vs 3.8x) validates the brand's appeal and shows the discounting strategy is effective at filling seats.
Operating margin recovered to 5.9% in Q3, a significant improvement from 1.9% in Q2 2025, suggesting management is starting to gain control over costs while still driving volume.
The 'Pomegranate Plan' is showing early promise with the launch of new concepts like Hi Bowl malatang, which is already profitable at the store level in Canada, offering a path for future growth.
🐻 Bear Case
Net Profit was almost entirely wiped out, falling 90% YoY. A $31.7 million negative swing from foreign exchange gains last year to losses this year highlights extreme vulnerability to currency fluctuations.
The 4.7% drop in average spend per guest is a major red flag, especially the over 10% decline in the key North American market. This raises questions about the long-term health of the brand's premium positioning.
Despite higher revenue, the operating margin contracted to 5.9% from 7.5% a year ago, as investments in customer discounts and higher operating expenses outpaced sales growth.
⚖️ Verdict: 🔴
Bearish. The near-total collapse of Net Profit is too alarming to overlook. While driving traffic is positive, the current strategy is financially unsustainable, especially given the significant FX risk. The company is successfully buying revenue growth, but not profitable growth. Until there is a clear path to restoring margins and mitigating currency volatility, the outlook remains negative.
Key Themes
Foreign Exchange Volatility Wipes Out Earnings
The most significant factor this quarter was non-operational. Net Profit fell from $37.7M to $3.6M, a decline of $34.1M. Management attributes this almost entirely to a $31.7M negative swing in foreign exchange, with a $5.8M loss this quarter compared to a $25.8M gain in Q3 2024. This massive impact from FX completely overshadows the positive narrative on traffic growth and highlights a critical vulnerability in the company's global operating model.
Pricing Power Under Pressure, Especially in North America
The company's strategy of offering 'more reasonable pricing' and 'more affordable portions' led to a 4.7% decline in average spend per guest. This was most acute in North America, where average spend plummeted 10.1% from $43.5 to $39.1. While this drove a slight increase in table turnover, it calls into question the brand's ability to command premium prices in developed markets.
New Brand Incubation ('Pomegranate Plan') Shows Early Promise
Management is actively diversifying beyond the core Haidilao brand. In Q3, the 'Hi Bowl' malatang concept launched in Canada and quickly achieved store-level profitability. In November, the company opened a 'Sparkora BBQ' in Indonesia and an Izakaya in Japan. This strategy leverages local management expertise to build new growth vectors tailored to specific markets.
East Asia Remains a Standout Performer
The East Asia region was the primary growth engine, with guest visits surging 50% YoY. Table turnover increased significantly to 4.9x from 4.3x, driving a 14.7% increase in average daily revenue per restaurant to $20,300, even with a slight dip in average spend. This performance demonstrates strong brand momentum and operational execution in the region.
Employee-Focused Initiatives Improving Retention
A core part of the company's strategy involves investing in employee benefits and reducing pressure from headquarters. This appears to be yielding results, as the average monthly employee turnover rate dropped by 1 percentage point YoY to just over 7% in Q3. Management believes this stability enhances service quality and customer experience.
Southeast Asia is a Laggard
Contradicting the overall growth story, the Southeast Asia segment saw its average daily revenue per restaurant decline by 1.3% YoY. The drop in average spend per guest from $20.4 to $19.1 was too severe for the slight increase in table turnover to overcome. This indicates the discounting strategy is not even driving top-line growth in this large segment of 74 restaurants.
Other KPIs
Decelerating YoY but reversing sequentially. The 5.9% operating margin is down from 7.5% in Q3 2024, showing significant YoY pressure from cost inflation and discounting. However, it marks a strong recovery from the 1.9% margin reported in Q2 2025, suggesting some operational stabilization.
Down 16% YoY from $40.7 million. The decline in cash flow, despite revenue growth, reflects the lower profitability and, as cited by management, cyclical fluctuations in receivables. This is a negative indicator for the quality of earnings.
Accelerating. Combined revenue from Delivery ($4.4M) and Other Business ($8.9M) grew 72% YoY. These segments now represent 6.2% of total revenue, up from 3.9% a year ago, providing a small but fast-growing source of diversification.
Guidance
Management provided no quantitative guidance but noted that Q4 is typically the peak season for hot pot. They expect Q4 operating margins to be higher than the 4.0% average margin recorded in the first nine months of the year. This implies sequential improvement but gives no indication of the YoY comparison.
Stable. The company plans to open 'a few more' stores in Q4, bringing the full-year total to over 10. With a pipeline of nearly 20 projects, the pace of expansion remains measured and deliberate, prioritizing quality over speed.