Super Hi (HDL) Q2 2026 earnings review
Operational Gains Eclipsed by Severe FX Headwinds
Super Hi delivered strong operational improvements in Q2, driving operating profit up 118.9% to $8.1M as cost controls and the 'Pomegranate Plan' gained traction. However, the bottom line suffered a massive reversal: a $20.6M negative year-over-year foreign exchange swing completely wiped out operating gains, dragging Net Income to a $1.9M loss. While core restaurant traffic and overall table turnover improved, severe weakness in the North American segment (same-store sales down 8.5%) and outsized, unhedged currency exposure suggest the company's international expansion remains vulnerable to external shocks.
🐂 Bull Case
The 'Pomegranate Plan' and Delivery segments grew >100% YoY, proving Super Hi can successfully diversify revenue streams beyond traditional dine-in hot pot.
Staff costs declined to 34.3% of revenue from 35.3%, and income from operations more than doubled, validating management's 'Dual Focus' efficiency strategy.
🐻 Bear Case
A $20.6M YoY negative swing in FX wiped out all operational profit, exposing a critical flaw in treasury management and masking underlying business health.
North America same-store sales fell 8.5% and table turnover dropped to 3.6x/day, lagging significantly behind the Asian markets and dragging on overall metrics.
⚖️ Verdict: ⚪
Neutral. The underlying unit economics, margin expansion, and new brand incubation are structurally improving. However, severe unhedged currency risks and North American contraction create a highly unpredictable near-term earnings profile.
Key Themes
Unhedged Foreign Exchange Volatility Destroys Earnings
For the second consecutive quarter, unhedged currency exposure severely punished the bottom line. Despite a 118.9% YoY surge in operating profit to $8.1M, a $20.6M YoY negative swing in net foreign exchange completely wiped out profitability, resulting in a $1.9M net loss. The depreciation of local currencies against the USD continues to overshadow the company's true operational leverage.
North America Segment Contraction
While overall same-store sales grew 1.7%, North America emerged as a severe laggard. Q2 North America same-store sales dropped 8.5% YoY (from $37.9M to $34.7M), and same-store table turnover decelerated from 4.0 to 3.6 times per day. This divergence from the broader positive corporate narrative suggests significant brand resonance or execution issues in Western markets.
Zero Quantitative Guidance Persists
Management continues to explicitly refuse any specific numerical guidance for store openings, revenue, or profit targets, maintaining their 'bottom-up' expansion philosophy. This chronic lack of visibility severely hampers investors' ability to model future growth or assess the timeline for scaling the 'Pomegranate Plan'.
Explosive Growth in Delivery and 'Pomegranate Plan'
Secondary revenue streams are rapidly becoming material drivers. Delivery revenue accelerated by 105.4% YoY to $7.6M, driven by product optimization and platform collaborations. Concurrently, 'Other Business' revenue (primarily the Pomegranate Plan's new brand incubations and condiment sales) surged 119.7% YoY to $13.4M.
Cost Optimization Drives Margin Expansion
The 'Dual Focus on Employees and Customers' strategy is yielding tangible operating leverage. Operating margin expanded from 1.9% in 25Q2 to 3.7% in 26Q2. Staff costs—a historic pressure point—declined by 100 basis points to 34.3% of revenue, demonstrating that higher sales volumes are efficiently absorbing fixed overhead.
Digital Optimization and AI Integration
Super Hi is heavily investing in digital tools and central capabilities. Deepening the application of AI in restaurant operations, coupled with standardized digital support across procurement, inventory, and shift management, is structurally lowering unit-level friction and serving as a critical margin support mechanism.
Macro Environment and Value-Conscious Diners
Global consumer demand remains resilient but highly value-conscious. Super Hi has adapted by tailoring menus to specific dining occasions (late-night, family gatherings) and optimizing product mix (kids' meals, affordable combos), ensuring steady traffic (+5.2% total guest visits to 8.1M) despite a tougher macroeconomic backdrop.
Other KPIs
Stable. Ticked up from 3.9x a year ago. Despite broader economic concerns, core engagement remains robust across the portfolio (excluding North America), validating that targeted menu innovations and improved service protocols are effectively monetizing foot traffic.
Decelerating as a percentage of revenue. While absolute costs rose 6.7% YoY due to overall network expansion and rising statutory minimum wages, the ratio fell from 35.3% to 34.3% of revenue. This indicates superior scheduling efficiency and operating leverage materializing at the restaurant level.
Guidance
Stable. Management reiterated they will selectively open new Haidilao locations while actively incubating secondary brands based on local market conditions. No quantitative guidance was provided, consistent with prior quarters.
Stable. Management emphasized optimizing cost structures and improving digital tools across procurement and inventory to protect profitability, though explicitly refusing to anchor themselves to a numerical margin target.
Key Questions
Foreign Exchange Hedging Threshold
Given the $20.6M negative FX swing in Q2 that completely erased operating profits, at what threshold will the Board implement a formal foreign exchange hedging policy to protect operational gains?
Reversing North American Contraction
North American same-store sales declined 8.5% alongside dropping table turnover. What specific localized strategies or management changes are being deployed to reverse this severe contraction in Western markets?
Pomegranate Plan Scaling Timeline
With 'Other Business' revenue growing 120%, what are the specific financial criteria and expected timeline for scaling the 'Pomegranate Plan' concepts (like Hi Bowl or Sparkora BBQ) out of the incubation phase and into aggressive expansion?