HAIDILAO International Holding, China’s biggest hot pot chain, will close about 300 underperforming restaurants following its rapid rollout of new stores last year, the Hong Kong-listed firm said Friday.

Haidilao, which became so popular in recent years that it appeased customers in hours-long queues for its soups by providing free manicures, snacks and shoe shines, said the stores that will be shuttered are with relatively low customer traffic and lower-than-expected business performance. Some stores will be temporarily closed for no more than two years, it said.

The chain will also slow down its business expansion plan and refrain from opening new restaurants on a large scale once the average table turnover rate drops below four times a day, Haidilao said in a filing.

The firm has seen falling table turnover rates and profits as consumers dine out less and new stores cannibalize business at older locations.

Initially undeterred by the COVID-19 pandemic, Haidilao embarked on an expansion drive in early 2020, with an astonishing 544 new restaurants opened last year, an average of 1.5 new restaurants per day. As of June 30, Haidilao had 1,597 restaurants globally, according to the company’s 2021 interim report. It did so by snapping up sites left behind by vacating weaker players, often helped by deep discounts offered by landlords.

But that expansion pushed Haidilao’s table turnover rate down to three, or three sets of customers per day on average, in the first half of this year, from 4.8 in 2019.

To turn its fortunes around, Haidilao has opened more than 10 outlets specializing in fast food such as noodles and dumplings, moving beyond the hot pot, the signature dish of southwestern Sichuan Province where the company was founded 27 years ago.

However, with a maximum of just five stores each and an average spending per guest of 10 yuan (US$1.56) to 20 yuan — versus 107.3 yuan for the Haidilao restaurants — the sub-brands contributed just 0.5 percent to the firm’s first-half revenue.

Haidilao last month closed a potato noodle restaurant less than a year after opening it in the central city of Zhengzhou, without publicly citing a reason.

Haidilao’s shares closed Friday up 5.46 percent at HK$21.05 (US$2.7) compared with a record high of HK$86 reached in February. (SD-Agencies)