Xiaobu Xiaobu will lose 296 million yuan in 2025, with over 100 stores closed this year.

Author | Zheng Haoyuan, Intern | Wang Chaoyang

Editor-in-Chief | Chen Junhong

Happie Happie (0520.HK) recently released its 2025 annual performance report. The financial statements show that for the full year, revenue reached 3.789 billion yuan, down 20.3% year over year; the total loss for the year was 296 million yuan, narrowing by 25.6% year over year. This marks the company’s fifth consecutive year of losses since 2021, with cumulative losses already exceeding 1.5 billion yuan.

Analysts point out that Happie Happie is stuck in a “loss reduction without revenue growth” situation. The narrowing losses mainly rely on cost cuts brought by closing stores, rather than endogenous growth. Against the backdrop of increasingly intense competition in the hot pot industry and consumption becoming more rational, it faces a dual dilemma of strategic imbalance and expansion under high leverage.

Reducing losses by closing stores; growth momentum weakens

In 2025, Happie Happie’s losses narrowed significantly. The financial report shows that its net loss for the period was 296 million yuan, narrowing by 25.6% compared with 398 million yuan in 2024. The company attributed this to “resolutely promoting structural optimization of restaurants and cost reduction and efficiency improvement.” This specifically includes: orderly closing low-efficiency and loss-making outlets, resulting in a sharp decline of about 51.4% year over year in the amount of asset impairment losses recognized for stores being closed and for continuously loss-making restaurants; at the same time, it lowered costs through measures such as digital supply chain management and more refined member operations.

However, behind the narrowing losses is a sharp contraction in revenue. The financial report shows that full-year revenue was 3.789 billion yuan, down 20.3% from 2024. Compared with the peak period of 6.147 billion yuan in 2021, revenue has shrunk by more than 38%. The main reasons for the revenue decline are ongoing fierce industry competition, increasingly rational consumer demand, and a net decrease of 52 stores compared with the same period of the prior year.

It is worth noting that the narrowing losses mainly depend on “passive bleeding control,” not “active blood generation.” Employee costs decreased by 18.2% year over year, but mainly because the number of employees fell from 22,504 to 16,781, with a layoff rate of 25.4%; raw materials and consumables costs decreased by 20.7% year over year, but their share of revenue only dipped slightly from 35.2% to 35.0%, indicating that operating efficiency has not been substantially improved in practice.

The price of this “contraction-style loss reduction” is enormous. In the second half of 2025, the company’s loss scale actually expanded by 70% compared with the same period of the prior year, and operating pressure remains significant. Analysts say that once the optimization of the store network is basically completed, the company loses the room to continue cutting costs. If it cannot return to the growth track in the future, it will fall into a deadlock of “no stores to close, no costs to cut.”

Meanwhile, liquidity pressure continues to intensify. Operating cash flow fell from 1.135 billion yuan in 2023 to 421 million yuan. Its ability to generate cash through operations has dropped sharply. By the end of 2025, cash and cash equivalents decreased by 31.3% year over year to 249 million yuan; net current liabilities expanded from 304 million yuan to 447 million yuan; and the asset-liability ratio rose to a historical high of 92%.

The capital markets have already responded. The company’s share price has fallen from the February 2021 high of HKD 27.08 to HKD 0.52 on March 26, 2026, a decline of 98%. Its market capitalization has shrunk from nearly 30 billion HKD to less than 600 million HKD. Even though the controlling shareholder, He Guangqi, increased holdings multiple times after the share price fell below 1 HKD, with an average acquisition price of 1.61 HKD, it still failed to restore market confidence.

The “misalignment” contradiction of a dual-brand positioning

At present, the two main brands under the Happie Happie Group—“Happie” and “Coucou”—have gone down completely opposite paths, but have not found a healthy growth model.

It is understood that the main brand Happie chooses “trading price for volume,” taking a route of higher cost performance. The financial report shows that the brand’s average spending per customer fell from 54.8 yuan to 51.5 yuan, and the table-turn rate increased from 2.5 times to 2.8 times. However, the rebound in customer traffic has not translated into revenue growth. The financial report shows that Happie’s total revenue was 2.28 billion yuan, down 13.3% year over year. Same-store sales in first-tier to third-tier cities fell by 9.9%, 8.3%, and 11.6%, respectively, showing that although the price-cut strategy brought some customer traffic, it was unable to stop the overall decline in sales.

This predicament reflects the blurring of Happie’s brand positioning. From the unique positioning of “one person, one pot,” it has gradually become a substitute for an “upgraded mala hot pot” or “value fast food.” Its original leisure attributes have been weakened. Facing a siege from numerous low-priced mini hot pots and fast-food formats, its differentiated advantages are no longer obvious.

Coucou chooses “trading quantity for price,” raising prices against the trend. The financial report shows that Coucou’s average spending per customer increased from 123.5 yuan to 148.8 yuan, a rise of 20.5%. But this strategy directly led to a large loss of customer traffic: the table-turn rate fell from 1.6 times to 1.4 times, staying at a relatively low level in the industry; revenue dropped sharply by 30.8% to 1.349 billion yuan; and same-store sales in first-tier to third-tier cities recorded declines of 13.7%, 18.2%, and 28.9%, respectively. In 2025, Coucou’s segment operating loss was 250 million yuan, becoming the main source of the group’s losses.

Coucou’s predicament stems from the rapid bursting of the bubble accumulated through its earlier “land-grabbing” style expansion. From 2021 to 2023, Coucou added a net 117 stores over three years. Because it adopts a direct-operated model and its locations are typically in core commercial districts, with large areas, high renovation investment, and intensive staffing, its fixed costs are far higher than those of other sub-brands. As problems such as poor site selection and insufficient customer traffic gradually emerged, it cumulatively closed 110 stores net in 2024–2025. By the end of 2025, the number of Coucou stores had been reduced from its peak of 257 to 147.

It is worth noting that over the past two years, the number of new stores opened by the Happie Happie Group has been less than the number of stores closed. In 2024–2025, it net closed 133 stores and 52 stores, respectively. Against this backdrop, the group still plans to open no fewer than 100 new stores in 2026. Some people in the industry say that the main brand Happie is trapped in a dilemma of “it’s hard to exchange price cuts for growth,” and Coucou also cannot support growth due to its high-end positioning. Whether its per-store profitability can support the 2026 expansion plan remains to be examined.

Gift cards “surviving by eating tomorrow’s grain”; the outlook for the new sub-brand remains unclear

As both brands contract across the board, member gift cards have become the only growth highlight for the whole year. In 2025, Happie Happie achieved gift card sales of over 670 million yuan, up 60% year over year. Gift card members’ average annual spending was 383 yuan, reaching 2 times that of ordinary members. But the amount from gift card sales can only be recognized as revenue gradually when consumers use the cards to spend in-store. This growth is, in effect, “surviving by eating tomorrow’s grain,” drawing down future revenue. If store operations remain weak and consumers’ willingness to dine in declines, the sustainability of this model is questionable.

To find a second growth curve, Happie Happie worked hard on both organizational management and the product side at the same time. On the organization side, in 2025 it launched a “returning to the nest” partner plan, inviting former outstanding employees and current key staff to participate in store operations as partners. By the end of 2025, 13 stores had participated in the plan, and more than 50 people became internal partners. Revenue at the first batch of partner stores increased by over 30% year over year, and the profit margin reached over 30%.

On the product side, the group launched the self-select mini hot pot brand “Happie Ranch” and “Happie Steak,” a model combining steak and self-service. The former continues to focus on self-select mini hot pot, while the latter attempts to move into the western-style dining segment, planning to open 100 stores within three years.

But Happie Happie is not trying new tracks for the first time. In 2022, it launched the high-end barbecue brand “Chengshao,” with an average spending per customer as high as 250 yuan, and planned to break through 100 stores within the next three years. However, by the end of 2023, only 8 stores had been opened. Due to its excessively high prices and a shift in the consumption environment toward rationality, the stores continued to operate at a loss. In August 2024, all stores nationwide were closed. This failed experience has led the market to worry about the prospects of “Happie Steak.”

Some people in the industry analyze that the “Happie Ranch” model is not very different from most self-select mini hot pot options in the market, and it entered the market relatively late, making it difficult to stand out in a market with existing capacity. Happie Happie currently should strengthen its clear positioning, rather than blindly expanding. Under the diverse competitive landscape in which Haidilao builds a moat through service, Shu Feng Hot Pot seizes niche tracks through distinctive themed scenarios, and Ban Nu Hot Pot strives to push toward a listing on the Hong Kong stock exchange, whether Happie Happie can rely on a mature supply chain and a complete operating mechanism to help the existing main brand break free from its consecutive loss predicament still needs to be tested by the market.

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