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Is the B.C. hot pot market too saturated for Haidilao chain's expansion?

Haidilao Canada says franchising options, which have recently opened in China, are not available in Canada at the moment

Haidilao International Holding Ltd., one of the most popular Chinese hot pot chains with locations in Vancouver and Richmond, announced Monday it will open its doors to franchising.

The Beijing-based company, founded in 1994, has more than 1,400 locations across the world and announced last month it expects to reach US$5.75 billion in revenue and US$611 million in net profit in 2023.

Haidilao said Monday in an announcement in Chinese that it's opening franchising to “further ramp up the pace of expansion of the restaurant network."

“In recent years, the catering industry has continued to develop and innovate in chain operations and franchise models. We believe that the current focus on direct operation and the introduction of franchise models will help the company achieve further expansion,” the company said.

However, Haidilao Canada told BIV News that franchising opportunities are not available in Canada at the moment. 

"We are not offering any franchising options in Canada. As a matter of fact, the franchising opportunities are for Haidilao China only," said a spokesperson from Haidilao Canada.

Haidilao is mostly known for its unique customer services. Varying by location, branches offer karaoke, manicures, board games or hand care for waiting customers; and entertainment activities after customers sit down, including noodle dances, Beijing opera face-changing and even a doll companion for those dining alone.

In 2021, Haidilao was embroiled in controversy after it was exposed as having installed rows of surveillance cameras in the dining area of Canadian restaurants.

However, the company said the camera equipment was there to ensure customer safety and was not to collect data on behalf of Beijing authorities, as alleged in an article, and it had taken action to comply with the Privacy Commissioner of Canada's standards.

'Saturated' hot pot market in B.C.

William Tse, association director of the BC Asian Restaurant Café Owners Association, said many restaurant brands in China have launched franchising options in recent years, but the model may not fit the Canadian market which is still relatively small in terms of Asian food.

Tse said he believes the hot pot market in Metro Vancouver is saturated and there is very limited room for growth.

"Many hot pot restaurants in Metro Vancouver are not doing great because there are too many of them. The market has been saturated," he said.

Given the nature of hotpot, which caters to younger Asian customers who usually come in large groups, there are requirements for the location and size of the restaurant.

"There are already many hot pot restaurants competing with each other in Richmond, Burnaby and Vancouver. If you open locations in cities where there is a smaller Chinese Canadian population, there may not be enough demand," Tse said.

"And the higher rents have increased the costs of running a restaurant. Investors will need to take that into consideration as well.”

Note: The article has been updated to include Haidilao Canada's response

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