S&P cuts Haidilao International

S&P said it lowered its ratings on Haidilao International Holding Ltd. and its debt to BBB- from BBB.

“Rapid opening of new outlets in 2020 and the first half of 2021 amid Covid-19 materially hit the company's table turnover rate, arguably its most important performance measurement. Many of the new restaurants that opened during the period underperformed or diverted customer traffic away from existing well-performing restaurants. Haidilao's table turnover declined to 3x in 2021, from 3.5x in 2020 and 4.8x in 2019,” S&P said in a press release.

The agency noted that the weak results helped drive leverage up because EBITDA was mostly flat, and the new leases added lease liabilities.

However, S&P said it saw improvements in Haidilao’s performance in the first two months of 2022.

The outlook is stable.

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