Founded in 1994 and listed in 2018, Haidilao International Holding Ltd (“Haidilao”) (HKG:6862) is a global fast-growing Chinese cuisine restaurant brand focusing on hotpot cuisine. In Part 1 of this article, we will take a closer look at the industry and business model of the group to better understand if it is worth an investment. Leader in the hot pot restaurant market in China According to an independent market research report by Frost & Sullivan presented in the IPO prospectus, the hot pot restaurant industry is a fragmented and highly competitive market. The top five players in the industry represent just 5.5% of the total market share. Haidilao has a 2.2% market share — which is more than double the second largest player who has a 0.9% market share.

(Source: IPO prospectus) Haidilao is considered a mid-to-high-end restaurant operator with average spending of around RMB100 per guest. The table below showcases Haidilao’s average spending per guest in 2018 and 2019....