(Yicai Global) April 8 -- Haidilao International Holding has blamed its second price rise in just six months on negating the effects of Covid-19 after recently re-opening most of its China mainland restaurants.

“There are limits on how many tables are available for eat-in services and how many customers each store can host,” The Paper cited the firm as saying yesterday, adding that not all staff had returned to work. “The company decided to adjust the prices of some dishes due to increased costs of labor and some food materials.”

Haidilao had re-opened more than 600 of its 716 mainland stores for in-house dining as of March 27 after closing them due to the novel coronavirus pandemic, but many web users in Beijing and Shanghai have been complaining of higher prices and smaller portions. The hike is the firm’s second in half a year after it lifted prices in winter by between 3 percent and 5 percent in areas with higher table turnover, blaming African swine fever’s impact on pork prices.

Shares in the Sichuan-based company [HKG:6862] were down 1.64 percent at HKD30 (USD3.87) as of 10.59 a.m. Its stock had gained 7.4 percent over the two previous trading days, adding HKD10 billion (USD1.3 billion) to its market cap, taking it to HKD161.6 billion.

Covid-19 is going to accelerate consolidation among China’s catering market and only the fittest will survive, according to food industry analyst Zhu Danpeng. Leading firms have brand power and can better combat risk, he said, adding that they will not need to rely on promotions as much as smaller companies.

Haidilao expects to lose about CNY580 million (USD82.2 million) this year because of the pandemic.

The virus hit the sector in an unprecedented manner after it began to make headlines at the end of January, with some 78 percent of companies swinging into the red during the week-long Spring Festival holiday after making a profit in the same period a year earlier, February data from the China Cuisine Association show. 9 percent saw a 90 percent decline, 7 percent took a hit between 70 percent and 90 percent, and only 5 percent said profit was down less than 70 percent.

Editor: James Boynton