Core Insights - Tims China reported a decline in revenue and same-store sales in Q1 2025, despite growth in franchise operations, indicating ongoing profitability challenges amid industry slowdown and intense competition [1][2][3] Revenue and Sales Performance - Tims China achieved revenue of 300.7 million RMB (41.4 million USD) in Q1 2025, a decrease of 9.5% from 332.1 million RMB (46.1 million USD) in the same period of 2024 [2] - Same-store sales fell by 7.8%, with direct store revenue declining by 14% to 254.8 million RMB (35.1 million USD) [2] - The number of franchise stores increased from 302 to 455 year-over-year, contributing to a 28.6% growth in franchise revenue, reaching 46 million RMB [2] Profitability Challenges - Adjusted EBITDA loss narrowed to 29.3 million RMB, improving by 44% year-over-year, but operational losses remained at 85 million RMB [3] - Cost reductions were significant, with direct store costs and expenses decreasing by 19%, including a 24.6% drop in food and packaging costs [5] Strategic Initiatives - Tims China is focusing on cost-cutting measures and expanding its franchise model, having opened more franchise locations and reduced entry barriers for new franchisees [5][6] - The company introduced 25 new products aimed at enhancing its competitive edge, particularly in the lunch segment [6] Market Position and Competition - Tims faces structural challenges in its business model, with a need to develop competitive coffee and food offerings to strengthen its market position [7] - The competitive landscape is intensifying, with major players like Starbucks and Luckin Coffee adopting aggressive pricing strategies, further complicating Tims' market positioning [7][8] Expansion Strategy - Tims plans to open over 200 new stores this year, focusing on high-tier cities and enhancing special channel expansions, including new airport franchise stores [8]

Core Viewpoint - Tims China is facing significant operational challenges, with a decline in revenue and same-store sales, despite some improvements in cost management and expansion efforts [1][3][7]. Financial Performance - In Q1 2025, Tims China reported revenue of 300.7 million RMB, a year-on-year decrease of 9.5% [1]. - The operating loss narrowed to 85 million RMB from 121.3 million RMB in the same period last year [1]. - Adjusted EBITDA was -29.3 million RMB, an improvement from -52.3 million RMB year-on-year [1]. - Same-store sales fell by 7.8%, with self-operated store sales down 6.5% due to a 14.0% drop in order volume and a slight decrease of 1.9% in average transaction value [3]. Market Competition - The coffee industry in China is experiencing intensified competition, with major players like Luckin Coffee and Starbucks implementing aggressive pricing and marketing strategies [2][3]. - Tims China is competing against established brands that have a stronger market presence, which affects its attractiveness to potential franchisees [7]. Strategic Initiatives - Tims China has implemented cost-cutting measures, reducing costs and expenses by 19.0% compared to the previous year, with significant reductions in food and packaging costs by 24.6% [4]. - The company is expanding its franchise model, with 455 franchise stores as of March 31, 2025, up from 302 a year earlier [4]. - Tims China plans to open over 200 new stores this year, focusing on high-tier cities and special channel layouts [5]. Product and Service Innovation - Tims China is enhancing its product offerings by introducing lunch options, such as the "Light Bagel Lunch Box" series, to increase foot traffic during lunch hours [6]. - The company is also collaborating with brands like Oatly to launch health-oriented products, contributing to a 25.7% increase in registered members, reaching 25.15 million [6]. Challenges Ahead - Despite progress in franchise expansion and product innovation, Tims China faces ongoing challenges in establishing a strong brand presence and competing effectively in a crowded market [7].

Core Viewpoint - Tims China (THCH.NASDAQ) reported a decline in revenue for the first quarter of this year, marking the fourth consecutive quarter of revenue drop, although net losses have narrowed significantly compared to the previous year [1][3]. Revenue Breakdown - Total revenue for the first quarter was 301 million RMB, a year-on-year decrease of 9.45%, with a net loss of 58.94 million RMB, which is a 58.73% improvement from the previous year [1]. - Revenue from self-operated stores fell by 14.0% to 255 million RMB, accounting for 84.72% of total revenue [3]. - The decline in revenue is attributed to the closure of underperforming restaurants and a same-store sales drop of 6.5% [3]. Store Performance - The number of self-operated stores decreased to 569 as of March 31, 2025, a net reduction of 7 stores [3]. - The company has experienced a continuous decline in same-store sales growth, with a reported drop of 11.7% for self-operated stores in the first quarter [4]. Cost Management - Food and packaging costs for self-operated stores decreased by 24.6% to 77.5 million RMB, with this cost representing 30.4% of self-operated store revenue, down from 34.7% year-on-year [4]. Profitability - Operating profit from self-operated stores increased by 647.83% to 17.2 million RMB, with the contribution margin rising by 5.9 percentage points to 6.7% [5]. Product Strategy - Tims China has expanded its product line by introducing lighter meal options, reinforcing its differentiation strategy in the "coffee + freshly prepared food" segment [5]. Franchise Growth - Other revenue, primarily from franchising and e-commerce, grew by 28.6% to 46 million RMB, driven by the expansion of franchised stores, which increased by 153 to 569 [8]. - As of March 31, Tims China had a total of 1,024 stores in the country, ranking eighth among domestic coffee brands [8].

Core Viewpoint - The intense competition in the food delivery market in 2025 is leading to significant pressure on both store staff and delivery riders, resulting in conflicts and operational challenges [1][2][4]. Group 1: Industry Dynamics - The food delivery market is experiencing a surge in demand, particularly for beverages, driven by promotional strategies such as discounts and red envelopes [1]. - The operational model of many coffee and tea brands, including Tims, emphasizes strict control over labor costs, often resulting in insufficient staffing during peak hours [5][10]. - The shift towards "made-to-order" food items, such as Tims' warm food offerings, complicates the workflow and increases the likelihood of delays, leading to customer dissatisfaction [10][14]. Group 2: Staff and Rider Conflicts - Conflicts between store staff and delivery riders are common, often stemming from delays in food preparation and the pressure to meet delivery times [2][8][19]. - Staff members report feeling overwhelmed during peak hours, with insufficient time to manage both food preparation and customer service, leading to a tense work environment [6][14]. - Delivery riders face financial penalties for late deliveries, which exacerbates tensions with store staff who are also under pressure to fulfill orders quickly [18][22]. Group 3: Operational Challenges - The increase in order volume during peak times can lead to "order bottlenecks," where the time to prepare food significantly exceeds expectations, causing frustration for both staff and riders [8][9]. - Many stores operate with minimal staff, which can lead to operational breakdowns during busy periods, affecting overall service quality [7][14]. - The complexity of the order system, including pre-scheduled orders, can create confusion and further delays, impacting the efficiency of both staff and riders [19][22]. Group 4: Employee Experience - Employees express dissatisfaction with their working conditions, citing high stress levels and inadequate compensation for the workload they manage [5][15]. - The high turnover rate among staff is attributed to the demanding nature of the job and the lack of adequate training and support from management [15][20]. - The emotional labor involved in customer service, combined with the repetitive nature of the tasks, contributes to a challenging work environment for employees [16][20].

Core Insights - Tims China is experiencing challenges in the domestic market despite its expansion efforts over the past six years [1] Group 1: Financial Performance - In Q1, Tims China achieved system sales of 376.3 million yuan, a year-on-year increase of 3.5% [2] - The company's actual revenue for Q1 was 301 million yuan, a decline of 9.5% year-on-year, with adjusted EBITDA losses of 29.3 million yuan compared to a loss of 52.3 million yuan in the same period last year [4] - Same-store sales decreased by 7.8%, with a 6.5% drop in single-store sales for direct-operated stores, and a 14% decline in order volume [9][10] Group 2: Store Expansion and Structure - The number of franchise stores has rapidly increased, with a net addition of over 120 stores in the past year, raising their proportion in the store structure from 37% to 44% [3] - In Q1, Tims China closed 7 direct-operated stores while adding 9 franchise stores, bringing the total number of stores to 1,024 [5] - In the previous quarter, there was a net addition of 76 stores, including 12 direct-operated and 64 franchise stores [6] Group 3: Competitive Landscape and Strategy - Tims China is facing intense competition in first- and second-tier cities, with competitors like Starbucks and Manner introducing baked goods and other brands promoting energy bowls [11] - The company is focusing on a differentiated competition strategy by expanding its product categories, particularly with bagels, to maintain an average transaction value of around 30 yuan [7] - Tims China has started to target the lunch market by launching new products such as hot bagel sandwiches and energy bowls [8] Group 4: Future Goals - The CEO has set a goal for Tims China to achieve positive cash flow profitability and same-store sales growth by 2025 [11] - Achieving these goals is considered challenging given the current market conditions, including aggressive pricing competition in the coffee and tea sectors [12]

Core Points - Tims China announced its first quarter 2025 financial results, which are available on the company's Investor Relations website [2][3] - The earnings call features remarks from the CEO Yongchen Lu and CFO Albert Li, followed by a question-and-answer session [3] Financial Highlights - The company provided operational and financial highlights in a press release and accompanying presentation [2] - Forward-looking statements were included in the earnings presentation, indicating potential future events and uncertainties [4][5]

Financial Data and Key Metrics Changes - The company achieved a 3.5% increase in system sales year over year in Q1 2025, with profits from other revenues increasing by 34.5% year over year [9][16] - Adjusted corporate EBITDA margin improved by 6.1 percentage points year over year, while company-owned and operated store contribution margin improved by 5.9 percentage points [8][13] - Monthly average transacting customers reached 2,920,000, a 4.3% increase from the same quarter in 2024 [14] Business Line Data and Key Metrics Changes - Revenue from franchised and retail businesses increased by 28.6% year over year, while company-owned and operated store revenue dropped by 14% year over year [15][16] - The number of franchised stores increased from 302 to 455 year over year [16] Market Data and Key Metrics Changes - The company expanded its store footprint into 84 cities, including Fujian and Nantang, during Q1 [10] - The largest loyalty club members reached 25,200,000, reflecting a 25.7% year over year growth [10] Company Strategy and Development Direction - The company is focusing on a differentiated strategic positioning in coffee and freshly prepared food, launching new products like the light and fit lunch box to reshape consumer perceptions [5][7] - The strategy includes moving from singular coffee consumption to all-day healthy dining, embedding a café experience into a health-focused lifestyle [8] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic volatility and intense market competition but highlighted significant profitability improvements due to operational efficiencies and cost controls [8][9] - The company remains optimistic about achieving positive same store sales growth in 2025, especially in the second half of the year [37] Other Important Information - The company has received over 7,000 applications for its individual franchisee program since its launch in December 2023, successfully converting nearly 200 stores by March 2025 [10] - The company is enhancing its digital capabilities, with digital orders as a percentage of total orders rising from 85.4% to 86.3% year over year [15] Q&A Session Summary Question: Outlook for new store openings and franchise applications - Management indicated that Q1 is typically slow, but they aim to open around 200 made-to-order stores this year, with most openings expected in the second half [23][25] Question: Current state of the Chinese consumer and government stimulus - Management noted that consumer morale has not significantly improved post-Chinese New Year, and they are waiting to see the effects of government policies on consumption [26][27] Question: Competition and market growth - Management emphasized that the market has become more rational, focusing on differentiation rather than price competition, and highlighted the success of their new product offerings [29][31]

Financial Data and Key Metrics Changes - The company achieved a 3.5% increase in system sales year over year in Q1 2025, with profits from other revenues increasing by 34.5% year over year [11][16] - Adjusted corporate EBITDA margin improved by 6.1 percentage points year over year, while company-owned and operated store contribution margin improved by 5.9 percentage points [10][15] - Monthly average transacting customers reached 2,920,000, a 4.3% increase from the previous year [16] Business Line Data and Key Metrics Changes - Revenue from franchised and retail businesses increased by 28.6% year over year, while company-owned and operated store revenue dropped by 14% year over year [16][19] - The number of franchised stores increased from 302 to 455 year over year [16] Market Data and Key Metrics Changes - The company expanded its store footprint into 84 cities, including Fujian and Nantang, and received over 7,000 franchise applications since launching the individual franchisee program [12][21] - The largest loyalty club members reached 25,200,000, reflecting a 25.7% year over year growth [12] Company Strategy and Development Direction - The company is focusing on a differentiated strategic positioning in coffee plus freshly prepared food, launching new products like the light and fit lunch box to reshape consumer perceptions [6][8] - The company aims to open around 200 made-to-order stores in 2025, with most openings expected in the second half of the year [27] Management's Comments on Operating Environment and Future Outlook - Management noted that the Chinese consumer sentiment remains cautious, with the economy struggling, but they are optimistic about achieving positive same store sales growth in 2025, especially in the second half [29][40] - The company is committed to sustainable profitable growth and generating long-term value for shareholders [21] Other Important Information - The company has implemented strategic marketing initiatives to drive traffic and increase average transaction value, including co-branded collaborations and a brand birthday campaign [13][14] - Operational efficiencies and cost controls have been emphasized, leading to a reduction in food and packaging costs as a percentage of revenues [18][19] Q&A Session Summary Question: Outlook for new store openings and franchise applications - Management indicated that Q1 is typically slow, but they plan to accelerate store openings in the second half of the year, aiming for around 200 made-to-order stores [24][27] Question: Current state of the Chinese consumer and government stimulus - Management noted that consumer morale has not significantly improved post-Chinese New Year, and they are waiting to see the effects of government policies on consumption [28][29] Question: Competition and market growth - Management stated that the market has become more rational, focusing on differentiation rather than price competition, and emphasized their unique coffee plus food combo offerings [31][33]

Q1 2025 Earnings Presentation Tims China Nasdaq: THCH June 24, 2025 This Presentation contains trademarks, service marks and trade names of third parties, which are the property of their respective owners. The use or display of third parties' trademarks, service marks, trade names or products in this Presentation is not intended to, and does not imply, a relationship with THIL, or an endorsement or sponsorship by or of THIL. Solely for convenience, the trademarks, service marks and trade names referred to i ...

Core Insights - TH International Limited, the exclusive operator of Tim Hortons in China, reported a 3.5% year-over-year increase in system sales to RMB376.3 million (USD51.9 million) for Q1 2025, despite a 9.5% decrease in total revenues to RMB300.7 million (USD41.4 million) [1][6][4] - The company achieved a significant improvement in its company-owned and operated store contribution margin, which increased by 5.9 percentage points to 6.7% [4][6] - The registered loyalty club members grew by 25.7% year-over-year, reaching 25.1 million by the end of Q1 2025 [1][6] Financial Performance - Total revenues for Q1 2025 were RMB300.7 million (USD41.4 million), down from RMB332.1 million in Q1 2024, marking a 9.5% decrease [6][7] - System sales increased to RMB376.3 million (USD51.9 million), reflecting a 3.5% growth compared to the same quarter of the previous year [6][7] - The company-owned and operated store contribution was RMB17.2 million (USD2.4 million), a significant increase from RMB2.3 million in Q1 2024 [6][7] Cost Management - The company successfully reduced various costs, including food and packaging costs by 24.6% year-over-year, and payroll and employee benefits expenses by 23.3% [8][10][11] - Marketing expenses decreased by 11.8% to RMB17.4 million (USD2.4 million) [10] - General and administrative expenses were reduced by 4.9% to RMB51.8 million (USD7.1 million) [11] Operational Developments - The company opened 2 new stores, resulting in a total of 1,024 stores as of March 31, 2025, with 569 being company-owned and operated and 455 franchised [20][6] - The launch of the "Light & Fit Lunch Box" product line aimed to enhance sales and improve store unit economics [3][4] - The company plans to focus on operational efficiencies and supply chain optimizations in the upcoming quarters [4][3] Market Position - Tims China was recognized in the 2025 China Restaurant Franchise Brand Top 100 list, highlighting its growing brand presence [24] - The company continues to expand its franchise business, increasing the number of franchised stores from 302 to 455 year-over-year [8][6]