Financial Data and Key Metrics Changes - In Q2 2025, food revenue increased by 8.6% year over year, with food revenue contribution reaching a historical high of 35.2%, up 2.8 percentage points from 32.5% in 2024 [5] - System sales achieved a 1.4% year over year increase, while adjusted corporate EBITDA returned to positive, and adjusted net losses were reduced by 16.2% [6][19] - Monthly average transacting customers reached 3,590,000, a 14.3% increase from 3,140,000 in Q2 2024 [15] Business Line Data and Key Metrics Changes - Company-owned and operated store revenues dropped by 12.5% year over year due to planned closures of underperforming stores and a 3.6% decrease in same store sales growth [15] - Revenues from franchised and retail businesses increased by 50.7% year over year, with the number of franchised stores rising from 333 to 449 [16] - Food and packaging costs accounted for 30.1% of revenues from company-owned stores, with a reduction in labor costs and other operating expenses as a percentage of revenues [17] Market Data and Key Metrics Changes - The average number of members per store reached approximately 26,600, serving as a strong catalyst for future growth [7] - Digital orders as a percentage of total orders rose from 86.5% in Q2 2024 to an all-time high of 90.4% in Q2 2025 [15] Company Strategy and Development Direction - The company reinforced its coffee plus freshly prepared food strategy with the launch of the live lunch box platform and new combo products [5] - Plans to open around 200 new franchise stores in 2025, focusing on special channel store development in high-traffic locations [7] - The company aims to enhance operational efficiencies through supply chain optimizations and rigorous cost controls [19] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the second half of the year, expecting positive same store sales growth and continued improvements in profitability [21][45] - The company is focused on balancing the need for revenue growth with conservative operating capital management [30] Other Important Information - The company has established a unique coffee plus fresh prepared food business model, with a payback period of two to three years for franchise opportunities [22] - Marketing expenses as a percentage of total revenues increased to approximately 4% during the quarter, reflecting investments in the lunch box campaign [18] Q&A Session Summary Question: Current thinking on the rate of sub franchise applications and new store growth - Management clarified that 41 of the 49 closures in Q2 were non-MTO Express stores, with a target of around 200 new MTO stores in 2025 [25] Question: Sustainability of increased marketing expenses and impact on same store sales growth - Management noted that same store sales have been recovering well and expect positive growth in the third quarter [27] Question: Balancing investment for revenue growth with operating capital needs - Management indicated they are close to achieving operating cash flow self-sufficiency and are working on securing additional capital for growth [30] Question: Update on refinancing of convertible debt - Management confirmed good progress on refinancing and will disclose details when available [38] Question: Monetizing loyalty members and potential sales generation - Management acknowledged the challenge of deriving value from memberships and is working on product and campaign designs to attract spending [39] Question: Expectation of liquidity position improvement - Management expressed confidence in a good liquidity position and the approach to operating cash flow self-sufficiency [41]

Financial Data and Key Metrics Changes - In Q2 2025, food revenue increased by 8.6% year over year, with food revenue contribution reaching a historical high of 35.2%, up 2.8 percentage points from 32.5% in 2024 [6] - System sales grew by 1.4% year over year, while adjusted corporate EBITDA returned to positive, and adjusted net losses were reduced by 16.2% [7][21] - Monthly average transacting customers reached 3,590,000, a 14.3% increase from 3,140,000 in Q2 2024 [16] Business Line Data and Key Metrics Changes - Revenues from franchised and retail businesses increased by 50.7% year over year, with the number of franchised stores rising from 333 to 449 [18] - Company-owned and operated store revenues dropped by 12.5% year over year due to planned closures of underperforming stores and a 3.6% decrease in same-store sales growth [17] - Delivery orders for company-owned stores increased by 10.2% year over year, indicating a growing demand for delivery services [20] Market Data and Key Metrics Changes - The average number of registered loyalty club members reached 26.2 million, reflecting a 22.4% year over year growth [9] - Digital orders as a percentage of total orders rose from 86.5% in Q2 2024 to an all-time high of 90.4% in Q2 2025 [16] Company Strategy and Development Direction - The company reinforced its coffee plus freshly prepared food strategy with the launch of the live lunch box platform and new combo products [6] - A target to open around 200 franchise stores in 2025 was set, focusing on capital efficiency and convenience for customers [9] - The company aims to enhance operational efficiencies through supply chain optimizations and rigorous cost controls [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about achieving positive same-store sales in Q3 and the second half of the year, indicating a recovery trend [38] - The company is close to achieving operating cash flow self-sufficiency and is working on securing additional capital for growth [33][43] Other Important Information - Marketing expenses as a percentage of total revenues increased to approximately 4%, up 0.5 percentage points year over year, primarily to support the lunch box campaign [20] - The company is focused on monetizing its loyalty members and designing campaigns to increase their spending [41] Q&A Session Summary Question: Current thinking on the rate of sub franchise applications - Management clarified that 41 of the 49 closures in Q2 were non-MTO Express stores, and they expect over 100 net openings this year, targeting 200 to 300 new openings annually in the coming years [28] Question: Sustainability of increased marketing expenses - Management noted that same-store sales have been recovering well and expect positive growth in the second half of the year, attributing some marketing expenses to the lunch box campaign [30][31] Question: Balancing investment for growth with capital conservatism - Management indicated they are close to breakeven on adjusted corporate EBITDA and are working on securing additional financing to open more profitable stores while balancing financial positions [32][34] Question: Update on refinancing convertible debt - Management stated they are making good progress on refinancing and will disclose details when available [40] Question: Monetizing loyalty members - Management acknowledged the challenge of monetizing loyalty members and emphasized the need to design effective products and campaigns to increase member spending [41] Question: Expectation of liquidity position improvement - Management expressed confidence in their liquidity position, stating they are approaching operating cash flow self-sufficiency and are working to bring in new capital [43]

Business Performance - Total stores increased by 11.9% from 907 in Q2 2024 to 1,015 in Q2 2025[12] - Registered loyalty club members grew by 22.4% year-over-year, reaching 26.2 million in Q2 2025[12] - Digital orders accounted for 90.4% of revenues from company-owned stores in Q2 2025, a 3.9 percentage point increase year-over-year[12] - The company opened ~150 individual franchise stores across 14 provinces[40] Financial Results - Total revenues decreased by 4.9% from RMB 366.8 million in Q2 2024 to RMB 349.0 million in Q2 2025[12] - Revenues from company-owned stores decreased by 12.5% from RMB 322.3 million in Q2 2024 to RMB 281.9 million in Q2 2025[12] - System sales increased by 1.4% from RMB 403.8 million in Q2 2024 to RMB 409.5 million in Q2 2025[12] - Same-store sales growth for company-owned stores decreased by 10.2 percentage points from -13.8% in Q2 2024 to -3.6% in Q2 2025[12] - Adjusted corporate EBITDA margin decreased by 30bp from 0.9% in Q2 2024 to 0.6% in Q2 2025[10] Strategic Focus - The company focuses on profitable and capital-efficient growth[28]

Core Insights - TH International Limited, the exclusive operator of Tim Hortons in China, reported a 1.4% year-over-year increase in system sales to RMB409.5 million (USD57.2 million) for Q2 2025, alongside a positive adjusted corporate EBITDA of RMB2.2 million (USD0.3 million) [1][4][13] - The company achieved a significant growth in its loyalty program, with registered members reaching 26.2 million, marking a 22.4% increase year-over-year [1][5] Financial Performance - Total revenues for Q2 2025 were RMB349.0 million (USD48.7 million), reflecting a 4.9% decrease from RMB366.8 million in Q2 2024 [5][6] - Food revenue increased by 8.6% year-over-year, contributing 35.2% to system sales, up from 32.5% in Q2 2024 [3][4] - The company reported a net loss of RMB75.9 million (USD10.6 million) for Q2 2025, an improvement from a net loss of RMB99.5 million in the same quarter of 2024 [14][15] Operational Highlights - The company closed nine stores during the quarter, resulting in a net opening of 40 made-to-order (MTO) stores and the closure of 49 non-MTO stores [5][6] - The contribution margin from company-owned and operated stores was 9.6%, down from 10.1% in Q2 2024 [5][8] - The number of franchised stores increased from 333 as of June 30, 2024, to 449 as of June 30, 2025, contributing to a 50.7% increase in other revenues [5][8] Cost Management - Company-owned and operated store costs decreased by 12.1% year-over-year to RMB272.4 million (USD38.0 million) [7][8] - Food and packaging costs fell by 15.0% year-over-year, benefiting from improved supply chain efficiencies [7][8] - Payroll and employee benefits expenses decreased by 17.4% year-over-year, reflecting optimization in staffing arrangements [7][8] Marketing and Brand Development - The company launched the "Light & Fit Lunch Box" platform to enhance its product offerings and drive top-line growth [3][4] - Marketing expenses increased by 8.4% year-over-year to RMB13.9 million (USD1.9 million), primarily due to promotional efforts for new products [9][10] Liquidity Position - As of June 30, 2025, the company's total cash and cash equivalents were RMB178.8 million (USD25.0 million), a slight decrease from RMB184.2 million at the end of 2024 [17]

Core Viewpoint - TH International Limited, operating as Tims China, is set to release its second quarter 2025 financial results on August 26, 2025, before the U.S. market opens, followed by a conference call [1] Group 1: Company Overview - TH International Limited (Nasdaq: THCH) is the exclusive master franchisee of Tim Hortons coffee shops in mainland China, Hong Kong, and Macau [2] - The company was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (TSX: QSR) (NYSE: QSR) [2] Group 2: Company Philosophy - The company's philosophy emphasizes world-class execution, data-driven decision making, local relevance, continuous innovation, community engagement, and convenience [3]

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]