Tims China Announces Third Quarter 2024 Financial Results

Core Insights - TH International Limited, the exclusive operator of Tim Hortons in China, reported its third quarter 2024 financial results, highlighting a focus on profitability despite challenges in the competitive coffee market [1][3]. Financial Performance - Total revenues for Q3 2024 were RMB 359.6 million (USD 51.3 million), a decrease of 17.1% from RMB 433.9 million in Q3 2023 [2]. - System sales decreased by 15.5% year-over-year to RMB 372.4 million (USD 53.1 million) [2]. - The company achieved a company-owned and operated store contribution of RMB 39.9 million (USD 5.7 million), a 37.6% increase from the same quarter in 2023 [2]. - The contribution margin for company-owned and operated stores was 13.3%, reflecting a 5.8 percentage point improvement year-over-year [2][3]. - Adjusted corporate EBITDA was RMB 2.0 million (USD 0.3 million), compared to a loss of RMB 63.0 million in Q3 2023, marking the second consecutive quarter of positive adjusted corporate EBITDA [12]. Store Operations - The company opened 49 new franchised stores during the quarter, while closing underperforming company-owned stores [2]. - As of September 30, 2024, registered loyalty club members reached 22.8 million, a 35.3% increase year-over-year [2]. Cost Management - Company-owned and operated store costs decreased by 29.0% to RMB 279.6 million (USD 39.9 million) compared to Q3 2023 [6]. - Food and packaging costs fell by 36.3% to RMB 86.9 million (USD 12.4 million), with a decrease in costs as a percentage of revenues from 35.1% to 29.0% [6]. - Payroll and employee benefits expenses decreased by 34.5% to RMB 50.7 million (USD 7.2 million), with a reduction in percentage of revenues from 19.9% to 16.9% [6]. Marketing and Administrative Expenses - Marketing expenses were reduced by 42.1% to RMB 18.5 million (USD 2.6 million), decreasing as a percentage of total revenues from 7.4% to 5.1% [8]. - General and administrative expenses decreased by 39.6% to RMB 39.8 million (USD 5.7 million), with adjusted expenses down 39.5% [9]. Strategic Initiatives - The company is focusing on product differentiation and enhancing operational efficiencies, including the renovation of 539 stores to improve food preparation processes [4][3]. - Tims China is actively engaging in partnerships and promotions, such as the collaboration with Meng Lan for the Bagel Festival, aimed at increasing customer engagement [20]. Market Position - Despite a competitive landscape, the company is committed to delivering value through fresh and healthy food options, while optimizing supply chain efficiencies to enhance profitability [4][3].