TH International (US:THCH) Guan Cha Zhe Wang·2025-07-03 08:14Core 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]