TH International Limited (THCH) Q2 2025 Earnings Call Transcript

Food Revenue Increased by 8.6% year-over-year. Reasons for the increase include the successful launch of the Light & Fit Lunch Box platform and new combo products for the lunch daypart, which enhanced store unit economics.

Food Revenue Contribution Reached 35.2% of sales, a historical high, up by 2.8 percentage points from 32.5% in Q2 2019. This increase is attributed to the growing success of food offerings.

System Sales Achieved a 1.4% year-over-year increase. This reflects steady growth in sub-franchisee and retail businesses.

Profits from Other Revenues Increased by 110.3% year-over-year. This growth underscores disciplined execution and commitment to sustainable profit growth.

Adjusted Corporate EBITDA Returned to positive territory. This improvement is due to disciplined execution and operational efficiencies.

Adjusted Net Losses Reduced by 16.2% year-over-year. This reduction is attributed to improved operational efficiencies and cost management.

Registered Loyalty Club Members Reached 26.2 million, reflecting a 22.4% year-over-year growth. This growth serves as a strong catalyst for future growth.

Monthly Average Transacting Customers Reached 3.59 million in Q2 2025, a 14.3% increase from 3.14 million in Q2 2024. This increase is driven by enhanced digital capabilities and customer engagement.

Digital Orders Rose to 90.4% of total orders in Q2 2025, up from 86.5% in Q2 2024. This increase reflects growing demand for delivery and takeaway services.

Company-Owned and Operated Store Revenues Dropped by 12.5% year-over-year. The decline is primarily due to planned closures of underperforming stores and a 3.6% decrease in same-store sales growth.

Franchise Business and Retail Business Revenues Increased by 50.7% year-over-year. This growth is driven by an increase in the number of franchised stores from 333 to 449.

Food and Packaging Costs Reduced as a percentage of revenues from company-owned and operated stores by 0.8 percentage points year-over-year, accounting for 31% of revenues. This reduction is due to supply chain refinements and economies of scale.

Labor Costs Reduced as a percentage of revenues from company-owned and operated stores by 1.0 percentage points year-over-year. This reduction is attributed to optimized staffing and operational efficiencies.

Other Store Operating Expenses Reduced as a percentage of revenues from company-owned and operated stores by 0.4 percentage points year-over-year. This reduction is due to operational streamlining.

Rental and Property Management Fees Increased as a percentage of revenues from company-owned and operated stores by 0.9 percentage points, from 19.3% in Q2 2024 to 20.2% in Q2 2025. This increase is primarily due to a 3.6% decrease in same-store sales volume growth.

Delivery Costs Increased as a percentage of revenues from company-owned and operated stores by 1.8 percentage points, from 10% in Q2 2024 to 11.8% in Q2 2025. This increase is due to a higher delivery revenue mix and a 10.2% year-over-year increase in delivery orders.

Marketing Expenses Increased as a percentage of total revenues by 0.5 percentage points year-over-year, accounting for approximately 4.0% of total revenues. This increase is due to promotional efforts for the Light & Fit Lunch Box series.

General and Administrative Expenses Decreased by 5.2% year-over-year. This reduction is attributed to cost optimization measures at the headquarters level.

Cash and Cash Equivalents Totaled RMB 178.8 million as of June 30, 2025, compared to RMB 184.2 million as of December 31, 2024. The decrease is primarily due to cash disbursements for business expansion, partially offset by additional bank borrowings.