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01/11 03:17
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates positive sentiment due to strong franchise revenue growth, improved operational efficiencies, and successful marketing campaigns driving same-store sales recovery. Despite a decrease in company-owned store revenues, the strategic focus on sub-franchising and digital orders shows promise. Positive EBITDA and cash flow self-sufficiency add to the optimism. The Q&A section reveals confidence in liquidity and growth, although some responses lack detail. Overall, the company's growth strategies and financial health suggest a positive stock price movement over the next two weeks.
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.
Light & Fit Lunch Box platform: Launched new combo products for lunch, including hot baked bagel sandwiches, energizing lunch wraps, and loaded power bowls. Food revenue increased by 8.6% YoY, with food revenue contribution reaching 35.2% of sales.
Beverage portfolio expansion: Introduced 43 new items, including 28 beverages and 15 food products. Launched sparkling cold brew series and reintroduced water buffalo milk series. Expanded into non-coffee beverages like ice cap line and cold tea.
Store expansion: Expanded footprint into 90 cities, including new cities in Shandong, Anhui, and Shanxi provinces. Opened 18 special channel stores in locations like railway stations and hospitals.
Franchise growth: Received over 8,100 franchise applications since December 2023, converted over 400 stores, and targeted 200 new franchise stores in 2025. Franchised stores increased from 333 to 449 YoY.
Operational efficiencies: Improved company-owned store contribution margin and adjusted corporate EBITDA margin by 2.7 and 2.8 percentage points YoY. Reduced food and packaging costs by 0.8 percentage points and labor costs by 1.0 percentage points YoY.
Digital orders: Digital orders reached 90.4% of total orders, up from 86.5% YoY. Delivery orders increased by 10.2% YoY.
Brand ambassador: Appointed Lars Huang as brand ambassador to target Gen Z consumers and promote healthy, light products.
Focus on healthy meals: Extended Light & Fit Lunch Box series with new formats like wraps and energy bowls, targeting the growing demand for nutritious meals.
Company-owned and operated store revenue decline: Revenues from company-owned and operated stores dropped by 12.5% year-over-year due to planned closures of underperforming stores and a 3.6% decrease in same-store sales growth.
Increased delivery costs: Delivery costs as a percentage of revenues from company-owned and operated stores increased by 1.8 percentage points to 11.8%, driven by a higher delivery revenue mix and a 10.2% increase in delivery orders.
Higher rental and property management fees: Rental and property management fees as a percentage of revenues increased by 0.9 percentage points, primarily due to a 3.6% decrease in same-store sales volume growth.
Marketing expense increase: Marketing expenses rose to 4.0% of total revenues, an increase of 0.5 percentage points year-over-year, due to efforts to promote new products like the Light & Fit Lunch Box series.
Economic pressures on same-store sales: Same-store sales growth decreased by 3.6%, reflecting challenges in maintaining customer traffic and sales volume in company-owned stores.
Cash and liquidity concerns: Total cash and cash equivalents decreased from RMB 184.2 million to RMB 178.8 million, reflecting cash disbursements for business expansion and reliance on additional bank borrowings.
Store Expansion: The company plans to open around 200 franchise stores in 2025, leveraging sub-franchisee partnerships and focusing on special channel store development in locations such as railway stations, airports, highway rest areas, hospitals, universities, and schools.
Loyalty Program Growth: The registered loyalty club members reached 26.2 million as of June 30, 2025, reflecting a 22.4% year-over-year growth. This is expected to serve as a strong catalyst for future growth.
Product Innovation and Diversification: The company introduced 43 new items in Q2 2025, including beverages and food products, to drive same-store sales and expand its consumer base. This includes healthier beverage options and non-coffee beverages to cater to diverse customer needs.
Operational Efficiency: The company aims to enhance operational efficiencies through supply chain optimization, cost controls, and refining store unit economics to achieve sustainable profit growth.
Marketing and Brand Expansion: The appointment of Lars Huang as the brand ambassador is expected to expand the brand's reach, particularly among Gen Z consumers, and drive traffic and average transaction value.
The selected topic was not discussed during the call.
The earnings call presents a mixed but overall positive outlook. Strong points include a 58.2% increase in profits from other revenues, significant growth in registered loyalty club members, and a successful franchise expansion. The Q&A section reveals effective liquidity management and strategic focus on improving margins. However, concerns about increased costs and a decline in company-owned store revenues are balanced by optimistic guidance and strategic measures to enhance profitability. The market is likely to react positively, especially with the promising franchise model and strategic partnerships.
The earnings call indicates positive sentiment due to strong franchise revenue growth, improved operational efficiencies, and successful marketing campaigns driving same-store sales recovery. Despite a decrease in company-owned store revenues, the strategic focus on sub-franchising and digital orders shows promise. Positive EBITDA and cash flow self-sufficiency add to the optimism. The Q&A section reveals confidence in liquidity and growth, although some responses lack detail. Overall, the company's growth strategies and financial health suggest a positive stock price movement over the next two weeks.
The earnings call reveals several positive factors: improved EBITDA and contribution margins, increased profits from other revenues, and strategic product launches. Despite challenges like liquidity constraints and underperforming stores, the company's focus on differentiation and strategic expansions, alongside a 29.7% growth in loyalty members, are promising. The Q&A highlights a strategic approach to competition and improving same-store sales. Overall, these factors, coupled with positive guidance and strategic initiatives, suggest a positive stock price movement.
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