TH International (THCH) Q1 2025 earnings summary

Executive summary

• System sales grew 3.5% year-over-year to RMB376.3 million, while total revenues declined 9.5% to RMB300.7 million in Q1 2025.

• Store count reached 1,024 across 84 cities, up 13% year-over-year, with over 1,000 stores and 25.2 million loyalty club members, reflecting 25.7% growth.

• Digital orders accounted for 86.3% of total orders, up from 85.4% in Q1 2024.

• Strategic focus on made-to-order stores, healthy food offerings, and capital-efficient growth to drive sustainable revenue and differentiate from competitors.

• Launched Light & Fit Lunch Box combos and new product innovations to boost lunch sales and reposition as a lunch destination.

Financial highlights

• Company-owned and operated store contribution margin improved by 5.9 percentage points to 6.7% year-over-year.

• Adjusted corporate EBITDA margin increased by 6.1 percentage points to -9.7% year-over-year.

• Profits from other revenues rose 34.5% year-over-year; adjusted corporate EBITDA loss cut by nearly 50%.

• Company-owned and operated store revenue declined 14.0% year-over-year due to store closures and a 6.5% decrease in same-store sales.

• Franchise and retail business revenue grew 28.6% year-over-year; franchise stores increased from 302 to 455.

Outlook and guidance

• Targeting the opening of around 200 made-to-order stores in 2025, with most openings expected in the second half, especially Q4.

• Strategic priorities include improving adjusted corporate EBITDA, accelerating franchise network growth, and optimizing cost structure.

• Optimistic about achieving positive same-store sales growth in 2025, particularly in the second half.

• Continued focus on operational efficiencies, supply chain optimization, and cost controls to drive profitable growth.

• Management aims to accelerate sub-franchising expansion in the next quarter.