TH International (THCH) Q3 2024 earnings summary

Executive summary

• Achieved second consecutive quarter of positive adjusted corporate EBITDA, with margin improving to 0.6% from -14.5% year-over-year and a profit of RMB2.0 million, following the first-ever positive result in Q2 2024.

• Company-owned and operated store contribution margin reached a record 13.3%, up 5.8 percentage points year-over-year.

• Store network expanded 24% year-over-year to 946 stores, with 39 net new stores in Q3 2024 and entry into 21 new cities.

• Registered loyalty club members grew 35.3% year-over-year to 22.8 million, driving higher purchase frequency and digital engagement.

• Franchise and sub-franchise network expansion accelerated, with 49 net franchised store openings and sub-franchise revenues up 84% year-over-year.

Financial highlights

• Total revenues declined 17.1% year-over-year to RMB359.6 million, while system sales fell 15.5% to RMB372.4 million.

• Company-owned and operated store sales dropped 22.9% to RMB299.5 million, driven by a 12.3% decline in order volume and a 12.0% decrease in average ticket size.

• Same-store sales for company-owned and operated stores decreased 20.7% year-over-year.

• Operating loss narrowed to RMB55.9 million from RMB147.7 million year-over-year; net loss from continuing operations improved to RMB87.4 million from RMB147.6 million.

• Adjusted general and administrative expenses as a percentage of revenue decreased 2.7 percentage points to 10.7% year-over-year.

Outlook and guidance

• Near-term priorities include improving adjusted corporate EBITDA margins, optimizing cost structure, delivering sustainable revenue growth, expanding store-level profitability, and accelerating franchise network growth.

• Strategic focus remains on profitable, capital-efficient growth, product differentiation, and further expansion of the sub-franchisee network.