THCH (THCH) Q2 2026 Earnings Call Transcript

Market share losses mount as store closures and competition pressure results.

Market share losses mount as store closures and competition pressure results. Need a quote from a Motley Fool analyst? Email [email protected] Management of TH International Limited ( THCH -18.82% ) reported a period of transition as the company works to reverse declining revenue and same-store sales. The company reported that results were impacted by underperforming store closures and heightened competition in the coffee market. Strategic priorities include accelerating product innovation, improving store-level unit economics, and shifting toward a more balanced expansion of company-owned and franchised locations. The company stated it is directing efforts toward cost optimization in the supply chain and corporate overhead to achieve corporate EBITDA breakeven. Operator: Ladies and gentlemen, welcome to the Tims China's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I would like to turn the call over to Patty Yu, Tims China's Public and Media Relations Manager for prepared remarks and introductions. Please go ahead, Patty. Patty Yu: Hello, everyone, and thank you for joining us on today's call. TH International Limited announced its second quarter 2026 financial results earlier today. A press release as well as the company's presentation, which includes operational and financial highlights are now available on the company's IR website at ir.timschina.com. Today, you will hear from Mr. John Cheung, our CEO; and Albert Li, our CFO.

After the company's prepared remarks, the management team will conduct a question-and-answer session. You will find the webcast of today's earnings call on our IR website. Before we get started, I would like to remind you that our earnings presentation and the investor materials contain forward-looking statements, which are subject to future events and uncertainties, statements that are not historical factors, including but not limited to statements about the company's beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and our actual results may differ materially from those forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our findings with the SEC. This presentation also includes certain non-GAAP financial measures, which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measure. The upcoming reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier day. With that said, I would like now to turn it over to John Cheung, our CEO. Please go ahead, John. Kwok Wah Cheung: Well, thank you, Patty. Good morning, good evening, everyone. Thank you for joining us today. Tim Hortons is one of the world's top 10 most valuable restaurant brands, and China represents one of the most compelling consumer market. It's truly a privilege to take on this role as the CEO of Tims China.

I'm truly excited and honored to be here, and I'm very passionate about our future. Since joining the company, well, in fact, I have to say even before joining the company in mid-June, I spent a lot of my time diving into the business, visiting stores and suppliers, talking to our barristers and store managers, hearing from our partners, and most importantly, connecting with our customers. These learnings have helped me having a strong grip of where we are and what we need to do differently moving forward. Everything I've seen and heard tell me we have significant strength to build on, and our brand is enduring. Over time, market and competition evolved, consumer have changed, there are many things we need to change to get consumers back and get them back more often. I look forward to sharing more about my framework of a plan going forward and how to drive our next phase of growth for Tims China review shortly. But first, I would like to turn it over to our CFO, Albert Li, for a more detailed overview of our second quarter 2026 financial performance. Albert? Dong Li: Thank you, John, and welcome to your first Tims China earnings call. During the second quarter of 2026, our total revenues and system sales were RMB 273.4 million and RMB 347.8 million, respectively, which dropped by 21.7% and 15.1% year-over-year. The decrease was primarily due to the closure of certain underperforming company-owned and operating stores, and a 17.8% decrease in same-store sales growth. Our overall monthly average transacting customer reached 2.85 million during the second quarter of 2026, compared to 3.59 million in the same quarter of 2025. Net new store openings totaled two during the second quarter of 2026, representing a net opening of 15 made-to-order stores and, in the meantime, a net closer of 13 non-MTO stores.

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