Q3 2025 TH International Ltd Earnings Call

December 9, 2025

Only mode during management prepared, remarks. And that will be a question and answer session to follow.

Today's conference is being recorded at this time. I would like to turn the call over to Jama backs who hates team China. Investor relations efforts for prepare remarks and introductions, please go ahead JMA

Thank you, Desmond, and um, hello everyone, thank you for joining us on today's call. My name is Ja boxer of investor relations for Tim's China, and, um, Tim's announced its third quarter 2025 Financial results earlier today.

The press release as well as an accompanying presentation, which contains operational and financial highlights are now available on the company's IR website at I think china.com.

Today, you will hear from Yong Chen Lu. Our CEO, and director, and Albert. Lea our CFO

Gemma Bakx: Thank you, Desmond, and hello everyone. Thank you for joining us on today's call. My name is Gemma Bakx, head of investor relations for Tims China, and Tims announced its Q3 2025 financial results earlier today. A press release, as well as an accompanying presentation, which contains operational and financial highlights, are now available on the company's IR website at IR.TimsChina.com.

After the companies prepared remarks, the management team will conduct a question and answer session. You can find the slide presentation and the webcast of today's earnings call on our IR website.

Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements which are subject to future events and uncertainties.

statements that are not historical facts including but not limited to statements about the company's beliefs and expectations, our forward-looking statements

Operator: Today, you will hear from Yongchen Lu, our CEO and Director, and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question-and-answer session. You can find the slide presentation and the webcast of today's earnings call on our IR website. Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Statements that are not historical facts, 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 these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors included in our filings with the SEC.

Today, you will hear from Yongchen Lu, our CEO and Director, and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question-and-answer session. You can find the slide presentation and the webcast of today's earnings call on our IR website. Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements, which are subject to future events and uncertainties. Statements that are not historical facts, 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 these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors included in our filings with the SEC.

Forward-looking statements involve inherent risks and uncertainties and our actual results May differ materially from these forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings, release and risk factors included in our filings 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 measures, the accompanying reconciliation information related to those non-gaap and gaap measures can be found in our earnings press release issued earlier today.

With that said, I would now like to turn it over to Ying Chen, Lu our CEO and director, please go ahead. Jonathan

Thank you Gemma. Good morning and for evening, everyone.

Operator: 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 measures. The accompanying reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier today. With that said, I would now like to turn it over to Yongchen Lu, our CEO and Director. Please go ahead, Yongchen. Thank you, Gemma. Good morning and good evening, everyone. In Q3, we returned to positive net new store openings and continued our strong momentum in system sales, achieving a 12.8% year-over-year growth. With our successful light and fit lunchbox platform products launched in Q2, we further enhanced our differentiated coffee plus freshly prepared food strategy, driving a positive 3.3% same-store sales growth for company-owned and operated stores.

In Q3 we return to positive uh, net new store, openings, and continued our strong momentum in system sales. Achieving a 12.8% year-over-year growth.

Yongchen Lu: Thank you, Gemma. Good morning and good evening, everyone. In Q3, we returned to positive net new store openings and continued our strong momentum in system sales, achieving a 12.8% year-over-year growth. With our successful light and fit lunchbox platform products launched in Q2, we further enhanced our differentiated coffee plus freshly prepared food strategy, driving a positive 3.3% same-store sales growth for company-owned and operated stores.

With our successful Light and Fit lunchbox, platform products. Launching Q2, we further enhanced our differentiated Coffee Plus fresh prepared food strategy, driving a positive, uh 3.3%, same store, sales growth for company owned and operated stores.

as a result, I put the revenues increased by 204.2% year over year and for the revenue contribution, as a percentage of sales, reach our historical high of 36.5%

And increase of 5 percentage points from 31.5% in the third quarter last year.

We are also benefiting from the promotional office from those deliberate aggregators and to take more market share deliver revenues increased by 23.1% year-over-year.

Operator: As a result, food revenues increased by 24.2% year-over-year, and food revenue contribution as a percentage of sales reached our historical high of 36.5%, an increase of 5 percentage points from 31.5% in the Q3 last year. We are also benefiting from the promotional offers from those delivery aggregators to take more market share. Delivery revenues increased by 23.1% year-over-year. At the same time, our sub-franchisee and the retail business maintained their steadily growing contributions to cash flow and profitability. Profits from other revenues achieved a year-over-year increase of 58.2% during the quarter. For the first nine months of 2025, our adjusted company-owned and operated store contribution margin was 8.1%, same as that for the first nine months of last year. Our adjusted corporate EBITDA and adjusted net loss we continued to improve by 10.4% and 11.5%, respectively. These results underscore our team's resilience and discipline in execution.

As a result, food revenues increased by 24.2% year-over-year, and food revenue contribution as a percentage of sales reached our historical high of 36.5%, an increase of 5 percentage points from 31.5% in the Q3 last year. We are also benefiting from the promotional offers from those delivery aggregators to take more market share. Delivery revenues increased by 23.1% year-over-year. At the same time, our sub-franchisee and the retail business maintained their steadily growing contributions to cash flow and profitability. Profits from other revenues achieved a year-over-year increase of 58.2% during the quarter. For the first nine months of 2025, our adjusted company-owned and operated store contribution margin was 8.1%, same as that for the first nine months of last year. Our adjusted corporate EBITDA and adjusted net loss we continued to improve by 10.4% and 11.5%, respectively. These results underscore our team's resilience and discipline in execution.

From franchisee and the retail business maintain their steadily growing contributions to cash flow and the profitability profits from other land. Use achieved a year-over-year increase of 58.2% during the quarter.

For the first 9 months of 2025, I was just company owned and operate store. Contribution margin was 8.1% same as the not that for the first 9 months of last year.

Uh on I just a couple even and adjust their loss. We continue to cut loss by not 10.4% and 11.5% respectively.

This results, unschool, our teams, resilience and discipline, and execution.

Sub franchisee Partnerships. We expand our store footprint into 98150 including the city of Yeng in central Province and U in halfway problems that we entered into 3 while maintaining capitalist institutions and delivery School values, absolute convenience for our guests.

Uh, I'll just copy even though and adjust their loss. We continue to cut loss by not 10.4% and 11.5%, respectively.

Operator: Our store development, leveraging sub-franchisee partnerships, we expand our store footprint into 91 cities, including the city of Yanji in Jilin Province, Changshu in Jiangsu Province, and Wuhu in Anhui Province that we entered in Q3, while maintaining capital efficiency and delivering absolute convenience for our guests. Since we launched our individual franchisee program in December 2023, we have received over 8,400 applications and successfully converted over 300 stores by the end of September, showcasing market confidence in our franchisee model. We have attractive and desirable store unit economics for our sub-franchisees with reasonable two to three years' payback period on average. We are also focused on strategic channel development with 64 stores in locations such as high-speed train stations, airports, highway rest areas, hospitals, universities, and schools at the end of September.

Our store development, leveraging sub-franchisee partnerships, we expand our store footprint into 91 cities, including the city of Yanji in Jilin Province, Changshu in Jiangsu Province, and Wuhu in Anhui Province that we entered in Q3, while maintaining capital efficiency and delivering absolute convenience for our guests. Since we launched our individual franchisee program in December 2023, we have received over 8,400 applications and successfully converted over 300 stores by the end of September, showcasing market confidence in our franchisee model. We have attractive and desirable store unit economics for our sub-franchisees with reasonable two to three years' payback period on average. We are also focused on strategic channel development with 64 stores in locations such as high-speed train stations, airports, highway rest areas, hospitals, universities, and schools at the end of September.

This results, unschool our teams, resilience and discipline, and execution.

I'm in December 2013. We have received over uh, 8,400 applications and successfully converted over 300 stores. By the end of September showcasing Market confidence. In our franchising model, we have attractive and desirable store, unit economics for our sub, franchises with reasonable to 2 3 years, payback F and appear on average.

We also focus on strategic channel uh, development.

On sport development, leveraging sub-franchisee partnerships, we expanded our storefront into 981 cities, including the city of Enzi in Engineering Province. In Wu, we encountered halfway problems that we entered into while maintaining capital efficiency and delivery service through various absolute conveniences for our guests.

With 684 stores in locations such as high speed, uh train stations, airports highway, rest areas, hospitals, universities and schools at the end of November.

Since we launched our individual franchisees program in December 2023, we have received over 8,400 applications and successfully converted over 300 stores by the end of September, showcasing market confidence. In our franchising model, we have attractive and desirable stores, with unique economics for our sub-franchisees, featuring a reasonable payback period of 2 to 3 years on average.

As of now, the end of, uh, September 2025, our largest Lottery car members due to 277.923% year, we grow the average number of members per store is not over 27,000 serving, a strong Catalyst for our future growth.

We also focus on strategic channel development.

Operator: As of the end of September 2025, our largest loyalty club of members reached 27.9 million, reflecting a remarkable 22.3% year-over-year growth. The average number of members per store is now over 27,000, serving a strong catalyst for our future growth. Q3 represents the peak season for China's beverage market. This summer experienced record high temperatures, driving a robust consumer demand for freshly prepared beverages, albeit amid heightened price sensitivity. Compounding this dynamic, the coffee sector faced intensified competitive pressure from the rapidly expanding tea beverage categories, not only due to strong demand for non-coffee alternatives, but also because leading tea brands have begun entering the coffee space, further intensifying market competitions. Our strategic initiatives, including a celebrity partnership during the Bagel Festival, and enhanced summer beverage portfolio, and targeted seasonal lunchtime operations, enable Tims China to return to positive same-store sales growth in Q3.

As of the end of September 2025, our largest loyalty club of members reached 27.9 million, reflecting a remarkable 22.3% year-over-year growth. The average number of members per store is now over 27,000, serving a strong catalyst for our future growth. Q3 represents the peak season for China's beverage market. This summer experienced record high temperatures, driving a robust consumer demand for freshly prepared beverages, albeit amid heightened price sensitivity. Compounding this dynamic, the coffee sector faced intensified competitive pressure from the rapidly expanding tea beverage categories, not only due to strong demand for non-coffee alternatives, but also because leading tea brands have begun entering the coffee space, further intensifying market competitions. Our strategic initiatives, including a celebrity partnership during the Bagel Festival, and enhanced summer beverage portfolio, and targeted seasonal lunchtime operations, enable Tims China to return to positive same-store sales growth in Q3.

With 684 stores in locations such as high-speed train stations, airports, highway rest areas, hospitals, universities, and schools, at the end of North September.

Q3 represents the peak season for China's, beverage Market, the this summer experience, local high temperatures, uh, driving and our robust consumer demand for frustration prepared beverages orbit, AIDS heightened twice, no sensitivity, combing compounding, this dynamic,

As of now, the end of September 2025, our largest loading carbon members number 27.9 million, which looks like a remarkable 22.3%. Year over year, we grew the average number of members per store to over 27,000, serving as a strong catalyst for our future growth.

The coffee sector faced intensify competitive pressure from the luckily expanding tea leverages categories. Not only due to strong demand for non, coffee Alternatives but also because leading key brands have become entering uh the copy space further intensify uh Market competitions.

Our strategic tips, including a celebrity partnership during the bagel Festival. Uh, and enhanced some beverage portfolio and targeted, seasonal lunch time operations enable, uh, teams China to return to positive Sim store sales uh growth in Q3.

Q3 represents the peak season for China's, beverage Market, the this summer experience. Local high temperatures uh driving in a robust consumer demand for frustrated prepared beverages orbit, AIDS heightened twice, no sensitivity combing compounding. This Dynamic, the coffee sector faced intensify, competitive pressure from the rapidly expanding key. Beverage categories, not only due to strong demand for 9, coffee Alternatives but also because leading key brands have begun entering uh the copy space further intensify uh Market competitions, I was

We partner with last 1. Once the whole Bank are highly influential gen. Z celebrate the celebrity to elevate uh brand awareness and drive engagement. The collaboration was integrated with compiling products bundles to convert into into purchases support by targeted promotions, to encourage you to compete with this.

Operator: We partnered with Lost Wang's Hongfan, a highly influential Jiangxi celebrity, to elevate brand awareness and drive engagement. The collaboration was integrated with compelling product bundles to convert interest into purchases, supported by targeted promotions to encourage repeat visits. This holistic marketing approach delivered strong results. July marked our highest sales month of the year, and the September Bagel Festival drove double-digit same-store sales growth, significantly outperforming the broader market. Building on the Cold Brew platform launched in Q2, we executed a series of monthly innovations throughout Q3, centered around refreshing some appropriate leverages. This was an intentional offensive strategy, leveraging a balanced portfolio of 20 SKUs spanning coffee and non-coffee categories to capture incremental share in the summer beverage market, particularly among younger consumers whose preferences align closely with our endorsers' audience.

We partnered with Lost Wang's Hongfan, a highly influential Jiangxi celebrity, to elevate brand awareness and drive engagement. The collaboration was integrated with compelling product bundles to convert interest into purchases, supported by targeted promotions to encourage repeat visits. This holistic marketing approach delivered strong results. July marked our highest sales month of the year, and the September Bagel Festival drove double-digit same-store sales growth, significantly outperforming the broader market. Building on the Cold Brew platform launched in Q2, we executed a series of monthly innovations throughout Q3, centered around refreshing some appropriate leverages. This was an intentional offensive strategy, leveraging a balanced portfolio of 20 SKUs spanning coffee and non-coffee categories to capture incremental share in the summer beverage market, particularly among younger consumers whose preferences align closely with our endorsers' audience.

Including a celebrity partnership during the Bagel Festival, an enhanced beverage portfolio, and targeted seasonal lunchtime operations enabled our teams in China to return to positive same-store sales growth in Q3.

This holistic marketing approach delivered strong results, July marked our highest sales months of the year and the September Bagel Festival digit. Seems to a sales growth, significantly of Performing the broader Market.

We partnered with the last 1. Once the whole band is highly influential Gen Z celebrities, we aim to elevate brand awareness and drive engagement. The collaboration was integrated with compiling product bundles to convert interest into purchases, supported by targeted promotions to encourage repeat visits.

Building on the core blue platform launched in K2. Uh we execute a series of monthly Innovations through our Q3 centered around reflection, some appropriate, leverages this was an intentional offensive, strategy leveraging, a balanced portfolio of 20 asq spanning coffee, and non- coffee categories. To capture incremental, share in the sub. Beverage Market, particularly among younger consumers, whose preferences aligned closely with our endorses audience. We anticipate competitive,

Performing the broader Market.

Encouragement from people and responding with decisively reinforcing. Our coffee leadership through premium office, like COBOL, blue, and a water. Buffalo milk latte, while deploying non- coffee is used to directly compete for key drinkers or share.

Notable, right? If you check approach uh, resonated as strongly with our Target demographics, contribute meaningfully to better the sales growth.

Operator: We anticipate competitive encroachment from tea brands and responded decisively, reinforcing our coffee leadership through premium offerings like Cold Brew and water buffalo milk lattes, while deploying non-coffee SKUs to directly compete for tea drinkers' watershare. Notably, this deal-check approach resonated strongly with our target demographics, contributing meaningfully to beverage sales growth. Following six months of focused lunchtime development, we proactively adapted our food strategy in Q3 to counter seasonal softness by introducing six new SKUs featuring chilled and boldly spicy options to stimulate consumer interest and maintain meal relevance. In order to sustain momentum from our ongoing lunchtime expansion strategy, we also introduced seasonal cold food offerings tailored to evolving consumer preferences during hot weather. Additionally, we expanded our afternoon tea offerings with chilled variants of cakes and Smile Bagels of five SKUs.

We anticipate competitive encroachment from tea brands and responded decisively, reinforcing our coffee leadership through premium offerings like Cold Brew and water buffalo milk lattes, while deploying non-coffee SKUs to directly compete for tea drinkers' watershare. Notably, this deal-check approach resonated strongly with our target demographics, contributing meaningfully to beverage sales growth. Following six months of focused lunchtime development, we proactively adapted our food strategy in Q3 to counter seasonal softness by introducing six new SKUs featuring chilled and boldly spicy options to stimulate consumer interest and maintain meal relevance. In order to sustain momentum from our ongoing lunchtime expansion strategy, we also introduced seasonal cold food offerings tailored to evolving consumer preferences during hot weather. Additionally, we expanded our afternoon tea offerings with chilled variants of cakes and Smile Bagels of five SKUs.

Building on the core Blue platform launched in Q2, we executed a series of monthly innovations through our Q3, centered around reflection. Some appropriate leverages made this an intentional offensive strategy, leveraging a balanced portfolio of 20 SQ, spanning coffee and non-coffee categories. This was done to capture incremental share in the sub-beverage market, particularly among younger consumers whose preferences aligned closely with our endorsed audience. We anticipate competitive.

Encroachment from Key Brands and responding like decisively reinforcing. Our coffee leadership through premium office like coal, blue and water. Buffalo milk and paste while deploying non-. Coffee, excused to directly compete for key drinkers, the world share.

Notably, this new check approach resonated strongly with our target demographics and contributed meaningfully to the sales growth.

Bunch of the smile Bagel, uh, series further. Reinforces our leadership in the bagel category and enhances our competitive. Fluctuation.

this initiatives have firmly helped cement, uh, team's reputation as a go-to lunch,

Destination in consumer's mindset.

Uh, thanks to our efforts over the past, 3 quarters more than half of, uh, of all orders. Now, included food and food sales, uh, makeup over a third, a third of total revenues.

Operator: The launch of the Smile Bagel series further reinforces our leadership in the bagel category and enhances our competitive differentiation. These initiatives have firmly helped cement Tims's reputation as the go-to lunch destination in consumers' mindset. Thanks to our efforts over the past three quarters, more than half of all orders now include food, and food sales make up over a third of total revenues. At this time, I would like to turn it over to our CFO, Albert Li, to discuss our Q3 financial performance in more detail. Thank you, Yongchen. We remain focused on delivering high-value for quality healthy products and sought-for services to our ever-growing customer base. Our overall monthly average transacting customers reached 3.85 million in Q3 2025, a 16.7% increase from 3.3 million in the same quarter of 2024.

The launch of the Smile Bagel series further reinforces our leadership in the bagel category and enhances our competitive differentiation. These initiatives have firmly helped cement Tims's reputation as the go-to lunch destination in consumers' mindset. Thanks to our efforts over the past three quarters, more than half of all orders now include food, and food sales make up over a third of total revenues. At this time, I would like to turn it over to our CFO, Albert Li, to discuss our Q3 financial performance in more detail.

At this time, I would like to turn over to our CFO elderly to discuss our third quarter financial performance in more detail.

Following 6 months of focused lunchtime development, we proactively adapted, our food strategy to counter seasonal, softness by introducing 6, US News, featuring short, and boldness by the options, to stimulate consumer interest and maintain meal relevance in order to sustain momentum from our ongoing lunchtime expansion strategy. We also introduced seasonal cold at Food offerings, tailored to evolving consumer preferences, during hot weather. Additionally, we expanded our afternoon tea offerings with children children of cakes and smile Bagels of Basque.

The launch of the Smile Bagel further reinforces our leadership in the bagel category and enhances our competitive edge.

This initiative has firmly helped cement the team’s reputation as a go-to lunch destination in consumers' mindset.

Albert Li: Thank you, Yongchen. We remain focused on delivering high-value for quality healthy products and sought-for services to our ever-growing customer base. Our overall monthly average transacting customers reached 3.85 million in Q3 2025, a 16.7% increase from 3.3 million in the same quarter of 2024.

Uh, thanks to our efforts over the past, 3 quarters more than half of, uh, of all orders. Now include the food and food sales, uh, makeup over a third, a third of total revenues at this time, I would like to turn over to our CFO elderly to discuss our third quarter financial performance in more detail.

Thank you. Uh we remain focused on delivering high value for Quality, healthy products, and short for services to our ever growing customer base. Our overall monthly average transacting customers reached 3.85 million in Q3 2025 a 16. Uh, a 16.7% increase from 3.3 million in the same quarter of 2024, additionally, digital orders, as a percentage of total orders Rose from 86.6% in Q3 2024 to an all-time high of 91.0% in Q3 2025.

We continue to enhance our digital capabilities to meet the growing demand from delivery and takeaway services.

In Q3 our company owned and operated store revenues dropped by 5.5% year-over-year, which was primarily due to the planned closure of certain underperforming stores.

Operator: Additionally, digital orders as a percentage of total orders rose from 86.6% in Q3 2024 to an all-time high of 91.0% in Q3 2025. We continue to enhance our digital capabilities to meet the growing demand from delivery and takeaway services. In Q3, our company-owned and operated store revenues dropped by 5.5% year-over-year, which was primarily due to the planned closure of certain underperforming stores, partially offset by a 3.3% increase in same-store sales growth for company-owned and operated stores. We have also achieved positive transaction growth in Q3, driven by strong momentum from food orders and delivery orders. In the meantime, revenues from our franchised business and retail business increased by 25.0% year-over-year. The number of our franchised stores increased from 382 as of 30 September 2024, to 479 as of 30 September 2025. Accordingly, our system sales increased by 12.8% year-over-year.

Additionally, digital orders as a percentage of total orders rose from 86.6% in Q3 2024 to an all-time high of 91.0% in Q3 2025. We continue to enhance our digital capabilities to meet the growing demand from delivery and takeaway services. In Q3, our company-owned and operated store revenues dropped by 5.5% year-over-year, which was primarily due to the planned closure of certain underperforming stores, partially offset by a 3.3% increase in same-store sales growth for company-owned and operated stores. We have also achieved positive transaction growth in Q3, driven by strong momentum from food orders and delivery orders. In the meantime, revenues from our franchised business and retail business increased by 25.0% year-over-year. The number of our franchised stores increased from 382 as of 30 September 2024, to 479 as of 30 September 2025. Accordingly, our system sales increased by 12.8% year-over-year.

Partially outside by a 3.3% increase in sales to a sales growth for company owned and operated stores.

We have also achieved positive transaction growth in Q3 driving by strong, momentum, from food orders, and delivery orders.

Thank you yungchen, uh we remain focused on delivering, high value for Quality, healthy products, and source for services to our ever growing customer base. Our overall monthly average transacting customers reached 3.85 million in Q3 2025 a 16. Uh, a 16.7% increase from 3.3 million in the same quarter of 2024, additionally, digital orders, as a percentage of total orders Rose from 86.6% in Q3 2024 to an all-time high of 91.0% in Q3 2025.

We continue to enhance our digital capabilities to meet the growing demand from delivery and takeaway services.

In the meantime, revenues from our franchise business and retail business increased by 25.0% year-over-year.

Number of our franchise resource increased from 382 as of September to 30 2024 to 479 as of September 30th 2025.

In Q3 our company owned and operated the store revenues dropped by 5.5% year-over-year, which was primarily due to the plant closure of certain underperforming stores.

Accordingly, our system sells increased by 12.8% year-over-year.

Part of the offset by a 3.3% increase in sales store sales growth for company-owned and operated stores.

To custom expenses for company owned and operated stores.

Since we offered higher discounts during the quarter, especially to others through those delivery platforms.

We have also achieved positive transaction growth in Q3, driven by strong momentum from food orders and delivery orders.

In the meantime, revenues from our franchise business and retail business increased by 25.0% year-over-year.

Food and packaging cost as a percentage of revenues from company owned and operated stores increased by 1.6 percentage points year-over-year.

The number of our franchise sources increased from 382 as of September 30, 2024, to 479 as of September 30, 2025.

And packaging costs accounted for 30.6% of our company owned and operated stores that, um, Revenue during the quarter.

Operator: Moving to cost and expenses for company-owned and operated stores, since we offered higher discounts during the quarter, especially to orders through those delivery platforms, food and packaging costs as a percentage of revenues from company-owned and operated stores increased by 1.6 percentage points year-over-year. Food and packaging costs accounted for 30.6% of our company-owned and operated store revenues during the quarter, and we maintained relatively stable labor costs, rental and property management fees, and other store operating expenses as a percentage of revenues from company-owned and operated stores in Q3. Delivery costs as a percentage of revenues from company-owned and operated stores increased by 2.9 percentage points to 13.2% in the Q3 of 2025, compared to 10.3% in the same quarter of 2024, which was primarily due to the higher delivery revenue mix as a percentage of total revenues from company-owned and operated stores.

Moving to cost and expenses for company-owned and operated stores, since we offered higher discounts during the quarter, especially to orders through those delivery platforms, food and packaging costs as a percentage of revenues from company-owned and operated stores increased by 1.6 percentage points year-over-year. Food and packaging costs accounted for 30.6% of our company-owned and operated store revenues during the quarter, and we maintained relatively stable labor costs, rental and property management fees, and other store operating expenses as a percentage of revenues from company-owned and operated stores in Q3. Delivery costs as a percentage of revenues from company-owned and operated stores increased by 2.9 percentage points to 13.2% in the Q3 of 2025, compared to 10.3% in the same quarter of 2024, which was primarily due to the higher delivery revenue mix as a percentage of total revenues from company-owned and operated stores.

accordingly our system sales increased by 12.8% year-over-year,

And we maintained relatively stable, labor costs rental and Property Management fees.

To customize expenses for company-owned and operated stores.

And others to operating expenses as a percentage of revenues from commonly owned and operated stores in Q3.

Since we offered higher discounts during the quarter, especially to others through those delivery platforms.

Increased by 1.6 percentage points year over year.

Packaging costs accounted for 30.6% of our company-owned and operated stores' revenue during the quarter.

Delivery costs as a percentage of revenues from company owned and operated stores. Increased by 2.9% is important to 13.2%. This uh in the third quarter of 2025 compared to 10.3% in the same quarter of 2024 which was primarily due to the higher delivery Revenue mix as a percentage of total revenues from company owned and and operated stores.

The number of delivery orders from company owned and operated stores increased by 24.9% year-over-year.

And we maintained relatively stable labor costs, rental and property management fees, and other operating expenses as a percentage of revenues from commonly owned and operated stores in Q3.

from our improved brand influencer marketing expenses has a percentage of total revenues accounted for approximately 4.4% during the quarter representing a 0.7 percentage Point decrease from 5.1% in the same quarter of 2024

Operator: The number of delivery orders from company-owned and operated stores increased by 20.9% year-over-year. Benefiting from our improved brand influence, marketing expenses as a percentage of total revenues accounted for approximately 4.4% during the quarter, representing a 0.7 percentage point decrease from 5.1% in the same quarter of 2024. Adjusted general and administrative expenses increased by 23.2% year-over-year, which was primarily due to an increase in outside service fees related to audit, IT, and business travel, an increase in credit loss of accounts receivable partially offset by a decrease in headquarters staff compensation costs, and a decrease in depreciation and amortization. Adjusted general and administrative expenses as a percentage of total revenues increased from 10.7% in the Q3 of 2024 to 13.2% in the same quarter of 2025.

The number of delivery orders from company-owned and operated stores increased by 20.9% year-over-year. Benefiting from our improved brand influence, marketing expenses as a percentage of total revenues accounted for approximately 4.4% during the quarter, representing a 0.7 percentage point decrease from 5.1% in the same quarter of 2024. Adjusted general and administrative expenses increased by 23.2% year-over-year, which was primarily due to an increase in outside service fees related to audit, IT, and business travel, an increase in credit loss of accounts receivable partially offset by a decrease in headquarters staff compensation costs, and a decrease in depreciation and amortization. Adjusted general and administrative expenses as a percentage of total revenues increased from 10.7% in the Q3 of 2024 to 13.2% in the same quarter of 2025.

Delivery costs as a percentage of revenues from company owned and operated stores increased by 2.9 percentage points to 13.2 percentage, uh, in the third quarter of 2025 compared to 10.3% in the same quarter of 2024 which was primarily due to the higher delivery Revenue mix as a percentage of total revenues from company owned and and and operated stores.

Adjusted General and administrative expenses increased by 23.2% year-over-year, which was primarily due to an increase in outside service fees related to audit it and business travel.

The number of delivery orders from company-owned and operated stores increased by 20.9% year-over-year.

Appreciation, and amortization.

from our improved, the brand influencer marketing expenses has a percentage of total revenues accounted for approximately 4.4% during the quarter representing a 0.7, percentage Point decrease from 5.1% in the same quarter of 2024

Adjust the general and administrative expenses as a percentage of total revenues increased from 10.7% in the third quarter of 2024 to 13.2% in the same quarter of 2025.

Adjusted General and administrative expenses increased by 23.2% year-over-year which was primarily due to an increase in outside service fees.

Related to audit it and business travel.

As a result of the foregoing adjusted corporate margin was negative 4.2% in the third quarter of 2025 compared to positive 0.6% in the same quarter of 2024.

An increase in credit loss of accounts receivable partially outside by a decrease in headquarter staff. Compensation costs and a decrease in depreciation and amortization

Turning to liquidity as of September 30th, 2025 our total cash, and cash, equivalents time, deposited and restricted cash or, and the $159.33 million.

Compared to R&B 184.2 million. As of December 3441 2024.

Operator: As a result of the foregoing, adjusted corporate EBITDA margin was negative 4.2% in the Q3 of 2025, compared to positive 0.6% in the same quarter of 2024. Turning to liquidity, as of 30 September 2025, our total cash and cash equivalents, time deposits, and restricted cash were RMB 159.3 million, compared to RMB 184.2 million as of 31 December 2024. The change was primarily attributable to cash disbursements on the back of the expansion of our business, partially offset by the drawdown of additional bank borrowings.

As a result of the foregoing, adjusted corporate EBITDA margin was negative 4.2% in the Q3 of 2025, compared to positive 0.6% in the same quarter of 2024. Turning to liquidity, as of 30 September 2025, our total cash and cash equivalents, time deposits, and restricted cash were RMB 159.3 million, compared to RMB 184.2 million as of 31 December 2024. The change was primarily attributable to cash disbursements on the back of the expansion of our business, partially offset by the drawdown of additional bank borrowings.

adjust the general and administrative expenses as a percentage of total revenues increased from 10.7% in the third quarter of 2024 to 13.2% in the same quarter of 2025.

The change was primarily attributable to cash disbursements on the back of the expansion of our business, partially outside, by the door down of additional bank borrowing.

As a result of the foregoing, adjusted corporate EBITDA margin was negative 4.2% in the third quarter of 2025, compared to positive 0.6% in the same quarter of 2024.

Looking ahead uh with profitable growth always been front and center of everything we do. We are post to further enhance our operational efficiencies such as supply, chain capabilities, and optimizations, and rigorous cost controls to your overall hours.

Turning to the liquidity as of September 30, 2025, our total cash and cash equivalents, including restricted cash, is $159.3 million.

Appreciating made to out of fresh and healthy food, preparation model to drive traffic.

Compared to R&B 184.2 million as of December 31st 2024.

To optimize the overall store unit, uh, economics. And to accelerate the expansion of our successful sub franchising.

Operator: Looking ahead, with profitable growth always being front and center of everything we do, we are poised to further enhance our operational efficiencies, such as supply chain capabilities and optimizations, and rigorous cost controls to roll over our differentiating made-to-order fresh and healthy food preparation model to drive traffic, to optimize the overall store unit economics, and to accelerate the expansion of our successful sub-franchising. I will now turn it over to Yongchen for concluding remarks, followed by Q&A. Yeah, thank you, Albert. Our Q3 performance reflects continuous improvements and resilience in our business and execution, as well as both challenges and opportunities in this industry. We extend our heartfelt gratitude to our guests, team members, business partners, shareholders, and everyone supporting our endeavor and journey.

Looking ahead, with profitable growth always being front and center of everything we do, we are poised to further enhance our operational efficiencies, such as supply chain capabilities and optimizations, and rigorous cost controls to roll over our differentiating made-to-order fresh and healthy food preparation model to drive traffic, to optimize the overall store unit economics, and to accelerate the expansion of our successful sub-franchising. I will now turn it over to Yongchen for concluding remarks, followed by Q&A.

The change was primarily attributable to cash disbursements on the back of the expansion of our business partially outside, by the draw, down of additional bank. Borrowings

I will now turn it over to Yung Chen for concluding remarks, followed by Q&A.

Yeah, thank you ever. Our third quarter performance, reflects, continuous improvements and the resiliency in our business and execution, as well as both challenges and opportunities in this industry,

We extended our heartfelt, gratitude to our guests.

Team members uh, business partners.

Looking ahead, with profitable goals always being front and center of everything we do, we are poised to further enhance our operational efficiencies, such as supply chain capabilities and optimizations, along with rigorous cost controls. This will support our overall differentiating made-to-order fresh and healthy food preparation model to drive traffic.

Shareholders and everyone supporting our in diverse in Journey.

To optimize the overall store unit economics and to accelerate the expansion of our successful sub-franchising.

Yongchen Lu: Yeah, thank you, Albert. Our Q3 performance reflects continuous improvements and resilience in our business and execution, as well as both challenges and opportunities in this industry. We extend our heartfelt gratitude to our guests, team members, business partners, shareholders, and everyone supporting our endeavor and journey.

I will now turn it over to Yung Chen for concluding remarks, followed by Q&A.

Together. We have built over 1,000 stores in 91 cities. A robust community of near 28 million lottery. Club members are unique coffee. Plus the social repair Food, business model, offering the best value for quality products.

A unique advantage of offering franchise opportunity as an International Conference in China and the refined store unique economics, with attractive, payback, period within 2, to 3 years on average.

Thank you, everyone. Our third quarter performance reflects continuous improvements and the resilience in our business and execution, as well as both challenges and opportunities in this industry.

We extend our heartfelt gratitude to our guests.

Team members uh, business partners.

With these milestones, we are satisfied in our commitment to sustainable profit growth and to generating long-term value for our shareholders.

Operator: Together, we have built over 1,000 stores in 91 cities, a robust community of nearly 28 million Loyalty Club members, a unique coffee plus freshly prepared food business model offering the best value for quality products, a unique advantage of offering franchise opportunity as an international coffee brand in China, and refined store unit economics with attractive payback period within two to three years on average. With these milestones, we are steadfast in our commitment to sustainable profit growth and to generating long-term value for our shareholders. We're excited to announce the successful issuance of approximately $89.9 million senior secured convertible notes due September 2029, the restructuring of our unsecured convertible notes due 2027, and the repurchase of all outstanding amounts due under our variable rate convertible senior notes due 2026.

Together, we have built over 1,000 stores in 91 cities, a robust community of nearly 28 million Loyalty Club members, a unique coffee plus freshly prepared food business model offering the best value for quality products, a unique advantage of offering franchise opportunity as an international coffee brand in China, and refined store unit economics with attractive payback period within two to three years on average. With these milestones, we are steadfast in our commitment to sustainable profit growth and to generating long-term value for our shareholders. We're excited to announce the successful issuance of approximately $89.9 million senior secured convertible notes due September 2029, the restructuring of our unsecured convertible notes due 2027, and the repurchase of all outstanding amounts due under our variable rate convertible senior notes due 2026.

Shareholders and everyone supporting our in diverse and journey.

We excited to announce the successful issues of approximately us. 89.9 million, senior, secure combo notes. Due September 2029.

Together. We have built over 1,000 stores in 91 cities, a robust community of near 28 million. L club, members a unique coffee, plus the first prepare food business model, offering the best value for quality products.

The restructuring of our unsecured convertible note 2027, and the repurchase of all outstanding amount due on the uh, the under our variable rate, compatible senior notes, due 2026.

A unique advantage of offering franchise opportunities as an international coffee brand in China is the refined store unit economics, with an attractive payback period of 2 to 3 years on average.

This strategic transactions enable us to focus on the development of of our overall store Network and the core team importance brand Nationwide.

For our shareholders.

uh, I would not think to the core over to GMA for today's Q&A sessions GMA

Thank you very much, Jen. Um, we will turn it over to Q&A and open it up for our registered questions. Uh, let's begin with the first question. Go ahead, operator.

We're excited to announce the successful issuance of approximately $89.9 million in senior, secured combo notes due September 2029.

We will now begin the question and answer session to ask a question on the phone, please. Press star 1, 1 1 and wait for our name to be announced

To cancel your request. You can press star 1 1 again, you can also submit your questions via the webcast.

Operator: These strategic transactions enable us to focus on the development of our overall store network and the core team performance brand nationwide. I will now turn it to the call over to Gemma for today's Q&A session. Gemma. Thank you very much, Yongchen. We will turn it over to Q&A and open it up for our registered questions. Let's begin with the first question. Go ahead, operator. We will now begin the question and answer session. To ask a question on the phone, please press star 11 and wait for a name to be announced. To cancel your request, you can press star 11 again. You can also submit your questions via the webcast. One moment for the first question. Our first question comes from the phone line of Steve Silver from Argus Research Corporation. Please go ahead.

These strategic transactions enable us to focus on the development of our overall store network and the core team performance brand nationwide. I will now turn it to the call over to Gemma for today's Q&A session. Gemma.

1 moment for the first question.

A restructuring of our unsecured convertible note 2027, and the repurchase of all outstanding amount due under uh, under our variable rate convertible, senior notes, due to 2026 is strategic transactions, enable us to focus on the development of of our overall store Network and the core team for this brand Nationwide.

How first questions comes from the phone line of Steve silver from August research Corporation. Please go ahead.

Gemma Bakx: Thank you very much, Yongchen. We will turn it over to Q&A and open it up for our registered questions. Let's begin with the first question. Go ahead, operator.

Uh, I will not turn to the call over to JMA for today's Q&A sessions.

Operator: We will now begin the question and answer session. To ask a question on the phone, please press star 11 and wait for a name to be announced. To cancel your request, you can press star 11 again. You can also submit your questions via the webcast. One moment for the first question. Our first question comes from the phone line of Steve Silver from Argus Research Corporation. Please go ahead.

Thank you very much, Jen. Um, we will turn it over to Q&A and open it up for our registered questions. Let’s begin with the first question. Go ahead, operator.

We will now begin the question and answer session. To ask a question on the phone, please press star 1, 1 1.

Uh, thanks operator. And, uh, thanks for taking my questions and congratulations on the system and same store sales growth. Um, with the closing of the new convertible notes, uh, transaction in Q3. Uh, I was hoping you can provide just the company's latest thinking on its liquidity status and its long-term financing plan.

To cancel your request, you can press *111 again. You can also submit your questions via the webcast.

1 moment for the first question.

Operator: Thanks, operator, and thanks for taking my questions, and congratulations on the system and same-store sales growth. With the closing of the new convertible notes transaction in Q3, I was hoping you can provide just the company's latest thinking on its liquidity status and its long-term financing plan. Okay, sure. Thanks, Steve, for asking this question. I will take this one. Okay, so we raised the successful issuance of the $89.9 million 2025 senior secured convertible notes. I think the company. We have used part of the process to fully repurchase the entire remaining amount of our 2021 variable notes actually due 2026. Actually, in the meantime, we have also extended the due date of our 2024 unsecured convertible notes from 2027 to the same timeline of September 2029.

Steve Silver: Thanks, operator, and thanks for taking my questions, and congratulations on the system and same-store sales growth. With the closing of the new convertible notes transaction in Q3, I was hoping you can provide just the company's latest thinking on its liquidity status and its long-term financing plan.

Our first question comes from the phone line of Steve Silver from August Research Corporation. Please go ahead.

Albert Li: Okay, sure. Thanks, Steve, for asking this question. I will take this one. Okay, so we raised the successful issuance of the $89.9 million 2025 senior secured convertible notes. I think the company. We have used part of the process to fully repurchase the entire remaining amount of our 2021 variable notes actually due 2026. Actually, in the meantime, we have also extended the due date of our 2024 unsecured convertible notes from 2027 to the same timeline of September 2029.

Uh, thanks operator. And, uh, thanks for taking my questions and congratulations on the system and same store sales growth. Um, with the closing of the new convertible notes, uh, transaction in Q3, I was hoping you can provide just the company's latest thinking on its liquidity status and its long-term financing plan.

Successful Insurance of the US at a US dollar, 89.9 million 20225, senior Securities, converting the notes. Um, I I, I think the company, uh, we we have used the part of the process to, uh, fully repurchased. Uh, you know, the entire, uh, remaining amount of, of our 2021 variable notes, uh, actually due 2026, and, uh, actually, in the meantime, we have also extended the due date, uh, of our 2025, uh, 2024 unsecured. Convertible notes from, you know, uh, 2027 to the same, uh, timeline of September 2029. So, uh, actually, uh, after the closing of this transactions, um, the company does not have any near-term offshore liabilities, uh, so that actually we can focus more on our uh, daily operations.

Operator: So actually, after the closing of these transactions, the company does not have any near-term offshore liabilities so that actually we can focus more on our daily operations. And we believe these financings would also help reduce our onshore leverage ratio actually quite significantly. So I think we will also benefit greatly to actually get more in terms of the onshore bank facilities in terms of the expansion and renewal from these PRC commercial banks. And I think, as we have also mentioned, so in order to take the advantage of the lower rent level at the current market environment and also to roll out our attractive made-to-order store model. So I think we are also working very hard in terms of securing additional alternative debt or equity financing in order to support the development of our company-owned and operated store network.

So actually, after the closing of these transactions, the company does not have any near-term offshore liabilities so that actually we can focus more on our daily operations. And we believe these financings would also help reduce our onshore leverage ratio actually quite significantly. So I think we will also benefit greatly to actually get more in terms of the onshore bank facilities in terms of the expansion and renewal from these PRC commercial banks. And I think, as we have also mentioned, so in order to take the advantage of the lower rent level at the current market environment and also to roll out our attractive made-to-order store model. So I think we are also working very hard in terms of securing additional alternative debt or equity financing in order to support the development of our company-owned and operated store network.

And um, we believe this financing is uh would also help reduce our onshore leverage ratio, actually quite significantly. So um I think we will also benefit greatly uh you know to uh actually get more or you know, in terms of the um unsure Bank facilities uh in terms of in terms of the uh expansion and the renewal um from this PRC commercial Banks.

Okay, sure, thanks. Uh, Steve for asking this this, this question, I, I will take, uh, this 1. Okay. So, um, you know, we, uh, missed the successful Insurance of the US at a US dollar 89.9 million, 202225, senior security, converting the notes. Um, I, I, I think the company, uh, we we have used the part of the process to, uh, fully repurchased. Uh, you know, the entire, uh, remaining amount of, of our 2021 variable notes, uh, actually due 2026, and, uh, actually, in the meantime, we have also extended the due date, uh, of our 2025, uh, 2024 and secured convertible notes from, you know, uh, 2027 to the same, uh, timeline of September 2029. So, uh, actually, uh, I

After the closing of this transactions, um, the company does not have any near-term offshore liabilities, uh, so that actually we can focus more on our uh, daily operations.

And um, I I think, uh, as we have also mentioned so uh, in order to take the um, advantage of the lower rent level uh, at the current, uh, Market environment and also to roll out our uh attractive make to other store uh model. So uh I I I think we are also working very hard, you know, in terms of uh securing uh additional um Alternatives that or active financing uh in order to support the development of our company own and operate operate. The store Network

And, um, we believe this financing, uh, would also help reduce our onshore leverage ratio, actually quite significantly. So, um, I think we will also benefit greatly, uh, you know, to, uh, actually get more or, you know, in terms of the, um, onshore bank facilities, uh, in terms of, in terms of the, uh, expansion and the renewal from these PRC commercial banks.

And and and uh so uh lastly uh I also want to mention, you know, with the further Improvement of our store and corporate level margins. So uh we are expecting to generate a positive operating cash inflows. Uh so so so uh we will become more and more self-sustainable in terms of to support the long-term sustainable growth of our business.

So uh, hopefully I have addressed your question, Steve.

Operator: And so lastly, I also want to mention, with the further improvement of our store and corporate level margins, so we are expecting to generate positive operating cash inflows. So we will become more and more self-sustainable in terms of supporting the long-term sustainable growth of our business. So hopefully, I have addressed your question, Steve. Yes, that was helpful. Thank you. So in Q3 specifically, it looks like there was some pressure on the store contribution margins. It sounds like gross margin, and delivery costs were impacted a bit. Do you expect that trend to continue over the near term? And maybe what are the company's thoughts about the margin profile moving forward? Okay, yes, Steve, I will take this one. Thank you for your question. Yes, the lower store contribution margin in Q3 was mostly because of higher delivery revenue mix led by the delivery war in China.

And so lastly, I also want to mention, with the further improvement of our store and corporate level margins, so we are expecting to generate positive operating cash inflows. So we will become more and more self-sustainable in terms of supporting the long-term sustainable growth of our business. So hopefully, I have addressed your question, Steve.

And um, I I think, uh, as we have also mentioned so, uh, in order to take the, um, advantage of the lower rent level, uh, at the current market environment and also to roll out our attractive made to other store uh models. So uh I I I think we are also working very hard, you know, in terms of uh securing uh additional um Alternatives that or active financing in order to support the development of our company or and operate operate. The store Network.

Yes, that was helpful. Thank you. Um, so in Q3 specifically there looks like there was uh some pressure on the um store contribution margins. Uh sounds like gross margin and delivery costs were impacted a bit. Um, do you expect that Trend to continue over the near term and maybe what other companies thoughts about the margin? Profile moving forward? Uh

I, and uh, so uh lastly, uh I also want to mention, you know, with the further improvement of our store and corporate level margin. So uh we are expecting to generate positive operating cash inflows. Uh so, so, so uh we will become more and more self-sustainable in terms of supporting the long-term sustainable growth of our business.

Steve Silver: Yes, that was helpful. Thank you. So in Q3 specifically, it looks like there was some pressure on the store contribution margins. It sounds like gross margin, and delivery costs were impacted a bit. Do you expect that trend to continue over the near term? And maybe what are the company's thoughts about the margin profile moving forward?

So uh, hopefully I have addressed your question, Steve.

Okay. Yes Steve. I will take this 1 uh, thank you for your question. Yes. The lower store contribution margin in Q3 was mostly because of higher the liberal Revenue next led by, you know, uh know the uh, the delivery War in China. Uh and those platforms not gave up aggressive uh subsidies trying to taking, you know, market share uh from from from from the competitors.

Uh, we we would think this, you know, uh, this would be temporarily, uh, play in our view.

Yongchen Lu: Okay, yes, Steve, I will take this one. Thank you for your question. Yes, the lower store contribution margin in Q3 was mostly because of higher delivery revenue mix led by the delivery war in China.

So, in the first 9 months of 2024 and 2025 our company owns stock contribution, margins, uh, was consistent at not 8.1%.

Operator: Those platforms gave out aggressive subsidies trying to take in market share from the competitors. We would think this would be a temporary play in our view. So in the first nine months of 2024 and 2025, our company-owned store contribution margins were consistent at 8.1%. And we aim to further expand that to mid to high teens by enhancing gross margins, driving same-store sales, and also the network optimization. Essentially, we need to continue to close some high-rent loss-making stores and we open high-quality new stores. So we plan to further improve our gross margins through supply chain optimizations, increase pricing on delivery platforms, high-margin new product launch, and optimize the recipe of existing core products. So by doing so, we expect, okay, we'll achieve double-digit store level margin next year. Great. And one last one, if I may.

Those platforms gave out aggressive subsidies trying to take in market share from the competitors. We would think this would be a temporary play in our view. So in the first nine months of 2024 and 2025, our company-owned store contribution margins were consistent at 8.1%. And we aim to further expand that to mid to high teens by enhancing gross margins, driving same-store sales, and also the network optimization. Essentially, we need to continue to close some high-rent loss-making stores and we open high-quality new stores. So we plan to further improve our gross margins through supply chain optimizations, increase pricing on delivery platforms, high-margin new product launch, and optimize the recipe of existing core products. So by doing so, we expect, okay, we'll achieve double-digit store level margin next year.

And we aim to further expand that to meet to high things by enhancing growth, margins and driving, same store, sales and also, uh, the network, uh, optimization, uh, essentially know, we need to continue to close and some high rent Los making stores and now, uh, we and, and we open high quality and new stores.

Yes, the lower store contribution margin in Q3 was mostly because of higher, the liberal revenues next led by, you know, uh, know the, uh, the delivery of War in China. Uh, and those platforms not gave up aggressive uh, subsidies trying to taking, you know, market share, uh, from from, from from the competitors. Uh, we, we would think this, you know, uh, this would be temporarily, uh,

Play in our view.

so, in the first 9 months of 2024 and 2025 our company owns stock contribution, margins, uh, was consistent at, you know, 8.1%,

So we plan to further improve our cross margins. Through supply chain optimizations, that increase pricing on deliberate know, platforms, the high margin, new product launch and optimize, you know, the recipe of exceeding core products. Uh, so by doing so we expect, okay, we'll we'll achieve double digit, uh, store level margin, uh, next year.

And then we aim to further expand that to mid- to high-tier offerings by enhancing gross margins and driving same-store sales, as well as improving the network.

Great and 1 last 1. If I may uh, the company is discussed um focusing on strategic special Channel stores under the franchise model. I was curious if there's any information about, uh, the performance of some of these stores.

Optimization, uh, essentially know, we need to continue to close and some high rent, Los making stores and know, uh, we and, and we open high quality and new stores.

End of uh, September.

So we plan to further improve our cross margins through supply chain optimizations that increase pricing on deliberate, known platforms, the high-margin new product launch, and optimizing the recipe of existing core products.

Of 2025 we have over 60? No, no. Uh, stores in those special channels including high-speed roads stations. Airports,

Uh, so by doing so we expect, okay, we will achieve double-digit store-level margin next year.

Steve Silver: Great. And one last one, if I may. The company has discussed focusing on strategic special channel stores under the franchise model. I was curious if there's any information about the performance of some of these stores.

Operator: The company has discussed focusing on strategic special channel stores under the franchise model. I was curious if there's any information about the performance of some of these stores. Yeah, sure. So I mean, as of the end of September of 2025, we have over 60 stores in those special channels, including high-speed roads, stations, airports, highway rest areas, hospitals, etc. Those stores at the special channels perform very, very well, generating store contribution margin of mid and even high teens EBITDA margin. The payback is around two years. So I mean, we have gained lots of interest from the super franchisees which have access to those special channels. In China, there are thousands, tens of thousands such as special channel locations. So we have seen great momentum in these channels, and we're expecting to open much more next year. Great.

Yongchen Lu: Yeah, sure. So I mean, as of the end of September of 2025, we have over 60 stores in those special channels, including high-speed roads, stations, airports, highway rest areas, hospitals, etc. Those stores at the special channels perform very, very well, generating store contribution margin of mid and even high teens EBITDA margin. The payback is around two years. So I mean, we have gained lots of interest from the super franchisees which have access to those special channels. In China, there are thousands, tens of thousands such as special channel locations. So we have seen great momentum in these channels, and we're expecting to open much more next year.

Great. And uh, 1 last 1, if I met uh, the company is discussed um focusing on strategic special Channel stores under the franchise model. I was curious, if there's any information about, uh, the performance of some of these stores.

Yeah, sure. Uh, so, I mean, uh, you know as

As of the end of September.

As of 2025, we have over 60 stores in those special channels, including high-speed road stations and airports.

High highway rest areas and hospitals Etc. And those stores that at the special channels perform very, very well generating. The stock contribution margin of mid and even high tether margin and the payback, uh, is around 2 years. So, I mean, we have gained a lot of interest from, uh, know the the sub foreign charges, uh, which have no access to those special channels. You know, in China, there are thousands tens of thousands, such a special channel, uh, uh, uh, locations. So now, we, we are, we have, we have seen the great momentum, uh, in, in this Channel and we can expect him to open, uh, much more next year.

Great. Thank you so much for taking the questions and best of luck, the rest of the year.

Thank you.

Thank you for the questions. As a, reminder, to ask question. Please press star. 1 1 and wait for a name to be announced.

High highway rust areas and hospitals, etc., and those stores that at the special channels perform very, very well, generating the store contribution margin of mid and even high teens. In the epiderm margin, the payback is around 2 years. So, I mean, we have gained a lot of, you know, interest from the sub.

At this time, there are no further questions. So, with that, that concludes today's question and answer session. I would like to hand a call back to Yong Chen for closing remarks,

Steve Silver: Great. Thank you so much for taking the questions, and best of luck the rest of the year.

Current charges. Uh, which have no access to those special channels. You know, in China, there are thousands tens of thousands, such a special channel, uh, uh, uh locations. So now we, we are, we have, we have seen the great momentum, uh, in in these channels and we expecting to open, uh, much more next year.

Operator: Thank you so much for taking the questions, and best of luck the rest of the year. Thank you. Thank you for the questions. As a reminder to ask questions, please press star 11 and wait for a name to be announced. At this time, there are no further questions. So with that, that concludes today's question and answer session. I would like to hand the call back to Yongchen for closing remarks. Yeah, thank you so much for your time. And we are very glad we returned the gross on system sales and also, more important, on the same-store sales. So we are expecting the progress toward the end of the year and even better next year. Thank you. Thank you. Thank you all very much. That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Yongchen Lu: Thank you.

Yeah, thank you so much for your time and, uh, we we are very glad know we uh, return the growth of the sales and also more important on the same store sales. So, now we expecting, uh, another progress toward the end of the year and much, much even better next year. Thank you.

Operator: Thank you for the questions. As a reminder to ask questions, please press star 11 and wait for a name to be announced. At this time, there are no further questions. So with that, that concludes today's question and answer session. I would like to hand the call back to Yongchen for closing remarks.

Great. Thank you so much for taking the questions, and best of luck for the rest of the year.

Thank you.

Thank you. Thank you all very much.

Let us conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Thank you for the question as a reminder, to ask question. Please. Press star. 1 1 and wait for a name to be announced.

Yongchen Lu: Yeah, thank you so much for your time. And we are very glad we returned the gross on system sales and also, more important, on the same-store sales. So we are expecting the progress toward the end of the year and even better next year. Thank you.

At this time, there are no further questions. So, with that, that concludes today's question-and-answer session. I would like to hand the call back to Yong Chen for closing remarks.

Albert Li: Thank you.

Gemma Bakx: Thank you all very much.

Yeah, thank you so much for your time and uh, we we are very glad know we uh, return the growth on system sales and also more important on the same store sales. So, no, we expecting, uh, another progress toward the end of the year and much, much even better next year. Thank you.

Operator: That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Thank you. Thank you all very much.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.

Q3 2025 TH International Ltd Earnings Call

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