Q2 2026 Super Hi International Holding Ltd Earnings Call
Speaker #1: Theater is themed investors and analysts, good evening. Thank you for joining Super High International 2026, the second quarter earnings conference call. The company leaders attending today's meetings are Mr. Li Yu, Executive Director and CEO, and Ms. Chu Song, Chief Financial Officer and Board Secretary.
Speaker #1: Today's meeting content may contain forward-looking statements, including but not limited to the company's statements regarding strategies and business plans. As well as outlook on performance prospects.
Speaker #1: The content of this earnings presentation and the comments and response to your questions represent management's view only as of today, please refer to the latest Safe Harbor statements in the earnings press release, which applies to the conference call, the meeting is conducted in Chinese, with an external agency providing simultaneous English interpretation.
Speaker #1: In case of any discrepancies, the Chinese content shall prevail. The presentation materials have been uploaded to the company's IR page, please feel free to review them.
Speaker #1: Now we invite Mr. Li Yu, CEO and Executive Director of Super High International, to review the company's performance for the second quarter of 2026.
Speaker #1: Thank you, moderator. Can everybody hear me okay? Yes, we can. Please go ahead. Dear investors and analysts, good evening. I am Li Yu, CEO and Executive Director of Super High International.
Speaker #1: Let me present to you the key highlights of Super High International for the second quarter of 2026. This quarter, the company's earlier investment in employees and customers further translated into operating improvements.
Speaker #1: Customer traffic and table turnover rates both improved year over year, while the employee cost ratio in several operating expense ratios declined, driving a significant year-over-year increase in operating profit.
Speaker #1: In Q2, Haidilao Restaurants served 8.1 million customer visits, up 5.2% compared to the previous year last year. Supported by customer traffic, overall table turnover rate for the quarter was 3.9 turns per day, same store turnover was 4.0 turns per day, both up 0.1 turns per day year over year.
Speaker #1: Both dining service at Haidilao Restaurants and also were expanding revenue sources, revenue from delivery and other business, both doubled this quarter, driven by the above business.
Speaker #1: The company achieved total revenue of 219 million in the second quarter, representing a 10% increase year over year. This quarter, companies' operating profit increased by 118.9% year YOY.
Speaker #1: The operating profit margin increased by 1.8 percentage point YOY. Profit growth significantly outpaced revenue growth, reflecting the continued conversion of companies' earlier investment into the beginning of the operating leverage release.
Speaker #1: Now I will review the major operational initiatives this quarter. First, continue to enhance operational management of Haidilao Restaurants. This quarter, we maintained management flexibility with each region autonomously adjusting operating strategies based on the local business conditions, market conditions, and consumer trends.
Speaker #1: At the same time, we further strengthened the professionalism in support capabilities of the headquarter platform by introducing digital tools and new technologies we enhanced our insights into the industry markets and consumers.
Speaker #1: Empowering frontline restaurants in areas such as menu items, marketing, and labor efficiency, thereby making improvements in the precision and execution efficiencies. These second quarter is a traditional low season, judging from the table turnover performance we believe that these initiatives have delivered a positive response.
Speaker #1: Merger release. Now I will review the major operational initiatives for this quarter. First, we continued to enhance the operational management of Haidilao restaurants. This quarter, we maintained management flexibility, with each region autonomously adjusting operating strategies based on local business conditions, market conditions, and consumer trends.
Speaker #1: Second, in term of products and menus, in the first half of this year, the company fully integrated local consumer dietary habits, consumption trends, and dining scenarios to drive menu optimization and new product development.
Speaker #1: At the same time, we further strengthened the professionalism and support capabilities of the headquarters platform. By introducing digital tools and new technologies, we enhanced our insights into the industry, markets, and consumers.
Speaker #1: For instance, in Southeast Asia, we introduced local flavors such as lemongrass satay and basil, extended soup bases, snacks, and beverage combinations around the core products to enhance cross-setting.
Speaker #1: We are empowering frontline restaurants in areas such as menu items, marketing, and labor efficiency, thereby making improvements in both precision and execution efficiencies. The second quarter is traditionally a low season, but judging from the table turnover performance, we believe that these initiatives have delivered a positive response.
Speaker #1: At the same time, we optimized existing products by improving taste, presentation, and product combination, lowering the barrier for customer trial and enhanced product appeal.
Speaker #1: In addition, the company continuously conducts dynamic operations based on new product sales performance, customer feedback, and regional market characteristics, providing customers with a more value-oriented and differentiated consumption experience.
Speaker #1: Second, in terms of products and menus, in the first half of this year, the company fully integrated local consumer dietary habits, consumption trends, and dining scenarios to drive menu optimization and new product development.
Speaker #1: For instance, in Southeast Asia, we introduced local flavors such as lemongrass, satay, and basil, extended soup bases, snacks, and beverage combinations around the core products to enhance cross-setting.
Speaker #1: Third, in terms of membership and marketing, as of the end of June, the number of overseas members reached 9.46 million. This quarter, we continue to improve customer management loop around sustained marketing, precise traffic acquisition, and member operations.
Speaker #1: At the same time, we optimized existing products by improving taste, presentation, and product combination, lowering the barrier for customer trial and enhancing product appeal.
Speaker #1: On the other hand, each region combined local consumption habits holiday occasions, preference of younger customer groups to continue to enhance brand exposures, and reach new customers through IP collaborations, new product launches, and new local events.
Speaker #1: In addition, the company continuously conducts dynamic operations based on new product sales performance, customer feedback, and regional market characteristics, providing customers with a more value-oriented and differentiated consumption experience.
Speaker #1: On the other hand, we place greater emphasis on post-marketing customer retention by further strengthening tiered membership operations using member-exclusive activities, differentiated benefits, customer communications, in-store experience optimizations.
Speaker #1: Third, in terms of membership and marketing, as of the end of June, the number of overseas members reached 9.46 million. This quarter, we continue to improve the customer management loop around sustained marketing, precise traffic acquisition, and member operations.
Speaker #1: We improved member activities and visit frequency. We continuously exploring more scenarios, more across scenarios, and multi-brand membership benefits, hoping to gradually transfer one-time marketing traffic into long-term membership relationships, further enhancing customer repurchase and store operating resilience.
Speaker #1: On the other hand, each region combined local consumption habits, holiday occasions, and preferences of younger customer groups to continue to enhance brand exposure and reach new customers through IP collaborations, new product launches, and new local events.
Speaker #1: In terms of store, expansion, this quarter we opened one new Haidilao restaurant in South Korea, one in Vietnam. In the first half of this year, we opened a total of three Haidilao restaurants.
Speaker #1: On the other hand, we place greater emphasis on post-marketing customer retention by further strengthening tiered membership operations through member-exclusive activities, differentiated benefits, customer communications, and in-store experience optimizations.
Speaker #1: End of Q2, we operated a total of 1209 Haidilao restaurants overseas. To date, the number of assigned but not yet opened Haidilao stores remains in the double digits.
Speaker #1: Meanwhile, based on the current construction schedules in July and August, we expect several new stores to be opened. Successfully, in the second half of the year and the full year, new store opening target is in the double digits.
Speaker #1: We improved member activities and visit frequency. We are continuously exploring more scenarios, including cross-scenario and multi-brand membership benefits, hoping to gradually transfer one-time marketing traffic into long-term membership relationships, further enhancing customer repurchase and store operating resilience.
Speaker #1: As of this quarter, the pomegranate plant has operated a cumulative total of 12 brands and 22 second brand restaurants overseas. We continue to optimize the high-ball marathon project, which originated in Canada, and we're now opening up the second high-ball store in Japan.
Speaker #1: In terms of store expansion, this quarter we opened one new Haidilao restaurant in South Korea and one in Vietnam. In the first half of this year, we opened a total of three Haidilao restaurants.
Speaker #1: At the end of Q2, we operated a total of 120 non-Haidilao restaurants overseas. To date, the number of assigned but not yet opened Haidilao stores remains in the double digits.
Speaker #1: At the same time, the Izakaya project in Japan is also steadily improving its stability with potential for further replication. Various country markets are exploring opportunities to independently incubate or replicate existing second brand formats.
Speaker #1: Meanwhile, based on the current construction schedules in July and August, we expect several new stores to be opened. Successfully, in the second half of the year and for the full year, the new store opening target is in the double digits.
Speaker #1: That's my conclusion for the business performance for this quarter, and like to invite Chusong to present the financial results. Thank you, Mr. Lee. I will now report about the financial results in the Q2 of 2026.
Speaker #1: As of this quarter, the pomegranate plant has operated a cumulative total of 12 brands and 22 second-brand restaurants overseas. We continue to optimize the High-ball Marathon project, which originated in Canada, and we're now opening up the second High-ball store in Japan.
Speaker #1: The company achieved a total revenue of 219 million and increase of 10% year over year. Haidilao Restaurant operating revenue was 198 million. By 4.6% year over year.
Speaker #1: Number of Haidilao restaurants increased by a net of 3 compared to the same period last year. Company served around 8.1 million customer visits in this quarter and increase of 5.2% year over year.
Speaker #1: At the same time, the Izakaya project in Japan is also steadily improving its stability, with potential for further replication. Various country markets are exploring opportunities to independently incubate or replicate existing second brand formats.
Speaker #1: Continuously to support the restaurant business. Beyond dining business, the company continued to expand revenue sources, delivery service, reached a 7.562 million up by 105% year over year.
Speaker #1: That's my conclusion for the business performance for this quarter, and I'd like to invite Chusong to present the financial results. Thank you, Mr. Lee. I will now report on the financial results for Q2 of 2026.
Speaker #1: During the period, each region continued to strengthen delivery operation investment, deepen collaboration with the major delivery platforms in each country, secure more promotional resources, and online traffic favorabilities.
Speaker #1: The company achieved a total revenue of $219 million, an increase of 10% year over year. Haidilao restaurant operating revenue was $198 million, up by 4.6% year over year.
Speaker #1: Enrich their delivery product offerings to enhance product appeal in the delivery scenario. Other business reached 13.439 million up by 119.7 year over year. Many contributed by sales of food and seasoning under the Haidilao brand and from the company's own central kitchens, as well as the active development of some new restaurant business under the pomegranate plant.
Speaker #1: The number of Haidilao restaurants increased by a net of 3 compared to the same period last year. The company served around 8.1 million customer visits in this quarter, an increase of 5.2% year over year.
Speaker #1: Continuously to support the restaurant business. Beyond the dining business, the company continued to expand revenue sources. Delivery service reached $7.562 million, up by 105% year over year during the period. Each region continued to strengthen delivery operation investment, deepen collaboration with major delivery platforms in each country, secure more promotional resources, and online traffic favorabilities.
Speaker #1: Overall, in this quarter, delivery and other business together generated 21 million in revenue up by 114.3 year over year. Their share of total company revenue increased from about 5% in the same period last year to nearly 9.6%, further diversifying company's revenue.
Speaker #1: In terms of cost and expenses, overall operating efficiency improved compared to the same period last year. In the second quarter, raw material and consumable cost was 74 million with a gross profit margin of 69.65.9, down slightly by 0.1 percentage point year over year.
Speaker #1: Enrich their delivery product offerings to enhance product appeal in the delivery scenario. Other business reached 13.439 million, up by 119.7% year over year, mainly contributed by sales of food and seasoning under the Haidilao brand and from the company's own central kitchens, as well as the active development of some new restaurant business under the pomegranate plant.
Speaker #1: Restaurant operating gross margin remained stable mainly because of the central kitchen B and supply chain business has grown significantly versus last year. In terms of employee cost, 74.951 million and the employee cost to revenue ratio decreased from 35.3% in the same period of last year, down approximately 1%, decreased as past year's employee efforts and employee capacity building, staffing, and store management to optimization have gradually been implemented labor efficiencies improvements have begun to materialize.
Speaker #1: Overall, in this quarter, delivery and other business together generated $21 million in revenue, up by 114.3% year over year. Their share of total company revenue increased from about 5% in the same period last year to nearly 9.6%, further diversifying the company's revenue.
Speaker #1: In terms of cost and expenses, overall operating efficiency improved compared to the same period last year. In the second quarter, raw material and consumable cost was $74 million, with a gross profit margin of 69.6%, down slightly by 0.1 percentage point year over year.
Speaker #1: Rent and related expenses were 5.6 million, accounting for approximately 2.6% of revenue, down about 0.4 percentage. Mainly due to revenue growth, diluting rent expenses, as well as adjustment in restaurant network layout reductions.
Speaker #1: Restaurant operating gross margin remained stable, mainly because the central kitchen B and supply chain businesses have grown significantly versus last year. In terms of employee cost, it was $74.951 million, and the employee cost to revenue ratio decreased from 35.3% in the same period last year to approximately 1% lower. This decrease is due to past efforts in employee capacity building, staffing, and store management optimization, which have gradually been implemented. Labor efficiency improvements have begun to materialize.
Speaker #1: In short term, utility expenses 7 million, accounting for approximately 3.3% of revenue, down 0.3% year over year. Depreciation and amortization 21 million, accounting for 9.6% of revenue, down about 0.3% year on year.
Speaker #1: In terms of travel communications and other operating related expenses, about 25.783 million, accounting for about 11.8%, remaining broadly stable year on year. Overall, the declines in employee cost ratio and expenses ratio for rent, utilities, depreciation, amortization were important factors in the operating margin improvement this quarter.
Speaker #1: Rent and related expenses were $5.6 million, accounting for approximately 2.6% of revenue, down about 0.4 percentage points. This was mainly due to revenue growth diluting rent expenses, as well as adjustments in restaurant network layout reductions.
Speaker #1: Raw material and other expenses resources still have room for further optimization. In Q2, the company achieved operating profit of 8.1 million US dollars up by 118.9 from 3.7 million in the same period last year.
Speaker #1: In the short term, utility expenses were $7 million, accounting for approximately 3.3% of revenue, down 0.3% year over year. Depreciation and amortization were $21 million, accounting for 9.6% of revenue, down about 0.3% year on year.
Speaker #1: Operating margin increased from 1.9% in the same period last year to 3.7%, up 1.8 percentage point year over year. As revenue grew, the employee cost ratio and several fixed operating expense ratio declined, driving the earlier investment in employees' customers and store management to gradually translate into operating efficiency improvements.
Speaker #1: In terms of travel, communications, and other operating-related expenses, about $25.783 million, accounting for about 11.8%, remained broadly stable year on year. Overall, the declines in the employee cost ratio and the expenses ratio for rent, utilities, depreciation, and amortization were important factors in the operating margin improvement this quarter.
Speaker #1: Although operating profit improved significantly, non-operating items in this quarter were mainly affected by exchange rate fluctuations. The same period of last year, there was a net foreign exchange gain of 16.33 million.
Speaker #1: Raw material and other expense resources still have room for further optimization. In Q2, the company achieved an operating profit of $8.1 million, up by 118.9% from $3.7 million in the same period last year.
Speaker #1: For this quarter, there was a loss of 4.34 million, a negative swing of more than 20 million year over year. A company result recorded a net loss of after-tax of 1.93 million for this quarter, compared to a net profit of 16.39 million in the same period last year.
Speaker #1: Operating margin increased from 1.9% in the same period last year to 3.7%, up 1.8 percentage points year over year, as revenue grew. The employee cost ratio and several fixed operating expense ratios declined, driving the earlier investment in employees, customers, and store management to gradually translate into operating efficiency improvements.
Speaker #1: Although final net profit was affected by non-operating factors, but the company's core operating profitability improved significantly. In terms of operating cash flow, company's for this quarter was a net inflow of 28 million and increase of 6.2%, compared with a net inflow of 26 million in the same period as of 30th of June.
Speaker #1: Although operating profit improved significantly, non-operating items in this quarter were mainly affected by exchange rate fluctuations. In the same period last year, there was a net foreign exchange gain of $16.33 million for this quarter.
Speaker #1: This year, company's cash reserve was approximately 266 million and overall liquidity remains ample to be used for continued store expansion. In terms of key restaurant operating metrics, the company served approximately 8.1 million customers' visits this quarter, up by 5.2%.
Speaker #1: There was a loss of $4.34 million, a negative swing of more than $20 million year over year. The company recorded a net loss after tax of $1.93 million for this quarter, compared to a net profit of $16.39 million in the same period last year.
Speaker #1: Although final net profit was affected by non-operating factors, the company's core operating profitability improved significantly. In terms of operating cash flow, the company's for this quarter was a net inflow of $28 million, an increase of 6.2% compared with the net inflow of $26 million in the same period as of June 30.
Speaker #1: And this reflects that Haidilao's turnover ratio and as well as same-day period is going up, further improvement in the store customer traffic and overall spending per store for the quarter was 24.3 dollars.
Speaker #1: Daily revenue was 17.4,000, down slightly by 1.1. And this overall restaurant operations customer traffic, table turnover have improved this quarter. Though single-store operating quality in certain regions have room for further optimization.
Speaker #1: This year, the company's cash reserve was approximately $266 million, and overall liquidity remains ample to be used for continued store expansion. In terms of key restaurant operating metrics, the company served approximately 8.1 million customer visits this quarter, up by 5.2%.
Speaker #1: By region, market performance diverged this quarter and table turnover in Southeast Asia and East Asia continued to improve. Turnover risk in North America and other regions faced pressure.
Speaker #1: And this reflects that Haidilao's turnover ratio, as well as the same-day period, is going up. Further improvement in the store customer traffic and overall spending per store for the quarter was $24.30.
Speaker #1: For Southeast Asia and the restaurant revenue for this quarter was 98.66, up about 3.9% in term this is mainly driven by high customer traffic and then in terms of average spending per customers was 18.6 dollars flat year over year.
Speaker #1: Daily revenue was $17.4 million, down slightly by $1.1 million. Overall, restaurant operations, customer traffic, and table turnover have improved this quarter, though single-store operating quality in certain regions has room for further optimization.
Speaker #1: Other overall Southeast Asian stores maintained a steady and upward operating trend. In East Asia, Haidilao restaurant revenue was 33.7 million, up about 9.9% year on year.
Speaker #1: By region, market performance diverged this quarter, and table turnover in Southeast Asia and East Asia continued to improve. Turnover risk in North America and other regions faced pressure. For Southeast Asia, the restaurant revenue for this quarter was $98.66 million, up about 3.9%. This was mainly driven by high customer traffic. In terms of average spending per customer, it was $18.60, flat year over year.
Speaker #1: Average table turnover increased from 4.8 turns per day, 4.9 turns per day, continuing to maintain at a high level and this is mainly because customer decreased spending from 29.4 in the same period, down by 2 dollars to 27.4.
Speaker #1: On the constant currency basis, average spending per customer in both countries actually increased year over year, excluding exchange rate disturbances. East Asia continues to maintain a strong operating trend with good customer traffic and table turnover performance.
Speaker #1: Other overall Southeast Asian stores maintain a steady and upward operating trend in East Asia. Haidilao restaurant revenue was $33.7 million, up about 9.9% year on year.
Speaker #1: In North America, Haidilao restaurants revenue was approximately 14 million, up about 6.6 year over year, with store count increasing from 20 to 22, average table turnover 4 turns and in terms of the average spending per customer increased from 39.1 the same period to 41, but the higher average check has not fully offset the impact of the lower turnover North America still needs to focus on improving customer traffic and operating efficiency.
Speaker #1: Average table turnover increased from 4.8 turns per day to 4.9 turns per day, continuing to maintain at a high level. This is mainly because customer spending decreased from $29.4 in the same period, down by $2 to $27.4.
Speaker #1: On a constant currency basis, average spending per customer in both countries actually increased year over year, excluding exchange rate disturbances. East Asia continues to maintain a strong operating trend with good customer traffic and table turnover performance.
Speaker #1: Other regions the restaurant revenue was 25.1 and down by 1.8%. Average table turnover is 3.7 turns per day. Down by 0.2 turns per day.
Speaker #1: In North America, Haidilao restaurants' revenue was approximately $14 million, up about 6.6% year over year, with store count increasing from 20 to 22. Average table turnover was 4 turns. In terms of average spending per customer, this increased from $39.10 in the same period to $41. However, the higher average check has not fully offset the impact of the lower turnover. North America still needs to focus on improving customer traffic and operating efficiency.
Speaker #1: This is mainly due to geopolitical volatility in the Middle East. It is still affecting the operation, though the impact is currently assessed to be gradually diminishing.
Speaker #1: Average spending per customer in other regions increased from 39.7 in the same period to 41, primarily driven by exchange rate effects over all regional operating performance in the second quarter showed some divergence.
Speaker #1: Southeast Asia improved. East Asia continued to maintain high level. North America and other regions need to further enhance customer traffic and per-store output. Same store performance there were 111 same-store restaurants.
Speaker #1: In other regions, restaurant revenue was $25.1 million, down by 1.8%. Average table turnover was 3.7 turns per day, down by 0.2 turns per day.
Speaker #1: Same-store sales was approximately 179 million, down about 0.8%. Among them, same-store sales in Southeast Asia and East Asia increased by 2.5% and 0.9% year over year.
Speaker #1: This is mainly due to geopolitical volatility in the Middle East still affecting the operation, though the impact is currently assessed to be gradually diminishing.
Speaker #1: Average spending per customer in other regions increased from 39.7 in the same period to 41, primarily driven by exchange rate effects. Overall, regional operating performance in the second quarter showed some divergence.
Speaker #1: Same-store in other regions declined by 2.7 and 8.5%. And the same reason as a consistent overtrend overall. Going forward, company will continue to focus on cooperation customers, customer operations, and in-store operations driving further conversion of customer traffic improvement into per-store sales and profitability enhancement.
Speaker #1: Southeast Asia improved. East Asia continued to maintain high levels. North America and other regions need to further enhance customer traffic and per-store output.
Speaker #1: It will now welcome questions and our first question comes from Lai Shengwei from CICC. Please welcome. Thank you, Mr. Lee. And Ms. Chief, thank you for giving me this opportunity and I have three questions and number one is that we can see that in China and right now there is an emphasis on empowering through an intelligent middle platform.
Speaker #1: Same store performance: there were 111 same store restaurants. Same store sales were approximately $179 million, down about 0.8%. Among them, same store sales in Southeast Asia and East Asia increased by 2.5% and 0.9% year over year.
Speaker #1: Same store sales in other regions declined by 2.7% and 8.5%, for the same reasons as the consistent overall downtrend. Going forward, the company will continue to focus on cooperating with customers, customer operations, and in-store operations, driving further conversion of customer traffic improvements into per-store sales and profitability enhancement.
Speaker #1: Does the overseas operation have any new ideas or plans regarding middle platform constructions or organized structure adjustment? And second is about the pomegranate plants and how do you balance the mature single-store model to share and do you balance the long-term investment cost of the new brands with the company's short-term performance?
Speaker #1: We will now open the floor for questions. Our first question comes from Lai Xiongwei from CICC. Please go ahead. Thank you, Mr. Lee and Ms. Chief. Thank you for giving me this opportunity. I have three questions. Number one is: We can see that in China right now, there is an emphasis on empowering through an intelligent middle platform.
Speaker #1: Do you currently have any relatively mature mechanisms and methodologies to further improve the probability? And my third question is about further optimization measures there.
Speaker #1: Are for cost and expensive controls going forward? Thank you, Mr. Lai, for your question. There are a total of three questions and I will take them one by one.
Speaker #1: Does the overseas operation have any new ideas or plans regarding middle platform construction or organizational structure adjustment? And second is about the pomegranate plants—how do you balance the mature single-store model to share, and how do you balance the long-term investment cost of the new brands with the company's short-term performance?
Speaker #1: In terms of the middle platform capability building, overseas is similar to China, but the overseas characteristic is that each country has different consumer habits, labor regulations, supply chain tax, and marketing environments.
Speaker #1: There's no single set of operating methods that can be directly replicated across or markets. Therefore, the principle for overseas middle platform construction is a headquarter should build common capabilities well whilst the regions and stores should run their local business well.
Speaker #1: Do you currently have any relatively mature mechanisms and methodologies to further improve the probability? And my third question is about further optimization measures that exist for cost and expense controls going forward.
Speaker #1: In terms of division of labor, headquarters centrally build common capabilities such as digital systems, bulk supply chain, personal management, financial management, and membership system, standards, and infrastructure.
Speaker #1: Thank you, Mr. Lai, for your question. There are a total of three questions, and I will take them one by one. In terms of the middle platform capability building, overseas is similar to China, but the overseas characteristic is that each country has different consumer habits, labor regulations, supply chain, tax, and marketing environments.
Speaker #1: Regional teams then adapt and implement these capabilities in combination with the local market conditions whilst specific operational decisions are left to the frontline teams who know the local markets and customers.
Speaker #1: There's no single set of operating methods that can be directly replicated across our markets. Therefore, the principle for overseas middle platform construction is that headquarters should build common capabilities well, while the regions and stores should run their local business well.
Speaker #1: From an organizational perspective, HQ's role will increase become increasingly become that of a supporting platform and frontline autonomy and operation will continue to be preserved and but things such as food safety and service quality will not be relaxed in any way.
Speaker #1: In terms of division of labor, headquarters centrally builds common capabilities such as digital systems, bulk supply chain, personnel management, financial management, and membership system standards and infrastructure.
Speaker #1: Currently, there are two projects that are running relatively smoothly. One is highball marathon currently we have both in Canada and one in Japan. It's a simple and fast-care role and easy to run low barrier.
Speaker #1: Regional teams then adapt and implement these capabilities in combination with the local market conditions, while specific operational decisions are left to the frontline teams who know the local markets and customers.
Speaker #1: In terms of turnover efficiency and operating performance, both meet our expectations. We're also looking at United States, Canada, and other markets will continue to verify its reputability.
Speaker #1: From an organizational perspective, HQ's role will increasingly become that of a supporting platform, and frontline autonomy and operation will continue to be preserved. However, things such as food safety and service quality will not be relaxed in any way.
Speaker #1: Others is the Japanese Izakaya. Its product offering focus on sashimi, yakitori, and Japanese side dishes. At the moment, in Tokyo, the customer acceptance and operation stability are continually improving and the second store is being prepared in Osaka.
Speaker #1: Regarding the balance between long-term investments and short-term performance, we use we verified the certainty with a small cost. Each project start with one or two stores investment per store is not large.
Speaker #1: Currently, there are two projects that are running relatively smoothly. One is High Ball Marathon, which we currently have both in Canada and one in Japan.
Speaker #1: It's a simple and fast payroll, and easy to run with a low barrier. In terms of turnover efficiency and operating performance, both meet our expectations. We're also looking at the United States, Canada, and other markets, and will continue to verify its reputability.
Speaker #1: Try and error cost is controllable. It will not have a material impact on the short-term performance. During the process, if operating performance or customer experience does not meet expectations, we'll make adjustment without blindly pursuing scale.
Speaker #1: Others is the Japanese Izakaya. Its product offering focuses on sashimi, yakitori, and Japanese side dishes at the moment. In Tokyo, customer acceptance and operational stability are continuing to improve, and the second store is being prepared in Osaka.
Speaker #1: So the real significant spending comes in the scale replication and we only allocate replication resources to models that have been verified and proven viable.
Speaker #1: So once proven, the company has already designed the return path and expectation for projects in the replication phase. Our third question about the cost control.
Speaker #1: Regarding the balance between long-term investments and short-term performance, we verified the certainty with a small cost. Each project starts with one or two stores. Investment per store is not—.
Speaker #1: The currently, it's not about compressing cost across the board, but to narrow the gaps between the stores. There is still imbalance in operating performance among stores lifting underperforming stores to the average levels and this is a better way forward.
Speaker #1: Large trial-and-error costs are controllable. They will not have a material impact on short-term performance. During the process, if operating performance or customer experience does not meet expectations, we'll make adjustments without blindly pursuing scale.
Speaker #1: So, the real significant spending comes in the scale replication, and we only allocate replication resources to models that have been verified and proven viable.
Speaker #1: And if we continue to compress store-level investment, this will ultimately harm customer experience and that's not the efficiency we want nor is it sustainable.
Speaker #1: So, once proven, the company has already designed the return path and expectations for projects in the replication phase. Our third question is about cost control.
Speaker #1: We have identified two sources of improvement. First is operating leverage as the second half enters the peak season. Customer traffic and the table turnover maintain good performance revenue growth itself will dilute relatively fix a cost.
Speaker #1: The currently it's not about compressing cost across the board but to narrow the gaps between the stores there is still imbalance in operating performance among stores lifting underperforming stores to the average levels and this is a better way forward and if we continue to compress store level investment this will ultimately harm customer experience and that's not the efficiency we want nor is it sustainable.
Speaker #1: Such as labor run and depreciation. Second is daily refinement staffing and scheduling efficiency. Procurement and supply chain and inventory shrinkage we will continue to optimize these areas as routine work not dependent on peak season.
Speaker #1: And right now we still focus on our investment in pomegranate plant. And we are not going to be stopping due to short-term profit pressure, but we'll control the pace and strictly manage budgets.
Speaker #1: We have identified two sources of improvement. First is operating leverage, as the second half enters the peak season. Customer traffic and the table turnover maintain good performance. Revenue growth itself will dilute relatively fixed costs such as labor, rent, and depreciation.
Speaker #1: So as you can see with the new brands gradually contribute to revenue and the middle platform capability building completes, it's major investment face the scap will gradually narrow.
Speaker #1: Thank you, Mr. Lee, for your comprehensive response. Our next question comes from Zengjun from Hua Tai Securities. Please. Thank you, Mr. Lee, and Ms. Chu.
Speaker #1: Second is daily refinement of staffing and scheduling efficiency. Procurement, supply chain, and inventory shrinkage—we will continue to optimize these areas as routine work not dependent on peak season. Right now, we are still focused on our investment in the pomegranate plant.
Speaker #1: This is Zengjun from Hua Tai. I would like to congratulate the company on your very stable performance. My first question is that with more Chinese hot pot and catering brands going overseas, how do you view the competition and especially that you are quite competitive in the China market?
Speaker #1: And we are not going to be stopping due to short-term profit pressure, but we'll control the pace and strictly manage budgets. So as you can see, with the new brands gradually contributing to revenue and the middle platform capability building completing its major investment phase, the SCAP will gradually narrow.
Speaker #1: How do you view the overseas competition? And especially for the pomegranate plant in this phase, where the brands are not yet established, how do you view the competitors' entry?
Speaker #1: Thank you, Mr. Lee, for your comprehensive response. Our next question comes from Zeng Jun from Hua Tai Securities. Please go ahead. Thank you, Mr. Lee and Ms. Chu.
Speaker #1: For instance, in terms of your brand's buzz and what are the localized approach that you would adopt? And my second question is that we can see table turnover performance has been good.
Speaker #1: This is Zeng Jun from Hua Tai. I would like to congratulate the company on your very stable performance. My first question is that with more Chinese hot pot and catering brands going overseas, how do and especially that you are quite competitive in the China market?
Speaker #1: Average steadily rising. What specific measures are used to improve the stores that need improvements? And in addition, what are the planned measures that you have in mind?
Speaker #1: Thank you. Great. Thank you, Ms. Zeng, for your questions. And I will take the first few questions and Ms. Chu will answer the third question.
Speaker #1: How do you view the overseas competition? And especially for the pomegranate plant at this phase, where the brands are not yet established, how do you view competitors’ entry?
Speaker #1: Number one, in terms of overseas market, apart from Chinese cuisine and hot pot, we also look at the entire dining market currently overseas consumers acceptance of Asian cuisine and Chinese food continue to rise.
Speaker #1: For instance, in terms of your brand's buzz, what are the localized approaches that you would adopt? And my second question is that we can see table turnover performance has been good.
Speaker #1: There's a lot of room for envelopment. Our main brand is in the hot pot segment and Chinese cuisine. We're still cultivating the market and raising consumer awareness.
Speaker #1: The average is steadily rising. What specific measures are used to improve the stores that need improvements? And in addition, what are the planned measures that you have in mind?
Speaker #1: Far from a zero-sum competition at the moment. Therefore, more Chinese brands going overseas is a positive sign. It validates the real demand existing and will also accelerate the process of overseas customers getting to know and accept Chinese cuisine.
Speaker #1: Thank you. Great. Thank you, Ms. Zeng, for your questions. I will take the first few questions, and Ms. Chu will answer the third question.
Speaker #1: Expanding the overall category path. But of course, we maintain a healthy respect for competition. We will focus on doing our own things while continue to enhance brand appeal through products, service, and customer experience, especially by diversifying our customer base and continuing to improving the proportion of local customers.
Speaker #1: Number one, in terms of overseas markets, apart from Chinese cuisine and hot pot, we also look at the entire dining market. Currently, overseas consumers' acceptance of Asian cuisine and Chinese food continues to rise.
Speaker #1: There's a lot of room for development. Our main brand is in the hot pot segment and Chinese cuisine. We're still cultivating the market and raising consumer awareness.
Speaker #1: For pomegranate projects, they're relatively diverse, including incubating and operating restaurants serving local cuisine. It's not about the brand, but it's about the model and capability first.
Speaker #1: Far from a zero-sum competition at the moment. Therefore, more Chinese brands going overseas is a positive sign. It validates the real demand that exists and will also accelerate the process of overseas customers getting to know and accept Chinese cuisine.
Speaker #1: For these projects, being the first to enter is not the most critical factor. What matters the most is to really prove the single store model and make it replicable.
Speaker #1: Second, in terms of the overseas brand building, we don't really need to increase marketing spend to buy the buzz. We center on products, service, store experience to let buzz grow organically.
Speaker #1: Expanding the overall category path. But of course, we maintain a healthy respect for competition. We will focus on doing our own things while continuing to enhance brand appeal through products, service, and customer experience.
Speaker #1: Marketing expenses have always been kept at a reasonable level and what we pursue is discussion, conversion, not just impressions. There are three layers. The first layer is to place marketing creativity and execution locally.
Speaker #1: Especially by diversifying our customer base and continuing to improve the proportion of local customers. For pomegranate projects, they're relatively diverse, including incubating and operating restaurants serving local cuisine.
Speaker #1: Teams in each region have a considerable flexibility to collaborate with the local IPs, artists, and games to plan around the local festivals and major events and to interact with the customers on the local online platforms so that the activities are rooted in local culture and feel familiar to local customers.
Speaker #1: It's not about the brand, but about the model and capability first. For these projects, being the first to enter is not the most critical factor.
Speaker #1: What matters the most is to really prove the single-store model and make it replicable. Second, in terms of overseas brand building, we don't really need to increase marketing spend to buy the buzz.
Speaker #1: Second is to make the products themselves carriers of communication. We launched a coriander-themed product series in some of the regions. Coriander as an ingredient.
Speaker #1: We center on products, service, and store experience to let buzz grow organically. Marketing expenses have always been kept at a reasonable level, and what we pursue is discussion and conversion.
Speaker #1: It's strongly loved or hated by people. And we built a complete product portfolio around this theme extending from soup base to dishes and snacks.
Speaker #1: It's not just impressions; there are three layers. The first layer is to place marketing creativity and execution locally. Teams in each region have considerable flexibility to collaborate with local IPs, artists, and games, to plan around local festivals and major events, and to interact with customers.
Speaker #1: Generated excellent organic discussion and in-store conversion. We planned this every season and with the same logic, the theme selection comes from the real interest of local customers while supply chain and R&D are centrally supported by the company and number three, is to capture and retain the buzz.
Speaker #1: On the local online platforms so that the activities are rooted in local culture and feel familiar to local customers. Second is to make the products themselves carriers of communication.
Speaker #1: If it only comes once, then the value is limited. We continue to connect the market activities, member operations, and online attention is directed to offline stores.
Speaker #1: We launched a coriander-themed product series in some regions. Coriander as an ingredient is something people either strongly love or hate. We built a complete product portfolio around this theme, expanding from soup base to dishes and snacks.
Speaker #1: And after arrival through membership benefits and refined operations, it is converted into repeat purchase and referrals. Buzz is the entry point. Membership and repurchase are the lasting accumulation.
Speaker #1: Finally, we must return to the fundamentals. No matter how front and marketing changes, the metric we value is all about customer satisfaction. Customer willing to come, come again, and recommend us to other people.
Speaker #1: We generated excellent organic discussion and in-store conversion. We plan this every season, and with the same logic, the theme selection comes from the real interests of local customers, while supply chain and R&D are centrally supported by the company. Number three is to capture and retain the buzz.
Speaker #1: This is where the brand influence truly takes root. Marketing can amplify the process but cannot replace it. The third question about turnover performance and what are the specific measures that we have while have Ms. Chu to answer this question.
Speaker #1: If it only comes once, then the value is limited. We continue to connect the market activities, member operations, and online attention, which is directed to offline stores.
Speaker #1: Thank you, Ms. Zeng, for your question. I will take your third question. For Q2, our overall increased by 0.1 year over year. The trend is healthy, but there is indeed divergence among regions East Asia and Southeast Asia perform better while North America and other regions still have room for improvement.
Speaker #1: And after arrival, through membership benefits and refined operations, it is converted into repeat purchases and referrals. Thus, the entry point, membership, and repurchase are the lasting accumulation.
Speaker #1: Finally, we must return to the fundamentals. No matter how form and marketing changes, the metric we value is all about customer satisfaction—customers willing to come, come again, and recommend us to other people.
Speaker #1: Take North America as an example. The issue for some stores is that customer base structure is relatively concentrated and coverage of mainstream local customers insufficient.
Speaker #1: This is where the brand influence truly takes root. Marketing can amplify the process, but it cannot replace it. The third question is about turnover performance and what specific measures we have. We will have Ms. Chu answer this question.
Speaker #1: For instance, if there are changes in the local immigration or visa policies, this can cause fluctuation in traffic. In the short term, we'll drive store traffic by adjusting menu combination of peak operations, but at the end of the day, it's really about diversifying the customer structure.
Speaker #1: Thank you, Ms. Zeng, for your question. I will take your third question. For Q2, our overall increased by 0.1 turn year over year. The trend is healthy, but there is indeed divergence among regions. East Asia and Southeast Asia perform better, while North America and other regions still have room for improvement.
Speaker #1: Solidly develops surrounding customer groups and member operations and localized marketing reducing reliance on any single customer segments. This is our long-term direction across all over overseas markets.
Speaker #1: In other regions, there are external factors such as geopolitics, which are beyond our control. What we can do is to adjust operating strategies and control expenses in a timely manner based on local conditions.
Speaker #1: Take North America as an example. The issue for some stores is that the customer base structure is relatively concentrated, and coverage of mainstream local customers is insufficient.
Speaker #1: For instance, if there are changes in local immigration or visa policies, this can cause fluctuations in traffic. In the short term, we'll drive store traffic by adjusting menu combinations during peak operations, but at the end of the day, it's really about diversifying the customer structure.
Speaker #1: At the moment, we can see that the negative impacts are gradually diminishing. In terms of mechanisms, the headquarters role is to help stores accurately identify problems and using operating data to attribute underperforming stores by table turnover on the store-by-store basis.
Speaker #1: Solidly develops surrounding customer groups and member operations, and localized marketing, reducing reliance on any single customer segment. This is our long-term direction across all of our overseas markets.
Speaker #1: Whether it's a customer base issue, a trade area issue, or operational issue, and we will be looking at solutions for instance, whether we will be relocating, adjustments, and rather than continuing to invest just to maintain the store count.
Speaker #1: In other regions, there are external factors, such as geopolitics, which are beyond our control. What we can do is adjust our operating strategies and control expenses in a timely manner, based on local conditions.
Speaker #1: Thank you. That is a very clear and I would also like to thank both the CEO and CFO for their answers. Thank you. Next question, please.
Speaker #1: At the moment, we can see that the negative impacts are gradually diminishing. In terms of mechanisms, the headquarters' role is to help stores accurately identify problems, and, using operating data, attribute underperforming stores by table turnover on a store-by-store basis.
Speaker #1: It comes from Weijiabao in Sitik. Ms. Li and Ms. Chu, this is Weijiabao from Sitik Securities. I have three questions. Number one is, what is the outlook for the average Czech average unit price per customer trend in Q3 and Q4, and why?
Speaker #1: Whether it's a customer base issue, a trade area issue, or an operational issue, we will be looking at solutions. For instance, whether we will be relocating or making adjustments, rather than continuing to invest just to maintain the store count.
Speaker #1: What are these specific measures that you will be taken if there are price increase or decreases? And second, which region will be the focus for store openings in the coming quarters?
Speaker #1: Thank you. That is very clear, and I would also like to thank both the CEO and CFO for their answers. Thank you. Next question, please.
Speaker #1: Will you accelerate openings in the regions with fewer current stores or enter into entirely new countries? Number next question is on the investment and payback period and in each region compared with the past, are they improving roughly flat or increasing?
Speaker #1: This question comes from Wei Jiabao at CITIC Securities. Ms. Li and Ms. Chu, this is Wei Jiabao from CITIC Securities. I have three questions. Number one: What is the outlook for the average check, average unit price per customer trend in Q3 and Q4, and why?
Speaker #1: And what are the reasons for these changes behind those? If any. Thank you, Mr. Wei, for your question. Your first question. With respect to the unit price for Q3 and Q4, right now we don't really have any plans for a uniform price adjustment.
Speaker #1: What are the specific measures that you will be taking? Will there be any price increases or decreases? And secondly, which region will be the focus for store openings in the coming quarters?
Speaker #1: We will not simply pass all cost onto customers. Each market will adjust autonomously based on the local customer acceptance, competitive environment, and product structure.
Speaker #1: Will you accelerate openings in regions with fewer current stores, or enter into entirely new countries? My next question is on the investment and payback period in each region compared with the past. Are they improving, roughly flat, or increasing?
Speaker #1: We pay more attention to the value perceived by customers rather than simply pursuing higher prices for instance, we add new products across different price ranges adjust set meals and combo products and give customers a more choices.
Speaker #1: And what are the reasons for these changes behind those, if any? Thank you, Mr. Wei, for your question—your first question. With respect to the unit price for Q3 and Q4, right now we don't really have any plans for a uniform price adjustment.
Speaker #1: So that's our unit price. And with respect to store openings for second half and we expect double-digit new stores to open. In North America, East Asia, and Southeast Asia, in addition, there are still about a dozen of stores with a substantial progress among which stores in North America and the UK are already in construction phase.
Speaker #1: We will not simply pass all costs onto customers. Each market will adjust autonomously based on local customer acceptance, the competitive environment, and product structure.
Speaker #1: And we'll open successively over the next two years. Layout and business expansion in existing countries continue to be handled by each country in the bottom of manner.
Speaker #1: We pay more attention to the value perceived by customers, rather than simply pursuing higher prices. For instance, we add new products across different price ranges, adjust set meals and combo products, and give customers more choices.
Speaker #1: And the project advancement pace in each country is basically consistent with its operating rhythm. For new entrants, headquarter will more cautiously assess market conditions, consumptions, and specific site locations.
Speaker #1: So that's our unit price. And with respect to store openings for the second half, we expect double-digit new stores to open in North America, East Asia, and Southeast Asia.
Speaker #1: There is currently no definite entry plan for new countries. We are under discussion, but they are not yet definitive. On your third question, for new stores currently, we are looking at a standard payback period of three to four years roughly.
Speaker #1: In addition, there are still about a dozen stores with substantial progress, among which stores in North America and the UK are already in the construction phase and will open successively over the next two years.
Speaker #1: Southeast Asia relatively faster and Europe and America relatively slower. Versus the past, each region has become more careful and prudent in site selections so the overall store payback periods are more controllable and quality has also improved.
Speaker #1: Layout and business expansion in existing countries continue to be handled by each country in a bottom-up manner. And the project advancement pace in each country is basically consistent with its operating rhythm.
Speaker #1: For new entrants, headquarters will more cautiously assess market conditions, consumption, and specific site locations. There is currently no definite entry plan for new countries.
Speaker #1: For single store investment fluctuates due to factors such as location, store size, and decoration style. In the meantime, decoration and labor cost in some markets have indeed risen over the past two years.
Speaker #1: We are under discussion, but they are not yet definitive. On your third question, for new stores currently, we are looking at a standard payback period of three to four years, roughly.
Speaker #1: We continue to control investments by optimizing store formats, decoration design, local procurement, and construction management, and overall per-store expenditure remains stable. Thank you. Thank you, Ms. Chu, for your answers.
Speaker #1: Southeast Asia is relatively faster, and Europe and America are relatively slower. Compared to the past, each region has become more careful and prudent in site selection, so the overall store payback periods are more controllable and quality has also improved.
Speaker #1: Thank you. Our next question. Comes from Fund and Securities. Ms. Jenny Lee. Thank you for giving me this opportunity for ask a question. I have two questions here.
Speaker #1: For single store investment, it fluctuates due to factors such as location, store size, and decoration style. In the meantime, decoration and labor costs in some markets have indeed risen over the past two years.
Speaker #1: Number one, which is about the localization of supply chain. For instance, Singapore and Malaysia in these areas. In Southeast Asia, do you have central kitchens and do you have plans for localization of central kitchens and supply chains in these areas?
Speaker #1: We continue to control investments by optimizing store formats, decoration design, local procurement, and construction management, and overall per-store expenditure remains stable. Thank you.
Speaker #1: Thank you, Ms. Chu, for your answer. Thank you. Our next question comes from Fund and Securities. Ms. Jenny Lee. Thank you for giving me this opportunity to ask a question.
Speaker #1: My second question is about the impact of exchange rate fluctuation on your net profit and hedging. Because we can see that there is an impact to a certain degree on the net profit and what are the control measures that you have taken and perhaps you could share with us on those points.
Speaker #1: I have two questions here. Number one is about the localization of the supply chain. For instance, in Singapore and Malaysia—do you have central kitchens? And do you have plans for localization of central kitchens and supply chains in these areas within Southeast Asia?
Speaker #1: Thank you, Ms. Lee, for your question. The first question on supply chain. And central kitchens in Singapore and Malaysia after many of operation low procurement and supply chain systems have become mature for products that can be stably procured locally and meet quality requirements, we will localize as much as possible.
Speaker #1: For some core seasonings or products whose local supply is not yet stable enough, we'll continue to source from central kitchens or established suppliers. Central kitchens do not necessarily expand linearly with the store counts.
Speaker #1: My second question is about the impact of exchange rate fluctuation on your net profit and hedging, because we can see that there is an impact to a certain degree on the net profit. What are the control measures that you have taken, and perhaps you could share with us on those points?
Speaker #1: We will consider store density, delivery radius, and capacity utilization. Existing central kitchens have a surplus capability capacity that we will also try to do some external sales to improve capacity utilization efficiency.
Speaker #1: Thank you, Ms. Lee, for your question. The first question is on supply chain. At our central kitchens in Singapore and Malaysia, after many years of operation, local procurement and supply chain systems have become mature for products that can be stably procured locally and meet quality requirements.
Speaker #1: With respect to the exchange fluctuation for Q2, there was indeed quite pronounced and this is mainly due to base effects same period last year we recorded a larger foreign exchange gain this year it's a loss positive and negative combined amplified the year-over-year fluctuation.
Speaker #1: We will localize as much as possible. For some core seasonings, our products whose local supply is not yet stable enough will continue to be sourced from central kitchens or established suppliers.
Speaker #1: Central kitchens do not necessarily expand linearly with the store count. We will consider store density, delivery radius, and capacity utilization. Existing central kitchens have a surplus capability and capacity, so we will also try to do some external sales to improve capacity utilization efficiency.
Speaker #1: But it should be emphasized that this is a non-operating, non-cash impact from a currency translation does not reflect the changes in the underlying business excluding foreign exchange gain losses.
Speaker #1: Operating profit and operating profit margin in Q2 both improved significantly year over year. Therefore, we ourselves focus on the operating profit measures. In exchange rate management, our approach has two layers.
Speaker #1: With respect to the exchange fluctuation for Q2, it was indeed quite pronounced, and this is mainly due to base effects. In the same period last year, we recorded a large foreign exchange gain; this year, it's a loss. The positive and negative combined amplified the year-over-year fluctuation.
Speaker #1: The first layer is natural hedging that is most of our revenue and costs occur in the same market, local collections, local procurement, local labor and rent repayment.
Speaker #1: The higher the degree of the business localization, the smaller cross-border exposure that truly needs to be managed. The second layer is for exposures that do exist such as centralized funds and cross-border settlements, company will continue to monitor them and based on the size of exposure, hedging cost, local compliance requirements, evaluate appropriate funds and exchange rate management methods.
Speaker #1: But it should be emphasized that this is a non-operating, non-cash impact from a currency translation. It does not reflect the changes in the underlying business. Excluding foreign exchange gains and losses, operating profit and operating profit margin in Q2 both improved significantly year over year.
Speaker #1: However, we will not engage in speculative forex operation just for the sake of reported numbers. Overall speaking, we're quite cautious. Thank you. Thank you, Ms. Chu.
Speaker #1: Therefore, we ourselves focus on the operating profit measures. In exchange rate management, our project has two layers. The first layer is natural hedging, that is, most of our revenue and costs occur in the same market—local collections, local procurement, local labor, and rent repayments.
Speaker #1: That's very clear. Thank you. Chushan Securities. Ms. Mr. Zhong Yecheng, please. Ms. Zhong Yecheng, please. Yecheng from Chushan Securities. I have two questions. Number one is about stores if we divide them into mature stores relatively new stores and new stores, are there significantly differences in the table turnover and store model among them?
Speaker #1: The higher the degree of business localization, the smaller the cross-border exposure that truly needs to be managed. The second layer is for exposures that do exist, such as centralized funds and cross-border settlements. The company will continue to monitor them and, based on the size of exposure, hedging costs, and local compliance requirements, evaluate appropriate funds and exchange rate management methods.
Speaker #1: However, we will not engage in speculative forex operations just for the sake of reported numbers. Overall speaking, we're quite cautious. Thank you. Thank you, Ms. Chu.
Speaker #1: If we compare and which ones would perform better? Or vice versa. And my second question is about incentives. For overseas headquarter management teams and we are going overseas early and we have a large scale relatively sound talent pipeline with more and more Chinese cuisine brands going overseas.
Speaker #1: That's very clear. Thank you. Chushan Securities. Mr. Zhong Yecheng, please. Ms. Zhong Yecheng, please. Hi, everyone. This is Zhong Yecheng from Chushan Securities.
Speaker #1: So is it likely that there are people who will be approaching your staff and your talent? So how do you ensure the teams' stability?
Speaker #1: I have two questions. Number one is about stores. If we divide them into mature stores, relatively new stores, and new stores, are there significant differences in the table turnover and store model among them?
Speaker #1: Thank you for your question. And on the first point, the store age itself is not the key factor determining store performance. And the difference among mature stores come from the trade areas and operational capabilities rather than how many years they have been open.
Speaker #1: If we compare, which ones would perform better, or vice versa? And my second question is about incentives—for overseas headquarters management teams. Since we are going overseas early and we have a large-scale, relatively sound talent pipeline, with more and more Chinese cuisine brands going overseas...
Speaker #1: The real impact of a store age is mainly in the first six months after opening. New stores need to go through a ramp-up period of team integration.
Speaker #1: Developing surrounding customers groups and stabilizing operating processes. This is a normal pattern. Taking 2024 as a dividing line among 107 stores opened from 2018 to 2023, about 50 achieved a positive cash flow in the first months of opening.
Speaker #1: So it's likely that there are people who will be approaching your staff and your talent. So how do you ensure the team's stability? Thank you for your question.
Speaker #1: And on the first point, the store age itself is not the key factor determining store performance. The differences among mature stores come from the trade areas and operational capabilities rather than how many years they have been open.
Speaker #1: Among the 27 stores opened from 2024 to June this year, the proportion rose to about 78%. In other words, the ramp-up speed of the new generation stores is significantly faster than before.
Speaker #1: The underlying reason is that in recent years we have tightened requirements and site selection standards investment calculations store format design and store manager reserves.
Speaker #1: The real impact of store age is mainly in the first six months after opening. New stores need to go through a ramp-up period of team integration, developing surrounding customers or groups, and stabilizing operating processes.
Speaker #1: Stores are opened more precisely in preparation before opening is also more thorough. Your second question with respect to the evaluation there are three levels.
Speaker #1: This is a normal pattern. Taking 2024 as a dividing line, among 107 stores opened from 2018 to 2023, about 50 achieved positive cash flow in the first months of opening.
Speaker #1: And core of store manager evaluation is about on one hand employees on the other hand customers with a focus on customer satisfaction, employee development and long-term store operating quality.
Speaker #1: Among the 27 stores opened from 2024 to June this year, the proportion rose to about 78%. In other words, the ramp-up speed of the new generation stores is significantly faster than before.
Speaker #1: Business results are included in incentives but they are not only they only metric because focusing solely on short-term profit can easily sacrifice employee and customer experience regional teams are more.
Speaker #1: The underlying reason is that in recent years, we have tightened requirements and site selection standards, investment calculations, store format design, and store manager reserves.
Speaker #1: Oriented looking at operating performance. Growth quality and talent development headquarter functional teams are evaluated on whether they can truly help frontline improve efficiency rather than merely completing their own tasks and targets.
Speaker #1: Stores are opened more precisely, and preparation before opening is also more thorough. Your second question— with respect to the evaluation, there are three levels.
Speaker #1: The core of store manager evaluation is about, on one hand, employees, and on the other hand, customers, with a focus on customer satisfaction, employee development, and long-term store operating quality.
Speaker #1: In terms of talent stability, intensified competition is inevitable but retaining people is not only about compensation but also growth space and operating space. Haidilao and overseas early is greater advantage is that it has already cultivated a group of local store managers and regional managers from the frontline.
Speaker #1: Business results are included in incentives, but they are not the only metric, because focusing solely on short-term profit can easily sacrifice employee and customer experience. Regional teams are more resource-oriented, looking at operating performance.
Speaker #1: They have a deep understanding of the local market and company culture. As new stores expand new regions are entered new regions are entered the new promogrant business are explored outstanding managers will always have the next bigger stage they can also share in the fruits of the business growth through incentive mechanisms.
Speaker #1: Growth, quality, and talent development headquarter functional teams are evaluated on whether they can truly help the frontline improve efficiency, rather than merely completing their own tasks and targets.
Speaker #1: This is our most fundamental way to maintain teams stability. Thank you for your question. I would also like to thank the management for your very clear answers and I also wish the company a bright future.
Speaker #1: In terms of talent stability, intensified competition is inevitable, but retaining people is not only about compensation; it’s also about growth space and operating space. Haidilao, and overseas, an early and greater advantage is that it has already cultivated a group of local store managers and regional managers from the frontline.
Speaker #1: Thank you. Thank you very much, everyone. And in the interest of time, this concludes today's conference earnings call. I'd like to thank all the investors and analysts for joining us in today's call.
Speaker #1: They have a deep understanding of the local market and company culture. As new stores expand, new regions are entered, and new program businesses are explored, outstanding managers will always have the next bigger stage.
Speaker #1: They can also share in the fruits of the business growth through incentive mechanisms. This is our most fundamental way to maintain team stability. Thank you for your question.
Speaker #1: I would also like to thank the management for your very clear answers, and I wish the company a bright future. Thank you. Thank you very much, everyone.
Speaker #1: And in the interest of time, this concludes today's conference earnings call. I'd like to thank all the investors and analysts for joining us on today's call.
