Q2 2026 DPC Dash Ltd Earnings Call

August 26, 2026

Operator: The star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note today's event is being recorded. I'd now like to turn the conference over to Cathy Zhong with Investor Relations. Please go ahead.

Speaker #1: Start key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad, and to withdraw your question, please press star then 2.

Speaker #1: Please note today's event is being recorded. And now I'd like to turn the conference over to Cathy Zong with Investor Relations. Please go ahead.

Speaker #2: Thank you, operator. Hello everyone, and thank you for joining us on today's call. Again, as a reminder, you're all currently on mute. We will open up the floor during Q&A session after management's prepared remarks.

Cathy Zhong: Thank you, operator. Hello, everyone, and thank you for joining us on today's call. Again, as a reminder, you're all currently on mute. We will open up the floor during Q&A session after management's prepared remarks. We will try to answer as many questions as time allows. Today, you will hear from Ms. Aileen Wang, Executive Director and CEO of DPC Dash, Ms. Helen Wu, CFO of DPC Dash, and Mr. Michael Xu, CPO of DPC Dash. Aileen will provide insights into the company's overall performance and share recent developments. Helen will go a bit deeper into the H1's financial results. The management team will address your questions after their remarks.

Cathy Zhang: Thank you, operator. Hello, everyone, and thank you for joining us on today's call. Again, as a reminder, you're all currently on mute. We will open up the floor during Q&A session after management's prepared remarks. We will try to answer as many questions as time allows. Today, you will hear from Ms. Aileen Wang, Executive Director and CEO of DPC Dash, Ms. Helen Wu, CFO of DPC Dash, and Mr. Michael Xu, CPO of DPC Dash. Aileen will provide insights into the company's overall performance and share recent developments. Helen will go a bit deeper into the H1's financial results. The management team will address your questions after their remarks.

Speaker #2: We will try to answer as many questions as time allows. Today you will hear from Ms. Aileen Wang, Executive Director and CEO of DPC Dash.

Speaker #2: Ms. Helen Wu, CFO of DPC Dash, and Mr. Michael Hsu, CPO of DPC Dash. Aileen will provide insights into the company's overall performance and share recent developments; Helen will go a bit deeper into the first half's financial results.

Speaker #2: The management team will address your questions after their remarks. Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable securities laws.

Cathy Zhong: Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable securities laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical facts, including but not limited to the statements about the company's beliefs, plans, and expectations, are forward-looking statements.

Cathy Zhang: Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable securities laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical facts, including but not limited to the statements about the company's beliefs, plans, and expectations, are forward-looking statements.

Speaker #2: Which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties. Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements.

Speaker #2: You can identify these forward-looking statements because they include terminology such as "may," "will," "expect," "estimate," "believe," "going forward," "plan," "projection," "aim," or other similar expressions.

Speaker #2: Statements that are not historical facts including but not limited to the statements about the company's beliefs, plans, and expectations are forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the Hong Kong Stock Exchange.

Cathy Zhong: All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with The Stock Exchange of Hong Kong Limited. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcements and interim report to be published in accordance with the rules governing the listing of the securities on The Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures. All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Aileen Wang, Executive Director and CEO of DPC Dash. Aileen, please go ahead.

Cathy Zhang: All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with The Stock Exchange of Hong Kong Limited. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcements and interim report to be published in accordance with the rules governing the listing of the securities on The Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures. All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Aileen Wang, Executive Director and CEO of DPC Dash. Aileen, please go ahead.

Speaker #2: Also, this call includes discussions of financial information and certain non-FRS financial measures. Please refer to our results announcements and interim report to be published in accordance with the rules governing the listing of the securities on the stock exchange of Hong Kong Limited, which contain a reconciliation of the non-FRS measures to IFRS measures.

Speaker #2: All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law.

Speaker #2: With that, I will turn the call over to Ms. Aileen Wang, Executive Director and CEO of DPC Dash. Aileen, please go ahead.

Speaker #3: Hello everyone, and thank you for joining us today. As we discussed DPC Dash Limited's results, for the first half of 2026, as the exclusive master franchisee for Domino's Pizza in the Chinese mainland, Hong Kong SAR and Macau SAR, we continue to operate in a market with substantial growth opportunities.

Aileen Wang: Hello, everyone, and thank you for joining us today as we discuss DPC Dash Limited's results for the H1 2026. As the exclusive master franchisee for Domino's Pizza in the Chinese mainland, Hong Kong SAR, and Macau SAR, we continue to operate in a market with substantial growth opportunities. Our global franchisor, Domino's Pizza, Inc., remains one of the largest pizza companies in the world, with more than 22,500 stores across over 90 markets as of the end of the reporting period. Before we discuss the figures, I want to contextualize our H1 performance, which provides a clearer perspective on our current trajectory. Revenue grew 20.8% to RMB 3,133.8 million, driven primarily by a 33.7% year-over-year increase in transaction volume. This growth was fueled by both our expanding store network and a 7.1% increase in same-store transactions.

Speaker #3: Our global franchiseor, Domino's Pizza Inc., remains one of the largest pizza companies in the world, with more than 22,500 stores across over 90 markets, as of the end of the reporting period.

Speaker #3: Before we discuss the figures, I want to contextualize our first half performance, which provides a clearer perspective on our current trajectory. Revenue grew 20.8% to RMB 3,133.8 million, driven 33.7% year-over-year increase in transaction volume.

Speaker #3: This growth was fueled by both our expanding store network and a 7.1% increase in same-store transactions. However, this half was characterized by two opposing forces: robust demand and network expansion, versus pricing pressure from industry-wide aggregator subsidy dynamics.

Aileen Wang: However, this half was characterized by two opposing forces, robust demand and network expansion versus pricing pressure from industry-wide aggregator subsidy dynamics. I will now outline how these dynamics diverged across our different types of markets. Let's start with our initial city markets, defined as the markets we entered before 2023, where we have the longest operating history. Transaction counts accelerated and same-store transaction growth was 8.5%, actually a healthy number. But same-store sales growth, SSG, turned negative, marking the first such occurrence in these initial city markets in recent years. We did not see evidence of a broad-based demand deterioration in our initial city markets. Indeed, more customers were visiting us. This shift was primarily attributable to the intensified third-party platforms' subsidy campaigns, leading to lower average ticket as they put in a meaningful share of orders onto these lower-priced channels.

Speaker #3: I will now outline how these dynamics diverged across our different types of markets. Let's start with our initial seeding markets. Defined as the markets we entered before 2023, where we have the longest operating history.

Speaker #3: Transaction counts accelerated, and same-store transaction growth was 8.5%, actually a healthy number. But same-store sales growth, SSG, turned negative. Marking the first such occurrence in these initial seeding markets in recent years.

Speaker #3: We did not see evidence of a broad-based demand deterioration in our initial seeding markets. Indeed, more customers were visiting us. This shift was primarily attributable to the intensified third-party platforms, subsidy campaigns, leading to lower average ticket.

Speaker #3: As they put in a meaningful share of orders, onto these lower-priced channels. Now let's turn to our new seeding markets. The markets we have entered since 2023.

Aileen Wang: Now let's turn to our new city markets, the markets we have entered since 2023. SSG, while still negative at -9.4%, has narrowed consistently for three consecutive halves. We have improved from -19.6% to -13.2% and now -9.4%. This is the normalizing curve we expect to see. When we enter a new city, our first stores open to extraordinary demand, often the strongest sales performance in the entire Domino system globally. As that initial launch phase settles and we increase more store density to drive operational efficiency, same-store comparisons naturally experience contraction for a period. We made a deliberate choice on managing this transition period, and I would like to outline our strategic rationale behind our decision-making.

Speaker #3: SSG, while still negative and negative 9.4%, has narrowed consistently for three consecutive halves. We have improved from negative 19.6% to negative 13.2%, and now negative 9.4%.

Speaker #3: This is the normalizing curve we expect to see. When we enter a new seeding, our first stores open to extraordinary demand, often the strongest sales performance, in the entire Domino's system globally.

Speaker #3: As that initial launch faced setups and we increased more store density to drive operational efficiency, same-store comparisons naturally experienced contraction for a period. We made a deliberate choice on managing this transition period, and I would like to outline our strategic rationale behind our decision-making.

Speaker #3: Rather than waiting out the 3TP subsidy wave, we view this as one-of-a-kind meeting window and an accelerated rollout of delivery services in our new seeding stores, ahead of our original plan.

Aileen Wang: Rather than waiting out the 3PP subsidy wave, we view this as a one-of-a-kind meeting window and then accelerated the rollout of delivery services in our new city stores ahead of our original plan. As a result, delivery order contribution in these new city stores rose to 25% today, and in a much faster pace as we observed in our initial city markets in the past. We want to point out that through building delivery penetration, together with launching value and other initiatives, same store transaction growth in new city markets turned positive at 2.2%, up from -19.1% a year ago and -7.9% in the H2 of last year. However, embracing aggregator platforms meant accepting a lower realized transaction price in the near term, since TTP orders carry a lower average ticket than orders through our own channels.

Speaker #3: As a result, delivery order contribution in these new seeding stores rose to 25% faster pace as we observed in our initial seeding markets in the past.

Speaker #3: We want to point out that, through building delivery penetration together with launching value and other initiatives, same-store transaction growth in new seeding markets turned positive at 2.2%, up from negative 19.1% a year ago, and negative 7.9% in the second half of last year.

Speaker #3: However, embracing aggregator platforms meant accepting a lower realized transaction price in the near term. Since 3TP orders carry a lower average ticket than orders through our own channels.

Speaker #3: But we believe that the customer habits and brand mindshare were building today, and what is an early and formative period for delivery in these new seedings, like what we did in the initial seedings, will yield long-term benefits.

Aileen Wang: But we believe that the customer habits and brand mindshare we are building today in what is an early and formative period for delivery in these new cities, like what we did in the initial cities, will yield long-term benefits. And importantly, even at the deep point of same-store sales comparison cycle, the underlying economics level at these stores has remained healthy. Our 93 stores opened in new markets this half, generating an average daily sales of RMB28,230 with a weighted expected payback period of just 14.8 months. Beyond the network expansion and same-store story, we continue to innovate our products and collaborate with popular IPs to engage with our customers.

Speaker #3: And importantly, even at the deep point of same-store sales comparisons cycle, the underlying economics level at these stores has remained healthy. Our 93 stores opened a new market this half, generating an average daily sales of RMB 28,230, with a weighted expected payback period of just 14.8 months.

Speaker #3: Beyond the network expansion and same-store story, we continue to innovate our products and collaborate with popular IPs to engage with our customers, to name a few of the highlights.

Aileen Wang: To name a few of the highlights, we launched a Crispy Croissant Crust, football-themed Mexican Inspired Salsa Roast Chicken and Beef Rectangular Pizza, Korean chicken pizza, and Energy Bowl series, alongside a successful partner with the gaming title Arknights, 命如芳洲, to capture a larger share of the youth demographics. On delivery, we maintained a delivery on-time rate of 93.6%, even as volumes grew significantly, which speaks to the quality of our operating system. On digital engagement, our loyalty program grew to 41.9 million members, up from 30.1 million a year ago, with 18.1 million new customers placing their first order over the past 12 months. On our supply chain, our fourth supply chain center in Wuhan commenced operations on 21 August 2026, serving over 200 stores around Wuhan areas across the western region. We have also secured sites in Chengdu and Nanjing, targeting opening during the H2 of 2027.

Speaker #3: We launched a crispy croissant crust, football-filled square-shaped pizza, durian chicken pizza, and energy bowl series, alongside a successful partner with the gaming titled Ark Knights, to capture a larger share of the used demographics.

Speaker #3: On delivery, we maintained a delivery on-time rate of 93.6%, even as volumes grew significantly, which speaks to the quality of our operating system. On digital engagement, our loyalty program grew to 41.9 million members, up from 30.1 million a year ago, with 18.1 million new customers placing their first order over the past 12 months.

Speaker #3: On our supply chain, our full supply chain center in Wuhan commenced operations on August 21, 2026, serving over 200 stores around Wuhan areas across the wealthy region.

Aileen Wang: On our supply chain, our fourth supply chain center in Wuhan commenced operations on 21 August 2026, serving over 200 stores around Wuhan areas across the western region. We have also secured sites in Chengdu and Nanjing, targeting opening during the H2 of 2027.

Speaker #3: We have also secured sites in Chengdu and Nanjing, targeting opening during the second half of 2027. We believe these investments are necessary to solidify our product and operation foundation as we keep scaling.

Aileen Wang: We believe these investments are necessary to solidify our product and operation foundation as we keep scaling. Moving forward, our strategy is defined by a distinct approach to our two core business segments. In our initial city markets, the priority is structural average ticket improvement. Orders placed through our own channels, our application, and WeChat Mini Program have consistently carried an ATP, meaning Average Transaction Price, above RMB90, meaningfully higher than TTP orders. So our focus is migrating more customers back to these higher value channels through our loyalty program, combo meal innovation, et cetera. In our new city markets, the priority is through expansion and penetration, continuing to scale delivery from its current base of around 25%, and communicating our iconic value programs while taking similar initiatives to migrate customers to our own channels and elevating ATP.

Speaker #3: Moving forward, our strategy is defined by a distinct approach to our two core business segments. In our initial seeding markets, the priority is structural average ticket improvement.

Speaker #3: Orders placed through our own channels, our application, and WeChat Mini program, have consistently carried an ATP meaning average transaction price, above RMB 90, meaningfully higher than 3TP orders.

Speaker #3: So our focus is migrating more customers back to these higher-value channels through our loyalty program, combo meal innovation etc. In our new seeding markets, the priority is still expansion and penetration, continuing to scale up delivery from its current base of around 25%, and communicating our iconic value programs while taking similar initiatives to migrate customers to our own channels and elevating ADP.

Speaker #3: Regarding our network expansion, we remain on track to open approximately 350 net new stores in 2026, have already delivered 235 openings in the first half, to better quantify our long-term growth potential, we're introducing store density as a key performance indicator this period.

Aileen Wang: Regarding our network expansion, we remain on track to open approximately 350 net new stores in 2026. Have already delivered 235 openings in the H1. To better quantify our long-term growth potential, we are introducing store density as a key performance indicator this period. Currently, China's overall pizza market density stands at 13.9 stores per million population, while our own national footprint is just 1.1. We believe these metrics provide a more precise illustration of the significant unpenetrated demand available to us, highlighting a substantial runway for growth, both through new city entry and further densification of our existing markets. With that, I will hand the call over to Helen to discuss our financial results in more detail.

Speaker #3: Currently, China's overall pizza market density stands at 13.9 stores per million population, while our own national footprint is just 1.1. We believe this metrics provide a more precise illustration of the significant unpenetrated demand available to us, highlighting a substantial runway for growth both through new city entry and further densification of our existing markets.

Speaker #3: With that, I'll hand the call over to Helen to discuss our financial results in more detail.

Speaker #1: Thank you, Aileen. Our financial results this half encapsulate the margin dynamics, resulting from our continued network scale-up amidst the ongoing market subsidies. I will now detail the specific impacts across our P&L.

Helen Wu: Thank you, Aileen Wang. Our financial results this H1 encapsulate the margin dynamics resulting from our continued network scale-up amidst the ongoing market subsidies. I will now detail the specific impacts across our P&L. Revenue performance. The total revenue grew 20.8% year over year to RMB 3,133.8 million. Alongside our usual Tier 1 versus non-Tier 1 breakdown, we are also sharing a new lens this H1 based on market maturity, the initial city markets versus new city markets, which we think gives a clearer picture of where our growth is coming from. Looking at this by market maturity, our initial city markets contributed RMB 1,723.9 million or 55% of revenue, growing modestly as strong transaction growth was largely offset by the ATP pressure I already described previously.

Speaker #1: Revenue performance: the total revenue grew 20.8% year over year to RMB 3,133.8 million, alongside our usual Tier 1 versus non-Tier 1 breakdown, where also sharing a new lens this half based on market maturity.

Speaker #1: The initial seeding markets, versus new seeding markets. Which we think gives a clearer picture of where our growth is coming from. Looking at this by market maturity, our initial seeding markets contributed RMB 1,723.9 million or 55% of revenue, growing modestly as strong transaction growth was largely offset by the ATP pressure Aileen described previously.

Speaker #1: Our new seeding markets contributed RMB 1,410 million now accounting for 45% of revenue and up from 34.6% a year ago, growing 57.3% as our expanding new store base scaled up.

Helen Wu: Our new city markets contributed RMB 1,410 million, now accounting for 45% of revenue and up from 34.6% a year ago, growing 57.3% as our expanding new store base scaled up. Looking at the same revenue through our Tier 1 versus non-Tier 1 lens. Non-Tier 1 markets grew 36.5% to RMB 2,059.7 million and now represent 65.7% of revenue, again, reflecting our revenue network growth is concentrated. The channel story reflects the same underlying dynamic playing out again. Total delivery sales grew 44.7% to RMB 1,618.8 million, now representing 51.7% of revenue. But within that, deliveries through 3PP grew 81%, while deliveries through our own channel actually declined 11.8% because the subsidy pulled orders through 3PP. This matters for margin because our own channel delivery orders carry an ATP average transaction price of RMB 94, so every order that shifts channel has a direct effect on our realized pricing.

Speaker #1: Looking at the same revenue through our Tier 1 versus non-Tier 1 lens, non-Tier 1 markets grow 36.5% to RMB 2,059.7 million and now represent 65.7% of revenue, again reflecting our revenue network growth is concentrated.

Speaker #1: The channel story reflects the same underlying dynamic playing out again. Total delivery sales grew 44.7% to RMB 1,618.8 million now representing 51.7% of revenue, but within that, deliveries through third-party platforms grew 81%, while deliveries through our own channel actually declined 11.8% because the subsidy pulled orders through 3PD.

Speaker #1: This matters for margin because our own channel delivery orders carry an ATP average transaction price of RMB 94, so every order that shifts channel has a direct effect on our realized pricing, not because the customers are spending less, but because of which door they are walking through.

Helen Wu: Not because the customers are spending less, but because of which door they are walking through. So offering the differentiated value and services to build up a larger base of customers of a high-quality loyal customers over time will help us improve ATP and order economics and a higher lifetime value of our customers. Margins and cost efficiency. This channel and pricing dynamic flow straight through to our store-level profitability. Store-level EBITDA grew 8.3% to RMB 544.5 million, though the margin declined to 17.4% from 19.4%. And the store-level operating profit grew 2.9% to RMB 390.4 million, with the margin at 12.5% versus 14.6% a year ago. The primary driver was the lower ATP, together with a higher 3PP delivery sales mix, which carries a different cost structure. And this was only partially offset by the cost efficiency measures that we have underway.

Speaker #1: So offering the differentiated value and services to build up a larger base of customers of a high-quality loyal customers over time will help us improve ATP and order economics and a higher lifetime value of our customers.

Speaker #1: Margins and cost efficiency: this channel and pricing dynamic flow straight through to our store-level profitability. Store-level EBITDA grew 8.3% to RMB 544.5 million though the margin declined to 17.4% from 19.4%.

Speaker #1: And the store-level operating profit grew 2.9% to RMB 390.4 million with a margin at 12.5% versus 14.6% a year ago. The primary driver was the lower ATP, or together with a higher 3PP delivery sales mix, which carries a different cost structure.

Speaker #1: And this was only partially offset by the cost efficiency measures that we have underway. To put some texture on that offset, our raw material cost, rental, and other store-level cost all grew broadly in line with our revenue and store count growth.

Helen Wu: To put some texture on that offset, our raw material cost, rental and other store-level costs all grew broadly in line with our revenue and store count growth. And in a few areas, we actually improved. Advertising and promotion expenses fell to 5% of revenue from 5.3%. And the store operation and the maintenance expenses improved slightly to 6% from 6.1%, both reflecting more efficient spending as we scale. Where we saw more pressure was in the store-level staff cost, which rose to 28.9% of revenue from 27.7%, reflecting the staffing we put into our new stores to protect service quality, plus the simple mathematical effect that lower ADS means less revenue to spread our fixed labor costs and also the higher rider costs from our growing delivery volume.

Speaker #1: And in a few areas, we actually improved. Advertising and promotion expenses fell to 5% of revenue from 5.3%. And the store operation and the maintenance expenses improved slightly to 6% from 6.1%, both reflecting more efficient spending as we scale.

Speaker #1: Where we saw more pressure was in the store-level staff cost, which rose to 28.9% of revenue from 27.7%. Reflecting the staffing we put into our new stores to protect service quality, plus the simple mathematical effect that lower ADS means less revenue to spread our fixed labor cost, and also the higher rider cost from our growing delivery volume.

Speaker #1: At the group level, our corporate cost discipline served as an effective buffer, improving from 8.1% to 7.5% of revenue as we get scale benefit and cost control at headquarters even while we keep investing to support our growth.

Helen Wu: At the group level, our corporate cost discipline served as an effective buffer, improving from 8.1% to 7.5% of revenue as we get scale benefit and cost control at headquarters, even while we keep investing to support our growth. Putting that all together, adjusted EBITDA grew 8.6% to RMB 350.7 million, with margin at 11.2% versus 12.4% last year, and the adjusted net profit grew 7.4% to RMB 98.2 million. Liquidity and capital allocation. We ended the period with cash and bank balances of RMB 934.7 million. Our operating cash flow grew to RMB 504.9 million from RMB 361.1 million. This means that our growth continued to be substantially supported by internally generated cash. Our gearing ratio improved to 7.9% from 8.2%, and we retain RMB 300 million in unutilized credit facilities. We are comfortable with our funding positions as we continue to expand. Looking at our capital expenditure.

Speaker #1: Putting that all together, adjusted EBITDA grew 8.6% to RMB 350.7 million with margin at 11.2% versus 12.4% last year, and the adjusted net profit grew 7.4% to RMB 98.2 million.

Speaker #1: Liquidity and capital allocation: we ended the period with cash and bank balances of RMB 934.7 million. Our operating cash flow grew to RMB 504.9 million from RMB 361.1 million so this means that our growth continued to be substantially supported by internally generated cash.

Speaker #1: Our gearing ratio improved to 7.9% from 8.2%, and we retained RMB 300 million in unutilized credit facilities. So we're comfortable with our funding positions as we continue to expand.

Speaker #1: Looking at our capital expenditure, at the store level, our average capex for a new store excluding the landlord-rental deposits and net-to-tax is approximately RMB 1.3 million per store.

Helen Wu: At the store level, our average CapEx for a new store, excluding the landlord rental deposits and net of tax, is approximately RMB 1.3 million per store. We will continue to optimize the store design and procurement to further lower new store CapEx and improve the cash payback cycles. Looking ahead, we will continue to invest in our three main areas, store expansion, supply chain center investment, and the digital infrastructure to build our competitive strengths for the business in the longer term. To sum up, this H1's result tell a consistent story across both the operating and financial numbers. Our underlying demand and the network growth are healthy, and in the case of our new city markets, they are improving faster than expected.

Speaker #1: We will continue to optimize the store design and procurement to further lower new store capex and improve the cash payback cycles. Looking ahead, we will continue to invest in our three main areas: store expansion, supply chain sensor investment, and the digital infrastructure to build our competitive strengths for the business in the longer term.

Speaker #1: To sum up, this hub's result tell a consistent story across both the operating and the financial numbers. Our underlying demand and the network growth are healthy, and in the case of our new city markets, the improving faster than expected.

Speaker #1: While pricing pressure from the current subsidy environment is a near-term drag on margin, but with a clear pathway for recovery as subsidy gradually normalized, the channel mix improves and together with our other growth levers.

Helen Wu: While pricing pressure from the current subsidy environment is a near-term drag on margin, with a clear pathway for recovery as subsidy gradually normalize, the channel mix improves and together with our other growth levers. Also with our own cost efficiency initiative continue to build, we believe the business remains well-positioned to benefit from operating leverage as sales productivity improves. This marks the end of our presentation, and we will open the floor for question now. Thank you very much, operator.

Speaker #1: Now, also with our own cost efficiency initiative continue to build, we believe the business remains well positioned to benefit from operating leverage as sales productivity improves.

Speaker #1: This marks the end of our presentation, and we will open the floor for questions now. Thank you very much operator.

Speaker #2: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. At this time, we will pause for just a moment to assemble our roster. Today's first question comes from Lisa Liao with Jefferies. Please go ahead.

Speaker #2: To withdraw your question, please press star then two. If you're using the speakerphone, we ask that you please pick up your handset before pressing the keys.

Speaker #2: At this time, we'll pause for just a moment to assemble our roster. And today's first question comes from Lisa Liao with Jefferies. Please go ahead.

Speaker #1: Good evening. Aileen, Helen, and Michael, thank you so much for the earnings call today. And here's two questions from my side. The first is about the same store sales trend we have observed.

Lisa Liao: Good evening, Elaine, Helen, and Michael. Thank you so much for the earnings call today. Here are two questions from my side. The first is about the same-store sales trend we have observed. In our fact sheet, we actually disclosed that we saw slightly positive same-store sales in May and June with successful marketing initiatives. Just wonder, how do we see the most updated trend, and what will be our key initiatives to help further support the same-store sales in H2? Regarding my second question, it is more on the aggregator subsidies. We know the most intensified subsidies actually happened last year. How do we assess the overall subsidy level from aggregators this year? Do we see any mitigation or slightly better situation recently? How has this impacted the overall consumer behaviors?

Speaker #1: In our fact sheet, we actually disclosed that we saw slightly positive same store sales in May and June, with successful marketing initiatives. So just wonder how do we see the most updated trend?

Speaker #1: And what will be our key initiatives to help further support the same store sales in the second half? And regarding my second questions, it's more on the aggregator subsidies.

Speaker #1: So we know the most intensified subsidies are actually happened last year. So how do we assess the overall subsidy level from aggregators this year?

Speaker #1: Do we see any mitigation or slightly better situation recently? And how does this behaviors? What will be our key strategies to further drive our own delivery channels regarding this part?

Lisa Liao: What would be our key strategies to further drive our own delivery channels regarding this part? Thank you so much.

Speaker #1: Thank you so much.

Speaker #3: Thank you, Lisa, for the question. I'll take this one. So last year, the average was actually started in May, right? So May and June, we already had this aggregator sort of subsidy impact.

Aileen Wang: Thank you, Lisa, for the question. I will take this one. Last year, the aggregator war actually started in May. May into June, we already had this aggregator sort of subsidy impact. At the same time, we have the new market normalization impact. With that, we can still manage to actually keep SSG positive for May and June. That actually shows the strength of our strategy and also our sales initiatives. That said, going forward in H2, I think last year in the H2, we have several things happening. One thing is that the aggregator war actually went to the peak. In the summertime and also in part of Q3. We are coming against a very strong base of last year.

Speaker #3: And then at the same time, we have the new market normalization impact. So with that, we can still manage to actually keep SSG positive for May and June.

Speaker #3: That actually shows the strength of our strategy and also our sales initiatives. Now, that said, going forward, in H2, I think last year in the H2 sort of we have several things happening.

Speaker #3: One thing is that the aggregator was actually went to the peak, right? So in the summertime, and also in sort of part of the quarter three, so then we're counting against a very strong base of last year.

Speaker #3: And then at the same time, we have very strong sort of new markets, the record breaking surveillance, that kind of new markets entering the same store size cycle.

Aileen Wang: At the same time, we have very strong new markets, the rapid growth in Shenyang, that kind of new markets, entering the same-store size cycle. These actually will make SSG peaky, got some difficulty in H2. At the same time, we continue to see the average ticket starting to stabilize and also improving. With these two together, we will still see SSG negative in H2 2026. We forecast to see in 2027, we will start to have positive same-store sales. That is to answer high level the first question. In terms of the initiatives. Like we mentioned, for the initial market, the key issue is actually the average ticket, because the TC is still healthy.

Speaker #3: So these actually will make the SSG peaky sort of got some difficulty in H2. But then at the same time, we continue to see the average ticket started to stabilize and also improving.

Speaker #3: So then with these two together, we will still see SSG negative in the second half of the year of 2026. Now, but we forecast to see in 2027, we'll start to have positive same store sales.

Speaker #3: So that's to sort of answer sort of high-level the first question. And then in terms of the initiatives, right? So like we mentioned, so for the initial markets, the key issue is actually the average ticket because the TC is still sort of healthy and then we also need to find a way to support H2 when the subsidy level goes down.

Aileen Wang: We also need to find a way to support H2 when the subsidy level goes down. For the new markets, we did have company against the higher opening base in the past and plus the same issue on ATP. The initiatives actually have two aspects. The first one is actually on the average ticket. We already see it started to stabilize, and then we actually started to see that in the past two months, it actually got improving. I think the key is actually, one, the 3PP with the subsidy level going down, the average ticket on 3PP will actually come back naturally. Two, as Helen mentioned, our own online channel for delivery, our average ticket is actually as high as 94.

Speaker #3: And then for the new markets, we did have counting against the higher opening base in the past and plus the same issue on ATP.

Speaker #3: So then the initiatives actually have two aspects. The first one is actually on the average ticket. We already see it started to stabilize. And then we actually started to see that in the past two months, it actually got improving, right?

Speaker #3: So I think the key is actually sort of one, the average the 3PP with the subsidy level going down, the average ticket on 3PP will actually come back naturally.

Speaker #3: And then two, as Helen mentioned, our own online channel for delivery, our average ticket is actually as high as 94. So then we do have people who are very loyal to us and then pay higher average ticket on our own channel.

Aileen Wang: We do have people who are very loyal to us and then pay higher average ticket on our own channel. The key is how to convert aggregator customers to our own channel and then optimize the channel mix. On the TC side, we believe that in the initial markets, we will continue to launch innovative new products like we did for the durian chicken, for example. Durian is actually very popular in the pizza market, but we are the first brand to actually put protein together with durian, which is a great innovation, and our customers like it. Also on crust leadership, we actually launched the Crispy Croissant Crust. It is another innovation to combine pizza and bakery. That proves that we will continue to lead on product innovation. Also we launched this new combo.

Speaker #3: So then the key is how to convert aggregator customers to our own channel. And then optimize the channel mix. And then on the TC side, we believe that in the initial markets, we will continue to launch innovative new products, like we did for the during Texas, for example.

Speaker #3: So during this actually very popular in the pizza market, but we're the first brand to actually put protein together with jewelry, which is a great innovation and our customers like it.

Speaker #3: And also on cross the leadership, we actually launched the croissant crust, right? It's another innovation to combine pizza and a bakery. So that proves that we will continue to lead on product innovation.

Speaker #3: And then also we launched this new combo, right? 79 with two pizzas, two sides, and two drinks, right? With this, we do believe that it will help both the average ticket side and also on the guest count side, right?

Aileen Wang: 79 with two pizzas, two sides and two drinks. With this, we do believe that it will help both on the average ticket side and also on the guest count side, because this is quite attractive value. Also by offering the combo, will make it very easy for customers to make choice. Also we have other things like IT innovation. For the new markets, we will continue to offer the iconic value programs and also keep penetrating broader delivery as we continue to build the delivery market share in these cities. I stop here for a second for this first question. Now, for the second question. With less aggregator subsidy this year, do we see any inference on consumer behavior and also our own channel? We did see that our own channel sales have been growing back.

Speaker #3: Because this is quite attractive value. And then also by offering the combo, we make it very easy for customers to make choice. And then also we have other things like IT innovation and for the new markets, we will continue to offer the iconic value programs and also keep penetrating for our delivery as we continue to build the delivery market share in these cities, right?

Speaker #3: I stopped here to for a second for this first question. Now, for the second question, with less aggregator subsidy this year, do we see sort of any influence on consumer behavior and also our own channel?

Speaker #3: So we did see that our own channel sales has been growing back. So we do believe that on the aggregators, there are two types of customers.

Aileen Wang: We do believe that on the aggregators, there are two types of customers. Either for their original OLO customers, and then as the aggregator actually provides more subsidy, then they spend less on aggregators, so they move to aggregator for Domino's. Or we have new customers coming to aggregators for Domino's. I think for either one, the original one, if the subsidy actually goes down, they will naturally come back to OLO. For the second group, the new customers, we will just let them know now how our own channel actually provides very different value propositions, and then that way we will actually build more channel mix in terms of OLO. I will stop here. Sorry, I talked a lot on this question, just to give you a full picture on what we are doing, average ticket versus TC, and then initial market versus new market.

Speaker #3: Either for their sort of this original oil customers and then as the aggregator actually provides more subsidy so then they spend less on aggregators so they move to aggregator predominantly, right?

Speaker #3: Or we have new customers coming to aggregators for dominants, right? So I think for either one, the original one, if the subsidy actually goes down, they will naturally come back to oil.

Speaker #3: And then for the second group, the new customers, we will just let them know that how our own channel actually provides very different sort of value propositions and then that way we will actually build more channel mix in terms of oil.

Speaker #3: So I'll stop here sorry, I talked a lot on this question. Just to give you a full picture, what we're doing average chicken versus TC and the initial market versus new markets.

Speaker #2: Yes, very clear. Thank you so much, Aline.

Lisa Liao: Yes, very clear. Thank you so much, Abby.

Speaker #1: Thank you. Our next question today comes from Lucy Yu at B of A Securities. Please go ahead.

Operator: Thank you. Our next question today comes from Lucy Yu at BofA Securities. Please go ahead.

Lucy Yu: Hi, Abby and Helen. Thanks for taking my question. Two questions here. First of all, is the subsidy will come down in H2 of this year. How should we think about ticket count in H2? Also, the margin. For H1, we saw margin has some contraction, possibly because of the next store sales. How should we think about the margin for H2, especially on a year-over-year basis? Is the contraction going to be wider or narrower than H1? Thank you.

Speaker #4: Hi, Aline, Helen. Thanks for taking my question. So two questions here. First of all, is the subsidy will come down in the second half of this year?

Speaker #4: So how should we think about a ticket count in the second half? And also, the margin for the first half, we saw margin has some contraction, possibly because of the negative same store sales.

Speaker #4: How should we think about the margin for the second half, especially on a year-over-year basis? It's going is it a contraction going to be wider or narrower than the first half?

Speaker #4: Thank you.

Speaker #3: Got it. Thank you for the question, Lucy. So for the first question, it will be quite similar to my answer to the first question but then I'll reiterate that we do think that our sort of TC momentum is healthy, right?

Aileen Wang: Got it. Thank you for the question, Lucy. For the first question, it will be quite similar to my answer to the first question. I'll reiterate that we do think that our TC momentum is healthy. Just comparing against last year's high base. We do believe that we actually offer TC and innovative products. We do offer a new value. After 10 years of having the Crazy Tuesday and Wednesday, 30% off across all pizzas on Tuesday and Wednesday. We actually offer this new and different value in terms of the combo, and customers like it. At the same time, we also start to offer single-serve offers. We realized there's a new occasion for this new demand.

Speaker #3: We're just counting against last year's high base. We do believe that we actually offer TC and then innovative products. We do offer a new value after 10 years of having the created Tuesday and Wednesday.

Speaker #3: 30% off across all pizzas on Tuesday and Wednesday. We actually offer this new and sort of different value in terms of the combo. And then customers like it.

Speaker #3: And then at the same time, we also start to offer single meal offers, right? Because we realize there's a new occasion for this new demand, right?

Speaker #3: And then at the same time, for the new markets, we'll emphasize more on sort of delivery and also value. And all the levers we mentioned for the initial markets.

Aileen Wang: At the same time, for the new markets, we will emphasize more to the delivery and also value and all the levers we mentioned for the initial markets. One thing I can mention more is actually the media optimization. We have our new CMO joining, her background is The Coca-Cola Company and McDonald's Corporation. She has brought in a lot of new thoughts, and she will help us to optimize the media and spend that to create more sales and also with higher online. I will stop here for the first question. The second question is on margin, I will hand over to Helen.

Speaker #3: One thing I can mention more is actually the media optimization. We have our new CMO joining, her background is corporate program McDonald's. She brought in a lot of new thoughts.

Speaker #3: And she will help us to optimize the media and spend that to create more sort of sales and also higher with higher ROI. And I'll stop here for the first question and the second question is on margin.

Speaker #3: I'll hand over to her.

Speaker #5: Yes. Lucy, thank you for the question. For the first half, our store operating profit margin is at 12.5%. That's for the whole group, right?

Helen Wu: Yes. Lucy, thank you for the question. For H1, our store operating profit margin is at 12.5%, that is for the whole group. Also, I think, the initial city, the store OP margin is slightly below that. But the new markets are higher than that. The reason being, even though people or you have seen that the SSG for the new market, for the initial new market, sorry, for the new markets, is actually negative. But we have said that because they started from very high base in terms of dollar sales. So even if they have a negative SSG, but they enter this into the SSG cycle, but in terms of dollar value-wise, in terms of sales, they are still pretty high and very healthy. So their OP margin for the new city are actually higher than 12.5%.

Speaker #5: And also, I think the initial city the store will keep margin is slightly below that. But the new market is higher than that. The reason being even though people or you have seen that the SSC for the new market for the initial new market sorry, for the new markets is actually negative.

Speaker #5: But we have said that because they started from very high base in terms of dollar. Sales, right? So even if you they have a negative SSC, but they enter this into the SSC cycle, but in terms of dollar value-wise, in terms of sales, they're still very pretty high and very healthy.

Speaker #5: So their OP margin for the new city are actually higher than 12.5%. Now, this trend probably going to be the same for second half.

Helen Wu: This trend is probably going to be the same for H2. Also, I think, we also actually starting from over the H1 of this year. We also gradually rolling out a lot of our cost saving initiative or cost control initiative at the store level. Some of that actually started from mid of H1. So we would expect that a more effect or impact on the cost saving will be kicking in during H2. For instance, we are actually try our best to recovering the ATP. Also at the same time, we have a lot of initiatives to actually maintain or to keep the ticket transaction volume.

Speaker #5: And also, I think we also actually starting from over the first half of this year, we also gradually rolling out a lot of our cost saving initiative or cost control initiative.

Speaker #5: At the store level. Now, some of that actually started from mid of first half. So we would expect that a more kind of effect or impact on the cost saving will be kicking in during the second half.

Speaker #5: So for instance, we are actually try our best to recovering the ATP, right? And also at the same time, we have a lot of initiative to actually maintain or to keep or the ticket transaction volume.

Speaker #5: So having the improving ATP at the same time sort of more impact on the cost saving initiative in the second half overall, we would expecting that actually the margin, the store OP margin will be actually better than the first half.

Helen Wu: Having improving ATP at the same time, more impact on the cost-saving initiative in H2 overall, we were expecting that actually the margin, the sole OP margin, will be actually better than H1. On this basis, the performance between the initial city markets versus the new city market will be similar in pattern for H1.

Speaker #5: And on this basis, the performance between the initial city markets versus the new city market will be similar in pattern for the first half.

Speaker #1: Thank you. Our next question today comes from Linda Huang with McQuarrie. Please go ahead.

Operator: Thank you. Our next question today comes from Linda Huang with Macquarie. Please go ahead.

Speaker #6: Hi, Linda. Thank you for taking my question. I was thinking that for the new market versus the thank you.

Linda Huang: Hi, Linda Huang. Thank you for taking my question. Based on the guidance right now, we see that the performance has been improving. The main reason that you have the annual revenue target of 37% but margins to improve.

Operator: Pardon me, Linda. This is the operator. I am not sure if we were able to understand your question there. Your line was breaking up pretty badly.

Speaker #1: I'm pardon me, Linda. This is the operator. I'm not sure if we were able to understand your question there. Your line was breaking up pretty badly.

Aileen Wang: Can you get closer to the

Speaker #3: I think that closer to the.

Speaker #1: We cannot hear you, ma'am. So I'm going to move on to our next question. I apologize. And our next question today comes from Miao Zhang with CMBI.

Operator: We cannot hear you, ma'am, so I am going to move on to our next question. I apologize. Our next question today comes from Miao Zhang with CMBI. Please go ahead.

Speaker #1: Please go ahead.

Speaker #6: Thank you, management, for taking my question. Miao Zhang from CMBI. And I have just two small questions on 3PP users, not so sure if it's being addressed already.

Miao Zhang: Thank you, management, for taking my question. I am Miao Zhang from CMBI. I have just two small questions on 3PP users. Not so sure if it has been addressed already. Could management share some color on what measures are currently being implemented or worked out to convert 3PP users into our own platform and to boost their repurchase frequency or lift average transaction price? I am wondering, is there any available statistics on the conversion rate or retention rate of such measures? Thank you.

Speaker #6: Could management share some color on what measures are currently being implemented or rolled out to convert 3PP users into our own platform? And to boost their repurchase frequency or lift average transaction price?

Speaker #6: And also, I'm wondering, is there any available statistics versus rate or retention rate of such measures? Thank you.

Speaker #3: Okay. I'll take this question. So the question is, what measures are being taken to convert platform users to online users, right? Okay. So like I mentioned before, right, I think for the aggregators, for the Domino's users, either they're actually converted from the OIO of Domino's or they're actually sort of new customers choosing Domino's and aggregators, right?

Aileen Wang: Okay, I will take this question. The question is, what measures are being taken to convert platform users to online users, right? Okay. As I mentioned before, I think for the aggregators, for the Domino's users, either they are actually converted from the OLO of Domino's, or they are actually new customers choosing Domino's on hybrid delivery side. For the first group of people, we actually think that with the subsidy coming down, they will actually naturally come back. That said, we are also taking proactive approach to actually attract people back to OLO. For the new customers, we also want to highlight our own online channel offering different things. First, the value we are offering on two channels are different. On aggregators, it is more like Red Packet or if you reach this level, you deduct this level.

Speaker #3: So for the first group of people, we actually think that with this update coming down, they will actually naturally come back. Now, that said, we're also taking proactive approach to actually attract people back to OIO.

Speaker #3: And then for the new customers, we also want to highlight our own online channel offering different things. So first, the value we're offering on two channels are different, right?

Speaker #3: So on aggregators, it's more like red pocket or if you reach this level, you deduct this level. But then our own channel, we have this combo we have created Tuesday and Wednesday, which are very different for different needs.

Aileen Wang: Our own channel, we have this combo, we have Crazy Tuesday and Wednesday, which are very different for different needs. Also we have the loyalty program. By the way, our loyalty program actually has 42 million members already. These people who are very loyal to us and then stay with us on our own channel. We attract people to get on our own channel, and they can only actually get points through our own channel's orders. At the same time, once people are on our own channel, we are upgrading our OLO experience to make that smoother and also to help us to improve the average ticket. Also we have different engagements, digital games, bounce-back coupons, and our proprietary intellectual properties. These are the things we al-

Speaker #3: And then also, we have the loyalty program. And by the way, our loyalty program actually has 42 million members already, right? So these people who are very loyal to us and then stay with us on our own channel.

Speaker #3: So we attract people to get our own channel and they can only actually get points. Through our own channels, orders. And then at the same time, once people are on our own channel, we're upgrading our OIO experience, right, to make that smoother and also to help us to sort of improve the average ticket.

Speaker #3: And then also, we have different engagements, digital games, bounce-back coupons. And then proprietary instructor properties these are the things we.

Speaker #1: Pardon me. This is the operator. It looks like we may have lost audio from our main speaking line here. If you can please stand by.

Operator: Pardon me. This is the operator. Looks like we may have lost audio from our main speaking line here. If you can please stand by, we will be right back with you. Thank you. Looks like the line is back. If you can please proceed with your answer. Thank you, ma'am.

Speaker #1: We'll be right back with you. Thank you. Looks like the line is back. If you can please proceed with your answer. Thank you, ma'am.

Speaker #3: Got it. Okay. I don't know where you lost me. Let me start from the beginning of this question. So we're talking about how to convert the aggregator platform users to our own online channel.

Aileen Wang: Got it. I do not know where you lost me. Let me start from the beginning of this question. We are talking about how to convert the aggregator platform users to our own online channel. We do think that our own online channel actually provides different differentiation from the points. The first thing is the value. For example, the aggregator channel actually has the Red Packet, or if you reach some threshold, then you get deduction. But on our own channel, you have the combo. You have the Crazy Tuesday and Wednesday. I think these are very different values. I think for the loyalty programs, you actually get rewarded for the loyalty programs based on the orders through our online channel. We are also upgrading our OLO user address so that people get smoother experience.

Speaker #3: We do think that our own online channel actually provides different differentiation, right? Points. The first thing is the value. So for example, the aggregator channel actually has the red pockets or if you reach some threshold and then you get deduction.

Speaker #3: But then on our own channel, you have the combo, right? You have the 3D Tuesday and Wednesday. I think these are very different values.

Speaker #3: And then at the same time, for the loyalty program, you actually get rewarded for the loyalty. You can be ordered through our online channel.

Speaker #3: And then we also upgrading our OIO UIUX. So that people get smoother experience. And then also, they get this opportunity to actually upsell across sell and then which will help and then also our own channel, you have different engagements, right?

Aileen Wang: Also, they get this opportunity to actually upsell or cross-sell, which will help. Also on our own channel, you have different engagements, digital engagement, WeChat games, and bounce-back coupons. You also have proprietary IP, product, et cetera. To get people back, we have different targeted and customized offers through CDT. That is why we do think that OLO is actually a different offer, and will attract people back. We have been continuing to monitor the conversion and retention rate. In the past, when the aggregator actually has higher subsidy, I think naturally there are two channels, people actually coming back and forth. When the aggregator subsidy is higher, naturally people will go more toward the aggregator.

Speaker #3: Digital engagements, which are games and bounce-back coupons. And then you also have proprietary IP, product declarer. And then to get people back, we have different targeted and then customized offers, right, through CDT.

Speaker #3: So that's why we do think that OIO is actually a different offer. And then we'll attract people back. And then we've been continuing to monitor the conversion and retention rate.

Speaker #3: So in the past, when the aggregator actually has higher subsidy, I think you naturally these two channels, people actually coming back and forth, then when the aggregator subsidy is higher, naturally people will go more toward the aggregator.

Speaker #3: But as the subsidy level goes down, we do see OIO channel is actually showing more growth, as I mentioned before.

Aileen Wang: As the subsidy level goes down, we do see OLO channel is actually showing more growth, as I mentioned before.

Speaker #1: Thank you. Our next question today comes from Shengwei Lei with CICC. Please go ahead.

Operator: Thank you. Our next question today comes from Sheng Wei Lei with CICC. Please go ahead.

Speaker #5: Hi, management. Thanks for taking that question. So I have one question regarding store opening plan. So we have maintained a fast pace of store expansion year to date.

Sheng Wei Lei: Hi, management. Thanks for taking my question. I have one question regarding the store opening plan. You have maintained a fast pace of store expansion year to date. How should we think about store opening plan for 2026 and 2027? How do you balance entering new cities versus opening stores in existing ones? Thank you.

Sijie Lin: Hi, management. Thanks for taking my question. I have one question regarding the store opening plan. You have maintained a fast pace of store expansion year to date. How should we think about store opening plan for 2026 and 2027? How do you balance entering new cities versus opening stores in existing ones? Thank you.

Speaker #5: How should we think about store opening plan for 2026 and 2027? And how do you balance entering new cities versus opening stores in existing ones?

Speaker #5: Thank you.

Speaker #3: Okay. I'll take this question. So as we mentioned in the earnings call, my part, we use this ratio of pizza store per million population.

Aileen Wang: Okay, I will take this question. As we mentioned in the earnings call, my part, we use this ratio of pizza store per million population. If you look at Domino's Pizza store per million population, ours is very low. It is only 1.1. We do think there is a very long way for us in China for the pizza store opening. We iterate that in the medium term, the 3,000 targets unchanged. That shows we have high confidence in the Chinese pizza market and also our penetration. As I mentioned before, for 2026, we are very much on track to achieve the target of 350. 2027, we are still in the sort of the planning phase. I think high level, we are very much on track. We will decide the detailed opening number based on several things, the customer dynamics and also the opening performance.

Speaker #3: And then if you look at the Domino's Pizza store per million population, ours is very low. It's only 1.1. We do think there's a very long way for us in China for the pizza store opening.

Speaker #3: And then we iterate that. In the median term, the 3,000 targets unchanged. That shows we have high confidence in the Chinese pizza market and also our penetrations.

Speaker #3: Now, as I mentioned before, for 2026, we're very much on track to achieve the target of 350. And then 2027, we're still in the sort of the planning phase.

Speaker #3: And then I think high level, we are very much on track. But then we'll decide the detailed opening number based on several things. The customer dynamics and also the opening performance.

Speaker #1: Thank you. And our next question today comes from Kong Xi with CITC. CITIC Securities Company. Please go ahead.

Operator: Thank you. Our next question today comes from Cong Xi with CITIC Securities Company. Please go ahead.

Speaker #6: Hi. Thank you for taking my questions and a good evening, management. I have only one question about average transaction value. And a quick breakdown, the reasons for the changes in the average transaction value for us.

Cong Xi: Thank you for taking my questions, and good evening, management. I have only one question about average transaction value. Could you break down the reasons for the changes in the average transaction value for us? How do we explain the average transaction value trend going forward? That is my question. Thank you.

Hongxi He: Thank you for taking my questions, and good evening, management. I have only one question about average transaction value. Could you break down the reasons for the changes in the average transaction value for us? How do we explain the average transaction value trend going forward? That is my question. Thank you.

Speaker #6: And how do we inspire the average transaction value trend going forward? That's my question. Thank you.

Speaker #3: Thank you for your question. So for the average ticket, right? So we do believe that the average ticket change was primarily attributable to the channel shift.

Aileen Wang: Thank you for your question. For the average ticket, we do believe that the average ticket change was primarily attributable to the channel shift. As we mentioned, for the aggregators, the average ticket is actually lower because of the subsidy, and then for our own channel, it stays actually quite healthy, right? We already see that naturally with the subsidy level going down, the pricing has been stabilized. We have been taking a lot of actions to proactively improve the average ticket. We want to reiterate that the average ticket improvement does not depend on aggregator subsidy going down or not. Actually, on aggregators, we have offers, and then we are continuing optimize these offers, so that will help too. On our own channel, as I mentioned, our average ticket is originally quite high.

Speaker #3: So as we mentioned, for the aggregators, the average ticket is actually lower because of the subsidy. And then for our own channel, it's actually stays actually quite healthy, right?

Speaker #3: So we already see that naturally with the subsidy level going down, the pricing has been stabilized. And then we've been taking a lot of actions to proactively improve the average ticket.

Speaker #3: So we want to reiterate that the average ticket sort of improvement does not depend on aggregator subsidy going down or not. Actually, on aggregators, we have offers and then we're continuing optimize these offers so that will help too.

Speaker #3: And then on our own channel, as I mentioned, so our average ticket is originally quite high. And then the question is how to actually sort of convert people when from the aggregator channels to our own channels.

Aileen Wang: The question is how to actually sort of convert people from the aggregator channels to our own channels. As I mentioned, combo is actually a very good choice, right? It has multiple items that will naturally actually increase the average ticket. Also we are uplifting sides and drinks so that people can actually cross-sell and upsell more. At the same time, when we are launching new products, we also have average ticket in our mind. For example, chicken pizza is actually a premium product, but as long as it is actually very good taste and innovation, people are willing to pay for the higher ticket. That is how we consider the average ticket.

Speaker #3: So as I mentioned, combo is actually a very good choice, right? So it has multiple items that will naturally actually increase the average ticket.

Speaker #3: And then also, we're uplifting sides and drinks so that people can actually cross-sell and upsell more. And then at the same time, we're launching new products.

Speaker #3: We also have average ticket in our mind. So for example, during ticket, it's actually a premium product. But as long as it's actually very good sort of taste and then innovation, people are willing to pay for the hard ticket.

Speaker #3: So that's how we consider sort of on the average ticket.

Speaker #6: Okay. That's clear. Thank you.

Cong Xi: Okay. That is clear. Thank you.

Hongxi He: Okay. That is clear. Thank you.

Speaker #1: And thank you, everyone. That does conclude our question and answer session. I'd like to turn the conference back over to the company for any final remarks.

Operator: Thank you, everyone. That does conclude our question and answer session. I would like to turn the conference back over to the company for any final remarks.

Speaker #3: Helen, do you want to comment more?

Aileen Wang: Helen, do you want to comment more?

Speaker #4: Well, first of all, for the training 27, one thing that we are seeing is that so over the past few years, we've been going through the normalization and also the 3PP heavy subsidies etc.

Helen Wu: Well, first of all, for the trend in 2027, one thing that we are seeing is that, over the past few years, we have been going through the normalization and also the 3PP heavy subsidies, et cetera. That is why our SSG experienced something that actually normally a brand probably would not see from a high base to normalize and then also in the overall market. Now, I think for 2027, what we have been seeing or what we are looking at is that our SSG will turn positive. That is number one. Second is that we would expect that our ATP will gradually be coming back. This is something that we have seen over the past few months, that actually ATP is climbing back.

Speaker #4: And then that's why our SSG sort of experience something that actually normally a brand probably wouldn't see. From high base and normalized and then also in the overall market.

Speaker #4: Now, I think for 27, what we've been seeing or what we are looking at is that our SSG or term positive, that's number one.

Speaker #4: And second is that we would expect that ATP will gradually coming back. Now, this is something that we have seen over the past few months that actually ATP is climbing back.

Speaker #4: It is on the back of a lot of the initiatives we already take, for instance, the combo lunch, for instance, the differentiated services between the 3PP and also on our online platform.

Helen Wu: It is on the back of a lot of the initiatives we already taken, for instance, the combo launch, for instance, the differentiated services between the 3PP and also on our online platform. So we will continue to work on that. Third part is the margin. H2, as I have just said, actually, we would expect some improvement H2 versus the H1. This trend will continue in 2027 because a lot of the cost initiative savings we are going to actually put into place and stick to it. So these are the things that we will actually carry on to 2027. On top of that, because we are scaling up gradually, as we build up a larger scale, a lot of other benefits in the scale will continue to unfold.

Speaker #4: So we will continue to work on that. Now, third part is the margin. Second half, as I have just said, actually, we would expect some improvements second half versus the first half.

Speaker #4: Now, this trend will continue in 27 because a lot of the cost initiative savings we're going to actually put into place and stick to it.

Speaker #4: And so this are the things that we will actually carry on to 27 on top of that because we're scaling up gradually. So as we build up a larger scale, a lot of other benefits in the scale will continue to unfold.

Speaker #4: So on top of that, so 27, we're also looking at the margin improvement versus 26. Yeah. So this is something that I will conclude for 27.

Helen Wu: On top of that, 2027, we are also looking at margin improvement versus 2026. This is something that I will conclude for 2027. Also in terms of store counts, first of all, 2026, 96% of the total net opening of 350 has been locked in. We are pretty much confident that we will deliver that for the net opening of 350. For 2027 and beyond, we have a medium-term target of growing into 3,000 store counts by the end of 2030. The store count planning or the expansion planning for the next few years, we will actually work along that medium-term target to actually plan for each year. Also, depending on the factors that Aileen Wang just mentioned, the store performance, et cetera.

Speaker #4: And also in terms of store counts, first of all, 27 or 26, 96% of the total net opening of the 350 has been locked in.

Speaker #4: So we are pretty much confident that we will deliver that for the net opening of the 350. Now, for 27 and then beyond, we have a median term target of growing into 3,000 store counts by the end of 2030.

Speaker #4: So the store planning or the expansion planning for the next few years, we will actually work along that median term target. To actually plan for each year.

Speaker #4: And then also depending on the factors that actually Aileen just mentioned, the store performance etc., we will actually every year we will roll out the appropriate store counts that fit our stage, fit our capacity, and fit the median term 3,000 target.

Helen Wu: Every year we will roll out to see a proper store count that fits our stage, fits our capacity, and fits the medium-term 3,000 targets.

Speaker #3: Okay. Well, thank you, Helen. Well, thank you for joining today's call. And for your continued support, we look forward to keeping you updated on our progress moving forward.

Aileen Wang: Well, thank you, Helen. Thank you for joining today's call and for your continued support. We look forward to keeping you updated on our progress moving forward. Thank you.

Speaker #3: Thank you.

Speaker #1: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Operator: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

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Q2 2026 DPC Dash Ltd Earnings Call

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