Tims China Announces First Quarter 2025 Financial Results

TH International Limited (Tims China) reported mixed Q1 2025 results, with total revenues down 9.5% year-over-year to RMB300.7 million, primarily due to company-owned store closures and a 6.5% same-store sales decline. However, system sales grew 3.5% to RMB376.3 million, supported by a strategic shift towards franchised stores, which saw 9 net openings. The company demonstrated significant operational improvements, narrowing its operating loss to RMB85.3 million from RMB121.3 million and reducing Adjusted Corporate EBITDA loss by nearly 50% to RMB29.3 million, driven by enhanced unit economics and a 5.9 percentage point improvement in company-owned store contribution margin to 6.7% through cost optimization and a 'Coffee + Freshly Prepared Food' strategy.

Analysis

TH International Limited (Tims China) presented a mixed financial profile for Q1 2025, characterized by a successful operational restructuring juxtaposed with continued top-line pressure at its core company-owned stores. While total revenues declined 9.5% year-over-year to RMB300.7 million, driven by a 14.0% drop in revenue from company-owned stores and a 6.5% decrease in their same-store sales, the overall system sales grew 3.5% to RMB376.3 million. This divergence highlights the success of the company's strategic pivot towards a franchise model, which saw the number of franchised stores increase from 302 to 455 year-over-year, contributing to a 28.6% rise in 'other revenues'. The most significant achievements were on the profitability front. The company demonstrated rigorous cost control, narrowing its operating loss to RMB85.3 million from RMB121.3 million and its adjusted corporate EBITDA loss by nearly 50% to RMB29.3 million. This was fueled by a substantial 5.9 percentage point improvement in the company-owned store contribution margin to 6.7%, achieved through reductions in food, packaging, and payroll costs as a percentage of revenue. Furthermore, strong brand engagement is indicated by a 25.7% year-over-year growth in loyalty club members, reaching 25.1 million, suggesting a solid foundation for future customer acquisition and retention.

Key Decisions for Investors

• Investors should weigh the significant improvements in operational profitability, evidenced by a 5.9 percentage point increase in company-owned store contribution margin and a near 50% reduction in adjusted corporate EBITDA loss, against the concerning 9.5% decline in total revenues and persistent negative same-store sales.
• The strategic pivot to a franchise-led expansion is the primary growth driver, reflected in the 28.6% growth in 'other revenues' and the net increase of franchised stores, making the scalability and long-term economics of this model critical for future valuation.
• Monitor future earnings for a positive inflection in same-store sales growth, as this remains the key catalyst needed to validate that new product strategies, like the 'Light & Fit Lunch Box', can translate strong brand loyalty into sustainable organic growth beyond cost-cutting measures.