Summary of THCH Q4 2025 Earnings Call

1Key Financial Results and Metrics

Total System Sales: RMB 1.57 billion for 2025, up 7.6% from 2024.

Q4 2025 System Sales: RMB 359.4 million, a 4.0% year-over-year increase.

Same-Store Sales Growth: Declined by 2.4% for the full year 2025, with a 2.7% increase in overall comparable transactions.

Food Sales Contribution: 33.4% of total revenues in Q4 2025, up from 24% in Q1 2023.

Company-Owned Store Contribution Margin: Decreased to 7% in 2025 from 7.4% in 2024, attributed to higher delivery costs.

Adjusted Corporate EBITDA Margin: Improved by 1 percentage point for the full year.

Digital Orders: Increased to 89.3% of total orders in Q4 2025, up from 86.1% in Q4 2024.

Cash and Cash Equivalents: RMB 129.7 million as of December 31, 2025, down from RMB 184.2 million in 2024.

2Strategic Updates and Business Highlights

Store Expansion: Opened 25 new stores in 2025, totaling 1,047 locations across 92 cities.

Franchise Growth: Over 10,000 franchise applications received, with 300 stores opened by year-end 2025.

Product Innovation: Launched 178 new products, contributing over 25% to top-line sales.

Sustainability Initiatives: Expanded the "Bring Your Own Cup" program, attracting over 200,000 participants and reducing carbon emissions.

Loyalty Program: Registered loyalty members exceeded 31 million, reflecting a 29% year-over-year growth.

3Forward Guidance and Outlook

2026 Store Opening Target: At least 100 net new stores, focusing on both company-owned and franchise locations.

Margin Improvement Goals: Aim to reduce food and packaging costs by 1-2 percentage points in 2026.

Operational Focus: Continue enhancing supply chain capabilities and optimizing store unit economics.

4Bad News, Challenges, or Points of Concern

Competitive Pressures: Increased competition from low-priced local brands and delivery aggregator platforms has intensified, leading to higher delivery costs and necessitating discounts.

Same-Store Sales Decline: The overall decline in same-store sales growth raises concerns about consumer demand and pricing strategies.

Store Closures: Closure of underperforming stores has impacted revenues, contributing to a drop in total revenues by 7.3% year-over-year in Q4 2025.

5Notable Q&A Insights

Franchise Store Contribution: Special channel stores (e.g., railway stations) show high contribution margins and a payback period of around 2 years, indicating a strong future focus on these locations.

Delivery Cost Mitigation: The company is negotiating with delivery platforms to improve cost structures and is considering price increases on delivery products to counteract rising costs.

Store Density Impact: Higher store density in Tier 1 cities leads to better margins and operational efficiencies, reinforcing the strategy to expand in these areas.

Future Sales Growth: Despite challenges, management remains optimistic about system sales growth in 2026, driven by new store formats and a strong franchise model. This summary encapsulates the key points from THCH's Q4 2025 earnings call, highlighting both achievements and challenges faced by the company.