THCH Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenues: Decreased by 14.6% year-over-year.

System Sales: Declined by 14.2% year-over-year.

Same-Store Sales Growth: Negative 13.2%, with a decline of 8.3% in transactions and 4.8% in average ticket size.

Monthly Average Transacting Customers: Dropped to 2.69 million from 2.92 million year-over-year.

Adjusted Corporate EBITDA Margin: Negative 11.8%, worsening from negative 9.8% in Q1 2025.

Cash and Cash Equivalents: Totaled RMB 111.4 million, down from RMB 129.7 million at the end of 2025.

2Strategic Updates and Business Highlights

The company is shifting focus from rapid scale growth to quality growth, optimizing operations and reducing discount-driven promotions.

Pruning of underperforming stores is ongoing, with plans to resume new store openings in Q2 2026.

Strong performance from 2024 and 2025 vintage stores, with expected contribution margins in the mid-teens.

Franchise model expansion is underway, with over 10,500 applications and nearly 260 stores opened since December 2023.

Launched 21 new products in Q1 2026, emphasizing health-conscious and localized offerings.

Digital orders increased to 87.5% of total orders, with delivery orders up by 10.2% year-over-year.

3Forward Guidance and Outlook

Management anticipates improved same-store sales in Q2 2026 and expects better performance for the remainder of the year.

The company aims to achieve corporate EBITDA breakeven and enhance store-level profitability through cost structure optimization and supply chain improvements.

Plans to accelerate sub-franchising and expand store networks, particularly in high-density urban areas.

4Bad News, Challenges, or Points of Concern

The coffee industry is experiencing a seasonal slowdown and intensified competition, particularly from tea brands entering the coffee market with lower-priced offerings.

Significant declines in same-store sales and overall revenues raise concerns about short-term growth.

Increased costs related to delivery and operating expenses, despite some reductions in food and packaging costs.

5Notable Q&A Insights

Management expressed optimism about recovering same-store sales, citing recent successful marketing campaigns.

There is an expectation for improved store margin profiles as underperforming stores are pruned and higher-margin stores become a larger percentage of revenues.

The competitive landscape is challenging, with tea players aggressively pricing in the coffee sector; however, THCH emphasizes its unique model of combining coffee with fresh prepared food as a differentiator. Overall, while THCH faces significant challenges in the current market environment, management remains focused on strategic adjustments and long-term growth initiatives.