THCH Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenues: RMB 273.4 million, down 21.7% year-over-year.

System Sales: RMB 347.8 million, a decline of 15.1% year-over-year.

Same-Store Sales Growth: Decreased by 17.8%, with a 16.3% decline in transaction volume and a 1.5% decline in average ticket size.

Monthly Average Transacting Customers: 2.85 million, down from 3.59 million in Q2 2025.

Net New Store Openings: Two stores opened, with a net closure of 13 non-made-to-order (MTO) stores.

Contribution Margin: 5.7%, down from 9.6% year-over-year.

Adjusted Corporate EBITDA Margin: Negative 7.6%, compared to positive 0.6% in Q2 2025.

Cash and Cash Equivalents: RMB 121.1 million, a decrease from RMB 129.7 million at the end of 2025.

2Strategic Updates and Business Highlights

Leadership Change: John Cheung joined as CEO, emphasizing a focus on customer engagement and product innovation.

Product Innovation: Launched 27 new products, including 20 beverages and 7 food items, aimed at enhancing the all-day dining experience.

Loyalty Program Growth: Registered loyalty club members increased to 37.1 million, a 41.7% year-over-year growth.

Cost Management: Reduced food and packaging costs as a percentage of revenue from 30.1% to 28.3% year-over-year.

Marketing Investment: Plans to increase marketing spending in the second half of 2026 to drive customer traffic and revenue growth.

3Forward Guidance and Outlook

Near-Term Priorities: Focus on sustainable revenue growth, enhancing supply chain capabilities, and achieving corporate EBITDA breakeven.

Store Expansion Strategy: A balanced approach between company-owned and franchised stores, with an emphasis on top-tier cities and strategic locations.

Investment Plans: Utilization of a USD 55 million financing to support product innovation, marketing efforts, and store network development.

4Bad News, Challenges, or Points of Concern

Declining Metrics: Significant drops in revenue, same-store sales, and customer transactions indicate a loss of market share and competitive pressure.

Store Closures: Continued closure of underperforming stores reflects challenges in maintaining profitability.

Increased Competition: New entrants in the coffee market, particularly from tea brands, pose a risk to market share and pricing strategies.

Operational Challenges: Rising payroll and operational expenses as a percentage of revenue indicate potential inefficiencies.

5Notable Q&A Insights

Strategic Priorities: CEO John Cheung emphasized the need to innovate and improve product offerings to regain customer loyalty and attract new customers.

Marketing Strategy: CFO Albert Li indicated that marketing expenses would increase significantly in the second half of 2026, focusing on enhancing customer acquisition and retention.

Store Development: Cheung noted a disciplined approach to expanding the store network, balancing between company-owned and franchised locations, particularly in urban centers.

Competitive Landscape: The management acknowledged the growing competition from tea brands entering the coffee space and reiterated their commitment to delivering superior product value. Overall, THCH's Q2 2026 results reflect significant challenges, particularly in revenue and customer engagement, while the new leadership is focused on strategic initiatives aimed at revitalizing the brand and improving financial performance.