THCH

Image source: The Motley Fool. Tuesday, Aug. 18, 2026 at 8:00 a.m. ET Chief Executive Officer - Kwok Wah Cheung Chief Financial Officer - Dong Li Public and Media Relations Manager - Patty Yu Operator: Ladies and gentlemen, welcome to the Tims China's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. At this time, I would like to turn the call over to Patty Yu, Tims China's Public and Media Relations Manager for prepared remarks and introductions. Please go ahead, Patty. Patty Yu: Hello, everyone, and thank you for joining us on today's call. TH International Limited announced its second quarter 2026 financial results earlier today. A press release as well as the company's presentation, which includes operational and financial highlights are now available on the company's IR website at ir.timschina.com. Today, you will hear from Mr. John Cheung, our CEO; and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question-and-answer session. You will find the webcast of today's earnings call on our IR website. Before we get started, I would like to remind you that our earnings presentation and the investor materials contain forward-looking statements, which are subject to future events and uncertainties, statements that are not historical factors, including but not limited to statements about the company's beliefs and expectations are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and our actual results may differ materially from those 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 findings with the SEC. This presentation also includes certain non-GAAP financial measures, which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measure. The upcoming reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier day. With that said, I would like now to turn it over to John Cheung, our CEO. Please go ahead, John. Kwok Wah Cheung: Well, thank you, Patty. Good morning, good evening, everyone. Thank you for joining us today. Tim Hortons is one of the world's top 10 most valuable restaurant brands, and China represents one of the most compelling consumer market. It's truly a privilege to take on this role as the CEO of Tims China. I'm truly excited and honored to be here, and I'm very passionate about our future. Since joining the company, well, in fact, I have to say even before joining the company in mid-June, I spent a lot of my time diving into the business, visiting stores and suppliers, talking to our barristers and store managers, hearing from our partners, and most importantly, connecting with our customers. These learnings have helped me having a strong grip of where we are and what we need to do differently moving forward. Everything I've seen and heard tell me we have significant strength to build on, and our brand is enduring. Over time, market and competition evolved, consumer have changed, there are many things we need to change to get consumers back and get them back more often. I look forward to sharing more about my framework of a plan going forward and how to drive our next phase of growth for Tims China review shortly. But first, I would like to turn it over to our CFO, Albert Li, for a more detailed overview of our second quarter 2026 financial performance. Albert? Dong Li: Thank you, John, and welcome to your first Tims China earnings call. During the second quarter of 2026, our total revenues and system sales were RMB 273.4 million and RMB 347.8 million, respectively, which dropped by 21.7% and 15.1% year-over-year. The decrease was primarily due to the closure of certain underperforming company-owned and operating stores, and a 17.8% decrease in same-store sales growth. Our overall monthly average transacting customer reached 2.85 million during the second quarter of 2026, compared to 3.59 million in the same quarter of 2025. Net new store openings totaled two during the second quarter of 2026, representing a net opening of 15 made-to-order stores and, in the meantime, a net closer of 13 non-MTO stores. On same-store sales growth, we experienced overall comparable transaction decline of 16.3% and an average comparable ticket size decline of 1.5%, which led to a negative 17.8% same-store sales growth for system-wide stores in Q2 2026. The decline was partly due to the delivery aggregators backing down their subsidized significantly and also partly due to our underspend in marketing and advertising spending and also a certain discount control. Digital orders as a percentage of total revenues -- as a percentage of total orders rose from 90.4% in Q2 2025 to 91.8% in Q2 2026. We continue to enhance our digital capabilities to meet the growing demand for delivery and take-away services. In Q2 2026, Tims China continued to execute its product innovation strategy by expanding its all-day menu and enhancing its product portfolio across key consumption locations. The company launched a total of 27 new products during the quarter, including 20 beverage and 7 food items, further enriching customer choice and strengthening its all-day dining proposition. As of June 30, 2026, our registered loyalty club members exceeded 37.1 million, reflecting a remarkable 41.7% year-over-year growth. The average number of members per store has now surpassed 36,000, serving us a solid foundation for growth and a testament to our customer support for an embrace of Tims China's loyalty program. We are also committed to improving our financial performance by refining store unit economics and boosting operational efficiencies at both stores and corporate levels, setting the foundation for long-term sustainable growth. Specifically, as we continue to benefit from higher efficiencies in supply chain and cost reduction on raw materials, logistics and warehousing expenses, we managed to reduce Q2 2026 food and packaging cost as a percentage of revenue from company-owned and operated stores by 1.8 percentage points from 30.1% in the second quarter of 2025 to 28.3% in the same quarter of 2026. Rental and property management fees were RMB 47.9 million in 2026 representing a decrease of 15.6% from RMB 56.8 million in the same quarter of 2025, which was primarily due to a decrease in the number of our company owned and operating stores from 566 of June 30, 2025 to 544 as of June 30, 2026. Rental and property management fees as a percentage of revenues from company-owned and operated stores increased by 1.5 percentage points from 20.2% in the second quarter of 25 to 21.7% in the same quarter of 2026. In the meantime, rental and property management fees for comparable stores decreased by 5.2% year-over-year in Q2 2026 which demonstrated our continued efforts to negotiate permanent rent concessions with our landlord. Payroll and employee benefits expenses were RMB 43.9 million in Q2 2026, representing a decrease of 12.6% from RMB 50.2 million in the same quarter of 2025 which was primarily due to a decrease in revenues from company-owned and operated stores. Payroll and employee benefit expenses as a percentage of revenue from company-owned and operated stores increased by 2.1 percentage points from 17.8% in the second quarter of 2025 to 19.9% in the same quarter of 2026. Delivery costs were RMB 28.9 million in 2026, representing a decrease of 13.3% from RMB 33.3 million in the same quarter of 2025, which was in line with the 11.9% decrease in delivery orders from 8.2 million in the second quarter of 2025 to 7.2 million in the same quarter of 2026. And a reduction in average delivery cost per order. Delivery costs as a percentage of revenue from company-owned and operated stores increased by 1.3 percentage points to 13.1% in the second quarter of 2026 compared to 11.8% in the same quarter of 2025 which was primarily due to an increase in delivery revenue as a percentage of total revenues from company-owned and operated stores from 61.0% in the second quarter of 2025 to 65.7% in the same quarter of 2026. Other operating expenses were RMB 17.4 million in Q2 2026, representing a decrease of 14.7% from RMB 20.4 million in the same quarter of 2025, which was primarily due to a decrease in revenue from company-owned and operated stores. Other operating expenses as a percentage of revenue from company-owned and operated stores increased by 0.7 percentage points to 7.9% in the second quarter of 2026 compared to 7.2% in the same quarter of 2025. As a result of the foregoing, company-owned and operated store contribution margins were 5.7% in the second quarter of 2026 compared to 9.6% in the same quarter of 2025. Benefiting from our cost optimization measures and improved brand influence, our marketing expenses were RMB 13.3 million in Q2 2026, representing a decrease of 4.4% from RMB 13.9 million in the same quarter of 2025. Marketing expenses as a percentage of total revenues increased by 0.9 percentage points from 4.0% in the second quarter of 2025 to 4.9% in the same quarter of 2026 as we spent more marketing efforts to support our franchise business during the second quarter of 2026. Our adjusted general and administrative expenses, which excludes: one, share-based compensation expenses of RMB 0.3 million; and two, impairment losses of rental deposits of RMB 2.3 million or RMB 39.6 million in Q2 2026, representing an increase of 14.4% from RMB 34.6 million in the same quarter of 2025, which was primarily due to a RMB 4.2 million increase in professional and other service fees. Adjusted general and administrative expenses as a percentage of total revenues increased by 4.6 percentage points from 9.9% in the second quarter of 2025 to 14.5% in the same quarter of 2026. As a result of the foregoing, adjusted corporate EBITDA margin was negative 7.6% in the second quarter of 2026 compared to positive 0.6% in the same quarter of 2026 (sic) [ 2025 ]. Turning to liquidity. As of June 30, 2026. The total amount of our cash and cash equivalents and restricted cash were RMB 121.1 million compared to RMB 129.7 million as of December 31, 2025. The change was primarily attributable to cash disbursements on business operations, partially offset by the drawdown of additional bank borrowings. We successfully closed the initial tranche of USD 15.8 million in additional senior secured convertible notes issued to Tim Hortons Restaurant International GmbH, our brand owner and founding shareholder in July 2026. With the profits from this USD 55 million series of proposed financing, we plan to drive our innovation and product offerings, invest more in marketing activities and deploy a more balanced store network development strategy by opening both company-owned and operated stores and franchised stores going forward. Looking ahead, our core near-term priorities will be to deliver sustainable revenue growth to further enhance supply chain capabilities and expand store-level profitability of both company-owned and operated stores and franchised stores to continuously optimize cost structure of our corporate marketing and G&A expenses and to achieve corporate EBITDA breakeven. With that, I will now turn the call over to John. Kwok Wah Cheung: Thank you, Albert. Second quarter is a period of transition for the company. Results are disappointing. Top line revenue and same-store sales were both in significant decline as we are losing share to competition. Also revenue was affected by our strategic adjustment of closing underperforming stores as well as we have been recycling last year heightened base of delivery business. Prior to my joining to Tim Hortons as CEO, I have had 30 years of building and stewarding world-class consumer brands, and here in Tim Hortons, it becomes very clear to me, we need to significantly step up our asset to win back our customers and to gain new customers through providing superior products, offering and experience. May it be dine-in or delivery also support with our great Tim Hortons hospitality and services. Our unwavering aspiration with product and service quality will drive everything we do and every decision we make going forward. I have a few points I want to share with you online. First and foremost, we have been and will continue to focus our resources to accelerate our product innovation based on thorough consumer, customer understanding and insight, ranging from improving the appearance, flavor of our core products to creating exciting innovations. And also in ways we offer a new bundle and promotion activities. So far, we have looked into more than 10,000 of our loyalty club members information to get insight from the feedback, and we have hired external professional advisers to support the process. Also we are starting an effort to work with our core coffee bean suppliers and also our in-house coffee masters to pursue the best fit of coffee to the Chinese consumer need and taste. Second, we will strengthen our capacities in product innovation and marketing to ensure we're able to bring superior product and experience to consumers in much faster time and more cost-efficient manner. We will enhance investment in our organization, we work with strategic partners, our suppliers to enhance our capabilities, especially in certain categories like dairy and bakery. We'll broaden our CRM and marketing efforts beyond current loyalty club program to reach new customers and as importantly, to enhance interaction and frequency. Third, we'll further enhance our operational excellence to escalate our service level and enhance overall guest experience. Additional efforts are being made on staff recruitment, training and labor scheduling to enable us to deliver the level of service we aim at. Fourth, on store network development, we are working on two fronts at the same time. On one hand, we are closing underperforming stores, which have started before my arrival to this company. Yet at the same time, we are expanding store with our new and enhanced product offering and services. We will focus more in top-tier cities in our expansion so that we can concentrate our resource and effort especially among the office work area trade zone or some special channel like train stations, major transportation hubs, airports, universities. This is a reliable channel that we have good data to predict the traffic and project -- have a high accuracy in our project sales revenue. And lastly, on productivity front, I and the team are keen to use more technology, especially AI to increase our efficiency, ranging from inventory management to labor shift planning to marketing material production and all the way to more personalized message and promotion activities planned for our members. With that, I turn back to Patty to continue with our call. Patty Yu: Thank you, John. We will turn it over to Q&A session and open up for our registered questions. Let's begin with our first question. Operator, please go ahead. Operator: [Operator Instructions] And the question comes from the line of Steve Silver from Argus Research. Steven Silver: John, welcome to the new leadership role. You mentioned in your prepared remarks some initial learnings in your discussions with customers, stores and suppliers. Can you talk about some of these top priorities in the corporate strategy that you see supporting Tims China to become a profitable business? And maybe how long you think it may take to implement some of these strategies? Kwok Wah Cheung: Well, thank you, Mr. Silver for your questions. Indeed, our imperative is to get back to our business fundamentals to regain customers and to gain new users. Well, in short, our top priority is to raise our game in innovation to offer more competitive products and experience to our customers. We are working on strengthening our core products, products that we offer during the breakfast and lunch daypart. Products that like bagel, we make it popular in this market, China, and we'll continue to bring innovation so that we can differentiate better from competitors. At the same time, we will offer some new products that have been the strength for our operation in other markets like Melt. We will even try some new bakery in other dayparts. Also, we are working on strengthening our coffee offerings, especially those milk-based coffee offerings, latte. I look forward to share more details when we have the new product ready sometime later in the year. And we are seeing opportunities in filling some gaps that we see there is still space to grow like afternoon daypart, so that's our top party raising our game in innovation. Our second priority is to improve our store economics, as Albert earlier mentioned. We'll continue to work on efficiency on all fronts, the rental, labor, even our food product costs. We have done a lot over the last years, but there's still room we can work on. At the same time, importantly, we will continue to close underperforming stores. As I mentioned, this initiative have started even before my arrival, I'll continue to drive that. But importantly, is to expand store -- new store in clearly defined network strategy, primarily top-tier cities, primarily office, transportation, the hub trade zone under our defined network strategy and discipline. And to make the two early priority possible, one thing I've been attending a lot of my effort and resource is to build capabilities to make them both happen. So build abilities, capabilities, strengthen capability in innovation, in marketing, strengthen and continue to invest in our capabilities in operations and business development, i.e., the new store development. So in short, those are three top priority for me, for our leadership team and for our organizations. I would be very glad to share with you progress as I'm moving along in this road. The time target, I can't share with you, but I can share with you all cylinders are firing now, and we are reserving no resource to drive progress on the all front I just shared. And I hope this priority will bring some signs of results or improvement very soon. But for the time being, I can't share with you a particular time line. Hope you can bear with us. Steven Silver: That's great. And one more, if I may. So with the recent commitment from RBI to invest $55 million into Tims China, and you mentioned the receipt of the first tranche from the financing, is there any update on the number of net new stores that you plan on opening in the second half of 2026 and 2027, and whether there are any changes to the new store mix between company-owned stores and franchise stores? Kwok Wah Cheung: Yes, the fund come in, in a very timely manner and a very much needed period. We prioritized -- actually we're strengthening the model of our business. So as I mentioned, our top priority, number 1 is raise our game in innovation, so we will prioritize more of the resources in bringing in more productive innovation and strengthening our marketing performance by both investing more in marketing as well as behind the strengthened team and resources. So those will be our top priority. We will expand our store footprint with discipline, hopefully, with our new offering proven. So going forward, I won't share a particular number, but we will diligently expand according to the strategy I just shared, i.e. prioritize cities in the top tier cities and also in particular trade zones. But answering your questions on the company-owned store and franchise network. We are aiming at a more balanced approach, so we'll see both company-owned store and franchisee support store will contribute roughly equal in our new store network. So that's what I can share for the time being. Operator: Now we're going to take the next question, and the question comes from the line of Emily from Tianfeng. Unknown Analyst: Now I have two questions, follow-up. The first one is about marketing. Marketing expense ratio was slightly lower than last year in first half. And was your view on marketing spending for the second half of 2022 and going forward? That's my first question. Dong Li: Okay. I will take this one. Okay. So yes, as you have mentioned, so our marketing investment are expected to increase, as John has highlighted in the second half especially, I think, starting from September because we have the annual actually brewed coffee and also bagel festival. And in the meantime, we have identified marketing efficiency as one of the most important lever for us to consider in terms of rebuilding our customer traffic and also support our sustainable revenue growth. And I think in the first half, our marketing expenses were relatively underspent. I think because we are building up our marketing team and also actually recruiting like more talent in both marketing and also in the product category team. Okay. So I think starting from the third quarter, so we are adding additional talent in marketing and also in product innovation, and we will -- we plan to invest more, actually significantly invest more in terms of the scale and in the meantime, the effectiveness of our marketing activities. So our focus will not only driving dine-in business or takeaway business or delivery transactions in just one like parameter. So actually, we want to expand all the dayparts from all channels. And we are also expanding our CRM and marketing beyond our existing loyalty members to reach new customers. Okay. So I think in the meantime, so we want to attract more customers through giving more effective -- actually, in terms of the coupons from those e-commerce channel. And in the meantime, we also want to make sure that in terms of their frequency and also in terms of the average spending per customer will be -- will also increase over time. Okay. So to conclude, we will definitely increase our marketing spending, and the key metrics for us is not only a specific, how many marketing dollar or marketing percentage to spend, but I think more importantly, in terms of the return and effectiveness of our marketing efforts. So we expect our overall business will recover. And with the actually store network expansion, we will continue to balance our investment in customer acquisition, traffic growth and also our profitability, okay? Unknown Analyst: Okay. And my second one is about competition. We noted that more and more tea players such as Guming, Mixue, Bing Chun recently penetrated into coffee business and what's your view on competition, and how is this may impact your business strategy? Kwok Wah Cheung: Maybe I will take on this question. Well, indeed, we noticed there are many different forms of new entrants to the coffee market. As we said, some example from the chain. However, on our side, it's very clear to us that we have to offer the best value to our customers and value is delivered through the combination of product, experience and also pricing. So our strategy is to ensure we can always provide superior product, coffee in this case, as you ask to our customers. Whether we are talking about the more basic product like black coffee, americano, or the more innovative, limited time product offering. That's related to the asset and resource we're putting in innovation, as I mentioned earlier. So to continue to be able to offer consumer superior product and experience. Experience as much as for services and the ambience consumer can experience in our restaurants as well as in delivery. And then the third is price. We have a lot of effort in working on our costs and also on our combination of product offering to ensure some consumers who want the most basic product, they can enjoy a very good cup of coffee from us at a very affordable price. So we are also planning programs to deliver part of our product mix at a price-competitive fashion. So we have answers to different needs of our customer, consumer different dayparts. So I and the organization and our team are aiming at bringing the best value to our customers. Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to the management team for any closing remarks. Kwok Wah Cheung: Okay. So thank you for joining today's conference call. We look forward to providing timely updates on any progress we have made on our new business plan and also our corporate strategies, so I look forward to speaking in the second -- in the next quarter. Thank you. 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SHANGHAI and NEW YORK, Aug. 18, 2026 (GLOBE NEWSWIRE) -- TH International Limited (Nasdaq: THCH), the parent company of the exclusive master franchisees of Tim Hortons coffee shops in China (“Tims China” or the “Company”), today announced its unaudited financial results for the second quarter 2026. SECOND QUARTER 2026 HIGHLIGHTS Total revenues of RMB273.4 million (USD40.3 million), representing a 21.7% decrease from the same quarter of 2025. System sales1 of RMB347.8 million (USD51.3 million), representing a 15.1% decrease from the same quarter of 2025. Net new store openings totaled two (a net opening of 15 made-to-order (“MTO”) stores and a net closure of 13 non-MTO stores). Company owned and operated store contribution2, previously reported as adjusted store EBITDA, was RMB12.6 million (USD1.9 million), compared to RMB27.2 million in the same quarter of 2025. Company owned and operated store contribution margin3, previously reported as adjusted store EBITDA margin, was 5.7%, compared to 9.6% in the same quarter of 2025. Registered loyalty club members totaled 37.1 million as of June 30, 2026, representing a 41.7% year-over-year growth. __________________________________ 1 System sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores.2 Company owned and operated store contribution, is calculated as fully burdened gross profit4 of company owned and operated stores excluding depreciation & amortization. 3 Company owned and operated store contribution margin, is calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores.4 Fully burdened gross profit of company owned and operated stores, the most directly comparable GAAP measure to company owned and operated store contribution, was a loss of RMB7.2 million (USD1.1 million) for the three months ended June 30, 2026, compared to a gain of RMB0.4 million in the same quarter of 2025. COMPANY MANAGEMENT STATEMENT Mr. Kwok Wah (John) Cheung, CEO of Tims China, stated, “The second quarter was a period of transition for Tims China. Our top-line results were impacted by our proactive decision to close underperforming stores, as well as pressure on same-store sales as we lapped strong delivery performance from last year. It is clear that we need to make meaningful changes to our strategy to win back customers. My experience tells me that when we focus on our core identity and consistently deliver great products and a great guest experience, our customers will respond. I have full confidence in Tims China’s ability to improve the business and regain market share. We have a clear plan and are moving quickly to return the business to growth. We already see green shoots in the business when we look at our registered loyalty club membership, which reached more than 37.1 million as of June 30, 2026, up 41.7% year over year, providing a strong foundation to deepen customer engagement and support future growth”. Mr. Dong (Albert) Li, CFO of Tims China, commented, “We successfully closed the initial tranche of US$15.8 million in additional senior secured convertible notes issued to Tim Hortons Restaurants International GmbH (“THRI”), our brand owner and founding shareholder, in July 2026. With the proceeds from this series of proposed financing, we plan to drive our innovation and product offerings, invest more in marketing activities, and deploy a more balanced store network development strategy by opening both company owned and operated stores and franchised stores going forward”. SECOND QUARTER 2026 FINANCIAL RESULTS Total revenues were RMB273.4 million (USD40.3 million) for the three months ended June 30, 2026, representing a decrease of 21.7% from RMB349.0 million in the same quarter of 2025. Total revenues comprise: Revenues from company owned and operated stores were RMB220.9 million (USD32.6 million) for the three months ended June 30, 2026, representing a decrease of 21.6% from RMB281.9 million in the same quarter of 2025. The decrease was primarily attributable to closures of certain underperforming stores as the number of company owned and operated stores decreased from 566 as of June 30, 2025 to 544 as of June 30, 2026, and a 17.3% decline in same-store sales growth for company owned and operated stores in the second quarter of 2026. The decrease was also attributable to a 0.9% year-over-year decrease in average ticket size, and a 20.7% year-over-year decrease in the number of orders from 10.5 million in the second quarter of 2025 to 8.3 million in the same quarter of 2026. Other revenues were RMB52.5 million (USD7.7 million) for the three months ended June 30, 2026, representing a decrease of 21.7% from RMB67.1 million in the same quarter of 2025. The decrease was primarily due to lower revenues generated per franchised store as a result of a decline in same-store sales growth for franchised stores, offset by an increase in the number of our franchised stores from 449 as of June 30, 2025 to 484 as of June 30, 2026. Company owned and operated store costs and expenses were RMB221.1 million (USD32.6 million) for the three months ended June 30, 2026, representing a decrease of 18.8% from RMB272.4 million in the same quarter of 2025. Company owned and operated store costs and expenses comprise: Food and packaging costs were RMB62.5 million (USD9.2 million) for the three months ended June 30, 2026, representing a decrease of 26.3% from RMB84.8 million in the same quarter of 2025, which was primarily due to a decrease in revenues from company owned and operated stores. As we continued to benefit from higher efficiencies in supply chains and cost reduction on raw materials, logistic and warehousing expenses, food and packaging costs as a percentage of revenues from company owned and operated stores decreased by 1.8 percentage points from 30.1% in the second quarter of 2025 to 28.3% in the same quarter of 2026. Rental and property management fees were RMB47.9 million (USD7.1 million) for the three months ended June 30, 2026, representing a decrease of 15.6% from RMB56.8 million in the same quarter of 2025, which was primarily due to a decrease in the number of our company-owned and operated stores from 566 as of June 30, 2025 to 544 as of June 30, 2026. Rental and property management fees as a percentage of revenues from company owned and operated stores increased by 1.5 percentage points from 20.2% in the second quarter of 2025 to 21.7% in the same quarter of 2026. Payroll and employee benefits expenses were RMB43.9 million (USD6.5 million) for the three months ended June 30, 2026, representing a decrease of 12.6% from RMB50.2 million in the same quarter of 2025, which was primarily due to a decrease in revenues from company owned and operated stores. Payroll and employee benefits expenses as a percentage of revenues from company owned and operated stores increased by 2.1 percentage points from 17.8% in the second quarter of 2025 to 19.9% in the same quarter of 2026. Delivery costs were RMB28.9 million (USD4.3 million) for the three months ended June 30, 2026, representing a decrease of 13.3% from RMB33.3 million in the same quarter of 2025, which was in line with the 11.9% decrease in delivery orders from 8.2 million in the second quarter of 2025 to 7.2 million in the same quarter of 2026, and a reduction in average delivery costs per order. Delivery costs as a percentage of revenues from company owned and operated stores increased by 1.3 percentage points to 13.1% in the second quarter of 2026, compared to 11.8% in the same quarter of 2025, which was primarily due to an increase in delivery revenue as a percentage of revenues from company owned and operated stores from 61.0% in the second quarter of 2025 to 65.7% in the same quarter of 2026. Other operating expenses were RMB17.4 million (USD2.6 million) for the three months ended June 30, 2026, representing a decrease of 14.7% from RMB20.4 million in the same quarter of 2025, which was primarily due to a decrease in revenues from company owned and operated stores. Other operating expenses as a percentage of revenues from company owned and operated stores increased by 0.7 percentage points to 7.9% in the second quarter of 2026, compared to 7.2% in the same quarter of 2025. Store depreciation and amortization expenses were RMB20.4 million (USD3.0 million) for the three months ended June 30, 2026, representing a decrease of 23.8% from RMB26.8 million in the same quarter of 2025, which was primarily due to impairment on property and equipment in relation to company owned and operated store closures and the reduced capital expenditures per store as a result of our initiatives to improve store unit economics. Store depreciation and amortization as a percentage of revenues from company owned and operated stores decreased by 0.3 percentage points to 9.2% in the second quarter of 2026, compared to 9.5% in the same quarter of 2025. Costs of other revenues were RMB36.8 million (USD5.4 million) for the three months ended June 30, 2026, representing a decrease of 20.9% from RMB46.5 million in the same quarter of 2025, which was in line with the revenue trend. Costs of other revenues as a percentage of other revenues increased by 0.8 percentage points from 69.3% in the second quarter of 2025 to 70.1% in the same quarter of 2026 due to lower margin generated from franchised business during the second quarter of 2026. Marketing expenses were RMB13.3 million (USD2.0 million) for the three months ended June 30, 2026, representing a decrease of 4.4% from RMB13.9 million in the same quarter of 2025. Marketing expenses as a percentage of total revenues increased by 0.9 percentage points from 4.0% in the second quarter of 2025 to 4.9% in the same quarter of 2026 as we spent more marketing efforts to support our franchised business during the second quarter of 2026. General and administrative expenses were RMB42.3 million (USD6.2 million) for the three months ended June 30, 2026, representing an increase of 12.1% from RMB37.7 million in the same quarter of 2025, which was primarily due to a RMB4.2 million (USD0.6 million) increase in professional and other service fees. As a result of the foregoing, adjusted general and administrative expenses, which excludes: (i) share-based compensation expenses of RMB0.3 million (USD0.05 million), and (ii) impairment losses of rental deposits of RMB2.3 million (USD0.3 million), were RMB39.6 million (USD5.8 million), representing an increase of 14.4% from RMB34.6 million in the same quarter of 2025. Adjusted general and administrative expenses as a percentage of total revenues increased by 4.6 percentage points from 9.9% in the second quarter of 2025 to 14.5% in the same quarter of 2026. For more information on the Company’s non-GAAP financial measures, please see “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this earnings release. Franchise and royalty expenses were RMB14.4 million (USD2.1 million) for the three months ended June 30, 2026, representing a decrease of 15.9% from RMB17.1 million in the same quarter of 2025, which was primarily due to a decrease in total revenues. Franchise and royalty expenses as a percentage of total revenues increased by 0.4 percentage points, from 4.9% in the second quarter of 2025 to 5.3% in the same quarter of 2026, as a result of higher royalty rate applicable. Impairment losses of long-lived assets were RMB4.6 million (USD0.7 million) for the three months ended June 30, 2026, compared to RMB9.5 million in the same quarter of 2025, which was primarily due to a decrease in the number of planned closures of underperforming company owned and operated stores in the second quarter of 2026. As a result of the foregoing, operating loss was RMB58.1 million (USD8.6 million) for the three months ended June 30, 2026, compared to RMB47.8 million in the same quarter of 2025. Adjusted Corporate EBITDA was a loss of RMB21.0 million (USD3.1 million) for the three months ended June 30, 2026, compared to a gain of RMB2.2 million in the same quarter of 2025. Adjusted Corporate EBITDA margin was negative 7.6% in the second quarter of 2026, compared to positive 0.6% in the same quarter of 2025. Changes in fair value of convertible notes were a loss of RMB34.9 million (USD5.1 million) for the three months ended June 30, 2026, compared to a loss of RMB23.4 million in the same quarter of 2025. Net loss was RMB97.4 million (USD14.4 million) for the three months ended June 30, 2026, compared to RMB75.9 million for the same quarter of 2025. Adjusted net loss, which excludes: (i) share-based compensation expenses of RMB0.3 million (USD0.05 million); (ii) impairment losses of long-lived assets of RMB4.6 million (USD0.7 million), (iii) impairment losses of rental deposits of RMB2.3 million (USD0.3 million), (iv) loss on disposal of property and equipment of RMB0.5 million (USD0.1 million), and (v) loss from changes in fair value of convertible notes of RMB34.9 million (USD5.1 million), was RMB54.9 million (USD8.1 million) for the three months ended June 30, 2026, compared to RMB39.7 million for the same quarter of 2025. Adjusted net loss margin was negative 20.0% in the second quarter of 2026, compared to negative 11.4% in the same quarter of 2025. Basic and diluted loss per ordinary share was RMB3.00 (USD0.44) in the second quarter of 2026, compared to RMB2.32 in the same quarter of 2025. Adjusted basic and diluted net loss per ordinary share was RMB1.69 (USD0.25) in the second quarter of 2026, compared to RMB1.21 in the same quarter of 2025. Liquidity As of June 30, 2026, the total amount of the Company’s cash and cash equivalents and restricted cash was RMB121.1 million (USD17.8 million), compared to RMB129.7 million as of December 31, 2025. The change was primarily attributable to cash disbursements on business operations, partially offset by the draw-down of additional bank borrowings. KEY OPERATING DATA KEY DEFINITIONS Same-store sales growth. The percentage change in the sales of stores that have been operating for 12 months or longer during a certain period compared to the same period from the prior year. The same-store sales growth for any period of more than a month equals the arithmetic average of the same-store sales growth of each month covered in the period. If a store was closed for seven days or more during any given month, its sales during that month and the same month in the comparison period are excluded for purposes of measuring same-store sales growth. Net new store openings. The gross number of new stores opened during the period minus the number of stores permanently closed during the period. System sales. Gross merchandise value of sales generated from both company owned and operated stores and franchised stores. Company owned and operated store contribution (previously reported as adjusted store EBITDA). Calculated as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization. Company owned and operated store contribution margin (previously reported as adjusted store EBITDA margin). Calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores. Adjusted general and administrative expenses. Calculated as general and administrative expenses excluding share-based compensation expenses, professional fees related to financing programs, and impairment losses of rental deposits. Adjusted corporate EBITDA. Calculated as operating loss excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, and impairment losses of rental deposits. Adjusted corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total revenues. Adjusted net loss. Calculated as net loss excluding share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, impairment losses of rental deposits, and changes in fair value of convertible notes. Adjusted net loss margin. Calculated as adjusted net loss as a percentage of total revenues. Adjusted basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary shares. RECENT BUSINESS DEVELOPMENT On August 13, 2026, Tims China announced the official launch of a joint membership campaign with China Southern Airlines. The two companies will work together on member benefits integration, consumer touchpoint fusion, and service experience innovation, giving members of both programs a new “coffee plus travel” lifestyle experience and expanding the membership service ecosystem. USE OF NON-GAAP FINANCIAL MEASURES The Company uses non-GAAP financial measures, namely company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) company owned and operated store contribution as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization; (ii) company owned and operated store contribution margin as company owned and operated store contribution as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, professional fees related to financing programs, and impairment losses of rental deposits; (iv) adjusted corporate EBITDA as operating loss excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, and impairment losses of rental deposits; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss excluding share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, impairment losses of rental deposits, and changes in fair value of convertible notes; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; and (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary shares. The Company believes company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors' overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure. EXCHANGE RATE INFORMATION This earnings release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.7851 to USD1.00, the exchange rate in effect on June 30, 2026 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any rate or at all. CONFERENCE CALL The Company will hold a conference call today, on Tuesday, August 18, 2026, at 8:00 am Eastern Time (on Tuesday, August 18, 2026, at 8:00 pm Beijing Time) to discuss the financial results. Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below. https://register-conf.media-server.com/register/BIe1051e377efc4328b00acdcfb0146d50 Participants may also view the live webcast by registering through below weblink: https://edge.media-server.com/mmc/p/y7354vo8 The webcast features a ‘Submit Your Question’ tab at the top, where you will have the opportunity to submit your questions before and during the call. A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”. FORWARD-LOOKING STATEMENTS Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based. ABOUT TH INTERNATIONAL LIMITED TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau. The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com. IMPORTANT NOTICE REGARDING THE TIM HORTONS® BRAND The TIM HORTONS® brand and related trademarks are used by Tims China pursuant to a franchise agreement with Tim Hortons Restaurants International GmbH and its affiliates (collectively, the “Identified Persons”). The Identified Persons are entities entirely separate and distinct from Tims China and its subsidiaries (the “Group”). No Identified Person exercises any control over the business, operations, finances or management of the Group, and no Identified Person is responsible for any obligations or liabilities of the Group. INVESTOR AND MEDIA CONTACTS Investor Relations [email protected] Public and Media Relations Patty [email protected]

This article first appeared on GuruFocus. Total Revenues: RMB273.4 million in Q2 2026, down 21.7% year over year. System Sales: RMB347.8 million in Q2 2026, down 15.1% year over year. Same-Store Sales Growth: Decreased 17.8% year over year, driven by a 16.3% decline in comparable transactions and a 1.5% decline in average ticket size. Monthly Average Transacting Customers: 2.85 million in Q2 2026, compared to 3.59 million in Q2 2025. Net New Store Openings: Totaled two in Q2 2026, with a net opening of 15 made-to-order stores and a net closure of 13 non-MTO stores. Company-Owned and Operated Stores: Decreased from 566 as of June 30, 2025, to 544 as of June 30, 2026. Food and Packaging Costs: As a percentage of revenue from company-owned and operated stores, decreased 1.8 percentage points to 28.3% in Q2 2026. Rental and Property Management Fees: RMB47.9 million in Q2 2026, down 15.6% from RMB56.8 million in Q2 2025. Payroll and Employee Benefit Expenses: RMB43.9 million in Q2 2026, down 12.6% year over year. Delivery Costs: RMB28.9 million in Q2 2026, down 13.3% from RMB33.3 million in Q2 2025. Other Operating Expenses: RMB17.4 million in Q2 2026, down 14.7% from RMB20.4 million in Q2 2025. Company-Owned and Operated Store Contribution Margin: 5.7% in Q2 2026, compared to 9.6% in Q2 2025. Marketing Expenses: RMB13.3 million in Q2 2026, down 4.4% from RMB13.9 million in Q2 2025. Adjusted General and Administrative Expenses: RMB39.6 million in Q2 2026, up 14.4% from RMB34.6 million in Q2 2025. Adjusted Corporate EBITDA Margin: Negative 7.6% in Q2 2026, compared to positive 0.6% in Q2 2025. Cash and Cash Equivalents and Restricted Cash: RMB121.1 million as of June 30, 2026, compared to RMB129.7 million as of December 31, 2025. Loyalty Club Members: Exceeded 37.1 million as of June 30, 2026, reflecting 41.7% year-over-year growth. Digital Orders: As a percentage of total orders, rose from 90.4% in Q2 2025 to 91.8% in Q2 2026. Warning! GuruFocus has detected 4 Warning Signs with THCH. Is THCH fairly valued? Test your thesis with our free DCF calculator. Release Date: August 18, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. TH International Ltd (NASDAQ:THCH) successfully closed the initial tranche of USD15.8 million in additional senior secured convertible notes from its brand owner, Tim Hortons Restaurant International GMBH, as part of a USD55 million financing series to support innovation and marketing. The company's loyalty program showed strong growth, with registered members exceeding 37.1 million, a 41.7% year-over-year increase, and average members per store surpassing 36,000. TH International Ltd (NASDAQ:THCH) reduced food and packaging costs as a percentage of company-owned store revenue by 1.8 percentage points year-over-year, from 30.1% to 28.3%, due to supply chain efficiencies. The company continued to enhance its digital capabilities, with digital orders rising to 91.8% of total orders in Q2 2026, up from 90.4% in the prior year. TH International Ltd (NASDAQ:THCH) launched 27 new products during the quarter, including 20 beverages and 7 food items, to enrich its all-day dining menu and strengthen its product portfolio. TH International Ltd (NASDAQ:THCH) experienced a significant decline in total revenues, dropping 21.7% year-over-year to RMB273.4 million, and system sales fell 15.1% to RMB347.8 million. Same-store sales growth was negative 17.8% in Q2 2026, driven by a 16.3% decline in comparable transactions and a 1.5% decrease in average ticket size. The company's company-owned and operated store contribution margins decreased to 5.7% in Q2 2026, down from 9.6% in the same quarter of 2025, due to higher rental, payroll, and delivery costs as a percentage of revenue. Adjusted corporate EBITDA margin turned negative at -7.6% in Q2 2026, compared to a positive 0.6% in the prior year, reflecting increased G&A expenses and lower revenue. TH International Ltd (NASDAQ:THCH) saw a decline in monthly average transacting customers to 2.85 million in Q2 2026, down from 3.59 million in Q2 2025, and net new store openings were minimal at just two, with closures of underperforming stores. Q: Can you talk about some of the top priorities in the corporate strategy that you see supporting Tims China to become a profitable business, and how long it may take to implement?A: CEO John Cheung outlined three top priorities: First, raising the game in innovation to offer more competitive products and experiences, focusing on strengthening core breakfast and lunch items like bagels and introducing new products like melts, while also improving milk-based coffee offerings. Second, improving store economics by continuing to close underperforming stores, enhancing efficiency in rental, labor, and food costs, and expanding new stores with a disciplined strategy focused on top-tier cities and high-traffic channels like office areas and transportation hubs. Third, building the necessary capabilities in innovation, marketing, operations, and business development to support these priorities. While he did not provide a specific timeline, he stated that "all cylinders are firing now" and that they are reserving no resources to drive progress. Q: With the recent commitment from RBI to invest $55 million into Tims China, is there any update on the number of net new stores planned for the second half of 2026 and 2027, and any changes to the mix between company-owned and franchise stores?A: CEO John Cheung stated that the funds arrived in a timely manner and will be prioritized to strengthen the business model, with a focus on product innovation and marketing. While he did not provide a specific number for new store openings, he confirmed a disciplined expansion strategy focusing on top-tier cities and specific trade zones. He also stated that the company is aiming for a more balanced approach, with company-owned stores and franchise stores contributing roughly equally to the new store network. Q: Marketing expense ratio was slightly lower than last year in the first half. What is your view on marketing spending for the second half of 2026 and going forward?A: CFO Albert Li confirmed that marketing investment is expected to increase significantly starting in the third quarter, as the company builds out its marketing and product category teams. The focus will be on expanding all dayparts and channels, extending CRM and marketing efforts beyond existing loyalty members to reach new customers, and improving the effectiveness and return on marketing spend. The key metrics will be customer acquisition, traffic growth, and overall business recovery, balanced with profitability. Q: More and more players are penetrating into the coffee business. What is your view on competition and how may this impact your business strategy?A: CEO John Cheung acknowledged the new entrants but emphasized that the company's strategy is to offer the best value through a combination of superior product, experience, and pricing. This includes investing in innovation for both basic products like Americano and limited-time offerings, ensuring a high-quality in-store and delivery experience, and working on cost and product mix to offer competitive pricing for consumers seeking basic products. The goal is to provide the best value to customers across different dayparts and needs. Q: Can you provide more detail on the company's financial performance in Q2 2026, specifically regarding revenue and store-level profitability?A: CFO Albert Li reported that total revenues and system sales were RMB273.4 million and RMB347.8 million, respectively, dropping 21.7% and 15.1% year-over-year. This was primarily due to the closure of underperforming stores and a 17.8% decrease in same-store sales. Company-owned and operated store contribution margins fell to 5.7% in Q2 2026 from 9.6% in Q2 2025. While food and packaging costs improved by 1.8 percentage points, rental and payroll costs as a percentage of revenue increased, and the adjusted corporate EBITDA margin was negative 7.6% compared to positive 0.6% in the prior year. Q: What were the key drivers behind the significant decline in same-store sales growth during the quarter?A: CFO Albert Li attributed the negative 17.8% same-store sales growth to a 16.3% decline in comparable transactions and a 1.5% decline in average ticket size. He cited three main reasons: delivery aggregators significantly reducing their subsidies, the company's underspending on marketing and advertising, and certain discount controls implemented during the period. Q: Can you elaborate on the company's liquidity position and the recent financing from the brand owner?A: CFO Albert Li stated that as of June 30, 2026, the company had RMB121.1 million in cash and cash equivalents and restricted cash. In July 2026, the company closed the initial tranche of USD15.8 million from a USD55 million series of senior secured convertible notes issued to Tim Hortons Restaurant International GMBH. The proceeds are planned to drive product innovation, increase marketing activities, and support a more balanced store network development strategy. Q: What specific actions are being taken to improve store-level profitability and operational efficiency?A: CFO Albert Li highlighted several initiatives, including reducing food and packaging costs by 1.8 percentage points through supply chain efficiencies, negotiating rent concessions which led to a 5.2% decrease in property maintenance fees for comparable stores, and reducing delivery costs per order. The company is also focusing on refining store unit economics and boosting operational efficiencies at both store and corporate levels to set the foundation for long-term sustainable growth. Q: How is the company addressing the need to win back customers and drive growth?A: CEO John Cheung emphasized a renewed focus on business fundamentals, including accelerating product innovation based on customer insights from over 10,000 loyalty club members and external advisors. The company is also working with coffee bean suppliers to tailor coffee to Chinese consumer tastes, strengthening capabilities in dairy and bakery categories, and broadening CRM and marketing efforts to increase customer interaction and frequency. Additionally, the company is enhancing operational excellence through staff recruitment, training, and labor scheduling to improve the overall customer experience. Q: What is the company's strategy for store network development going forward?A: CEO John Cheung stated that the company is working on two fronts: closing underperforming stores while expanding with new and enhanced product offerings. The expansion will focus on top-tier cities, particularly in office areas, trade zones, and special channels like train stations, airports, and universities, where traffic can be predicted with high accuracy. The company is also aiming for a balanced mix of company-owned and franchise stores in its new network. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was significantly impacted by a 17.8% decline in same-store sales growth, attributed to intense competition and a reduction in delivery aggregator subsidies. Management acknowledged a loss of market share and identified a historical underspend in marketing and advertising as a key driver of declining transaction volumes. The company is executing a strategic adjustment by closing underperforming stores while simultaneously recycling a heightened delivery business base from the prior year. A new leadership framework focuses on 'raising the game' in product innovation, specifically targeting the breakfast and lunch dayparts with core offerings like bagels and milk-based coffees. Operational efficiency gains were realized in food and packaging costs, which decreased by 1.8 percentage points due to supply chain optimization and raw material cost reductions. The digital strategy remains a core pillar, with digital orders now representing 91.8% of total orders, supported by a loyalty program that grew 41.7% year-over-year to 37.1 million members. Strategic expansion will now prioritize high-traffic 'reliable channels' such as top-tier city office zones, transportation hubs, and universities where traffic predictability is higher. The $55 million financing from RBI will be prioritized for product innovation and significantly increased marketing spend starting in September 2026. Future store development will shift toward a balanced mix, aiming for roughly equal contributions from company-owned and franchised locations. Management plans to integrate AI technology to drive efficiencies in inventory management, labor scheduling, and personalized member marketing. The near-term financial goal is centered on achieving corporate EBITDA breakeven through cost structure optimization and improved store-level profitability. Guidance assumes a recovery in customer traffic driven by new product launches and more effective couponing strategies through e-commerce channels. Closed the initial $15.8 million tranche of a $55 million senior secured convertible note issuance to Tim Hortons Restaurant International GmbH. Recorded impairment losses on rental deposits of RMB 2.3 million related to the strategic closure of underperforming company-owned stores. Adjusted G&A expenses increased by 14.4% year-over-year, primarily due to a RMB 4.2 million increase in professional and other service fees. Management flagged the entry of tea-chain competitors into the coffee space as a persistent headwind requiring a more aggressive value-based pricing strategy. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. CEO John Cheung identified three pillars: innovation in core products (bagels, melts, lattes), improving store economics through disciplined closures, and building organizational capabilities. Management declined to provide a specific timeline for the turnaround but stated that 'all cylinders are firing' to drive immediate progress. CFO Albert Li confirmed marketing spend was 'underspent' in H1 and will increase significantly starting in Q3 to support the annual brewed coffee and bagel festivals. The focus will shift from pure spend volume to 'marketing efficiency' and ROI, targeting new customer acquisition beyond the existing loyalty base. Management intends to compete on 'total value,' combining superior product quality with a tiered pricing strategy to remain competitive against low-cost entrants. The company plans to offer specific product mixes at 'price-competitive' points to address different consumer needs and dayparts.

Interested in TH International Limited? Here are five stocks we like better. Second-quarter performance weakened sharply: Revenue fell 21.7% year over year to RMB207.4 million, system sales declined 15.1%, and same-store sales dropped 17.8% as comparable transactions and monthly transacting customers fell. Store contribution margin also declined to 5.7% from 9.6%. New CEO John Chen outlined a turnaround focused on product innovation, stronger marketing, improved customer experience and store economics, while closing underperforming locations and selectively expanding in high-traffic, top-tier-city locations. Liquidity and investment remain important priorities: Cash and restricted cash totaled RMB121.1 million at quarter-end, while the company closed a $15.8 million tranche of planned convertible-note financing to fund product development, marketing and a balanced company-owned and franchised expansion strategy. TH International (NASDAQ:THCH), operator of Tims China, reported lower second-quarter revenue and system sales as comparable-store transactions declined, underperforming stores closed and delivery-platform subsidies were reduced. Management said it is responding with greater product innovation, marketing investment, operational improvements and a more selective store-development strategy. Total revenue fell 21.7% year over year to RMB207.4 million in the second quarter, while system sales declined 15.1% to RMB347.8 million, Chief Financial Officer Albert Lee said on the company’s earnings call. Same-store sales decreased 17.8%, reflecting a 16.3% decline in comparable transactions and a 1.5% decline in average comparable ticket size. → AMG’s Alternatives Boom Powers Record Growth Lee said the company’s monthly average transacting customers fell to 2.85 million from 3.59 million in the prior-year quarter. He attributed the same-store sales decline partly to delivery aggregators “backing down their subsidies significantly,” as well as the company’s lower marketing and advertising spending and discount controls. The company recorded two net new store openings during the quarter, consisting of 15 net new Made to Order stores and 13 net closures of non-MTO locations. The company-owned and operated store base totaled 544 at June 30, down from 566 a year earlier. → Microsoft's Maia 300 Chip Targets NVIDIA's AI Dominance Digital orders represented 91.8% of total orders, up from 90.4% a year earlier. Tims China also reported that its loyalty program surpassed 37.1 million registered members, a 41.7% year-over-year increase. Average members per store exceeded 36,000. During the quarter, the company introduced 27 products, including 20 beverages and seven food items, as part of its effort to expand its all-day menu. → The Metals Company’s Big Bet Now Comes Down to a License While sales declined, Lee said the company continued to reduce selected costs through supply-chain efficiencies and lower raw-material, logistics and warehousing expenses. Food and packaging costs at company-owned stores declined to 28.3% of revenue from 30.1% a year earlier. Rental and property management fees fell 15.6% to RMB47.9 million, primarily because of the smaller company-operated store base. However, rent as a percentage of company-owned store revenue rose to 21.7% from 20.2%, while comparable-store rental and property management fees declined 5.2% year over year as the company negotiated rent concessions with landlords. Payroll and employee benefits expenses declined 12.6% to RMB43.9 million, but increased as a percentage of company-owned store revenue to 19.9% from 17.8%. Delivery costs decreased 13.3% to RMB28.9 million, alongside an 11.9% decline in delivery orders to 7.2 million. Delivery costs represented 13.1% of company-owned store revenue, compared with 11.8% a year earlier, as delivery revenue became a larger portion of sales. Company-owned and operated store contribution margin declined to 5.7% from 9.6% in the prior-year quarter. Adjusted general and administrative expenses increased 14.4% to RMB39.6 million, largely due to higher professional and other service fees. Adjusted corporate EBITDA margin was negative 7.6%, compared with positive 0.6% cited by the company on the call. John Chen, who joined Tims China as chief executive officer in mid-June, called the quarter “a period of transition” and said the results were disappointing. He said the company was losing share to competitors, while revenue also was affected by the closure of underperforming stores and a reduction from the elevated delivery business of the previous year. Chen said Tims China’s immediate priority is to improve its product offering and customer experience. The company is reviewing feedback from more than 10,000 loyalty members and has engaged external advisers to support its consumer-insight work. It is also working with coffee-bean suppliers and in-house coffee specialists to better tailor coffee products to Chinese consumer preferences. Management plans to strengthen core offerings during breakfast and lunch, including bagels, while introducing products such as melts and additional bakery items for other dayparts. Chen specifically identified milk-based coffee drinks, including lattes, and the afternoon daypart as areas of opportunity. Expand product innovation and improve marketing capabilities. Improve store economics through work on rent, labor and food costs. Continue closing underperforming stores while selectively opening new locations. Use technology and artificial intelligence in inventory management, labor scheduling, marketing production and personalized promotions. For expansion, Chen said the company will emphasize top-tier cities and locations with more predictable traffic, including office districts, train stations, transportation hubs, airports and universities. He said future openings will be more evenly balanced between company-owned and franchise-supported stores, though management did not provide a store-opening target for the second half of 2026 or 2027. Cash, cash equivalents and restricted cash totaled RMB121.1 million at June 30, compared with RMB129.7 million at the end of 2025. The decline reflected operating cash disbursements, partly offset by additional bank borrowings, Lee said. In July, the company closed an initial $15.8 million tranche of additional senior secured convertible notes issued to Tim Hortons Restaurants International GmbH, its brand owner and founding shareholder. The financing is part of a proposed $55 million series that management said will support product innovation, marketing and a balanced company-owned and franchised store expansion strategy. Lee said marketing investment is expected to rise in the second half, particularly beginning in September around the company’s annual brewed coffee and Bagel Festival. Management said it intends to focus on the return and effectiveness of marketing spending, rather than a specific marketing-expense target, as it seeks to rebuild traffic, attract customers beyond its loyalty base and improve customer frequency and spending. TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company offers brewed tea, coffee, milk tea, lemonade, hot chocolate, and coffee drinks. It is also involved in franchise related business. The company is based in Shanghai, the People's Republic of China. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TH International Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is pivoting from prioritizing scale to prioritizing quality growth, intentionally reducing discount-driven promotions to focus on long-term brand equity. Performance was impacted by a seasonal slowdown and a strategic decision to prune underperforming stores, with net new openings expected to resume in Q2 2026. Same-store sales faced pressure due to significant reductions in subsidies from delivery aggregators and tighter control over marketing spend. Operational success is being driven by 2024 and 2025 vintage stores, which utilize compact, made-to-order formats that achieve superior unit economics. The company is leveraging higher store density in Tier 1 cities to achieve better economic scale, with these locations significantly outperforming lower-density markets. A 'coffee plus fresh prepared food' model serves as the primary competitive differentiator against aggressive low-price coffee and milk tea competitors. Supply chain refinements and economies of scale successfully reduced food and packaging costs by 2.0 percentage points year-over-year despite top-line pressure. Management expects same-store sales to recover throughout the remainder of 2026, supported by recent marketing campaigns and a new leadership transition. The company aims to achieve corporate EBITDA breakeven by accelerating the expansion of its sub-franchising model and optimizing cost structures. Future store growth will prioritize special channels such as transportation hubs and hospitals, which currently yield high-teens margins and 2-year payback periods. A new USD 55.0 million convertible note issuance from the brand owner is intended to fund nationwide network expansion and fortify the balance sheet. The transition of Yongchen Lu to Chairman and the appointment of John Cheung as CEO is intended to drive the next phase of brand building and operational management. The company is in the final stages of a store pruning program to eliminate legacy large-format stores that carry high rental burdens. Delivery costs as a percentage of revenue increased to 13.2% as delivery revenue rose to 65.1% of total revenues from company-owned and operated stores, reflecting a shift in consumer behavior. A partnership with DiDi added approximately 4 million new members in Q1, representing a nearly threefold year-over-year increase in customer acquisition. The franchise pipeline remains robust with over 10,500 applications received since the program's launch in late 2023. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management noted that sales have begun recovering in recent weeks following new marketing campaigns. Expectations are for improved performance in Q2 and significantly better results for the second half of the year. Margins are expected to improve as the pruning of underperforming stores is completed within the year. Gross margin improvements will be sustained through supply chain optimization and the launch of higher-margin products. Newer store vintages (2024-2026) have more reasonable rent structures compared to early brand-building stores, supporting store-level contribution margins in the teens, with 2024 vintages reaching low teens in Q1 2026 and special channel franchise stores achieving high teens. Management acknowledges aggressive entry from tea players but emphasizes their 'coffee plus food' model as a unique differentiator. The focus remains on quality and value rather than competing solely on the lowest price point.

This article first appeared on GuruFocus. Revenue: Total revenues dropped by 14.6% year-over-year. System Sales: Decreased by 14.2% year-over-year. Same-Store Sales Growth: Negative 13.2% for the system. Store Contribution Margin: Nearly 15% for 2024 vintage-year stores in 2025, lower 10s in Q1 2026. Store Locations: Decreased from 569 as of March 31, 2025, to 541 as of March 31, 2026. Franchise Applications: Over 10,500 applications received, over 440 stores signed up, nearly 260 stores opened by end of March 2026. Other Revenues: Increased by 7.7% year-over-year. Profits from Other Revenues: Achieved a year-over-year growth of 14%. Digital Orders: Increased to 87.5% of total orders in Q1 2026 from 86.3% in Q1 2025. Food and Packaging Costs: Reduced by 2.0 percentage points to 28.4% of revenues in Q1 2026. Rental and Property Management Fees: RMB47.2 million, decreased by 16.2% year-over-year. Payroll and Employee Benefits: RMB44.8 million, decreased by 10.4% year-over-year. Marketing Expenses: RMB9.8 million, decreased by 43.7% year-over-year. Adjusted General and Administrative Expenses: RMB43.4 million, decreased by 7.9% year-over-year. Adjusted Corporate EBITDA Margin: Negative 11.8% in Q1 2026. Cash and Cash Equivalents: RMB111.4 million as of March 31, 2026. Warning! GuruFocus has detected 4 Warning Signs with THCH. Is THCH fairly valued? Test your thesis with our free DCF calculator. Release Date: June 09, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. TH International Ltd (NASDAQ:THCH) has successfully launched its 2026 nationwide franchise load-share program, attracting over 10,500 applications and signing up over 440 stores, showcasing strong market confidence in its franchise model. The company has seen strong performance from its 2024 and 2025 vintage stores, with store contribution margins reaching nearly 15% in 2025 and expected payback periods within two to three years. TH International Ltd (NASDAQ:THCH) has expanded its presence across diversified locations, including transportation hubs and university campuses, enhancing brand penetration and consumer reach. The company has introduced upgraded franchise support policies, including multi-store incentives and high revenue rebates, to attract high-quality partners and lay a foundation for long-term scalable expansion. Digital orders as a percentage of total orders increased to 87.5% in Q1 2026, reflecting enhanced digital capabilities and growing demand for delivery and takeaway services. TH International Ltd (NASDAQ:THCH) experienced a 14.6% year-over-year drop in total revenues and a 14.2% decrease in system sales, primarily due to the closure of underperforming stores and a decline in same-store sales growth. Same-store sales growth faced pressure, with an overall comparable transaction decline of 8.3% and average comparable ticket size decline of 4.8%, leading to a negative 13.2% same-store sales growth. The company faced increased competition from tea players entering the coffee business with lower-priced offerings, potentially impacting its business strategy. Rental and property management fees as a percentage of revenues from company-owned and operated stores increased by 0.7 percentage points, indicating higher costs relative to revenue. Adjusted corporate EBITDA margin was negative 11.8% in Q1 2026, compared to negative 9.8% in the same quarter of 2025, highlighting ongoing financial challenges. Q: Can you discuss your current thinking on the same-store sales growth for the rest of 2026, considering the aggressive delivery aggregator subsidies since Q2 of last year? A: Yongchen Lu, CEO, stated that same-store sales have been recovering well recently, especially after launching several marketing campaigns. He expects better same-store sales in the second quarter and for the rest of the year. Q: What are your expectations on store margin profiles moving forward, given the strong performance of 2024 and 2025 stores and special channel stores? A: Albert Li, CFO, explained that they expect the margin profile to improve gradually. With the recovery in same-store sales, higher revenues at the store level are anticipated. The company is also optimizing underperforming stores and expects higher-margin stores to take a larger revenue share. Additionally, supply chain optimization and launching higher-margin products will help improve gross margins. Q: Could you talk about the current competitive landscape, especially with tea players entering the coffee business with lower-priced offerings? A: Yongchen Lu, CEO, acknowledged the aggressive entry of tea players into the coffee sector but emphasized TH International's differentiation by offering coffee plus freshly prepared food, setting them apart from both coffee and tea competitors. Q: How do you plan to address the high rent costs associated with early vintage stores? A: Yongchen Lu, CEO, noted that early vintage stores had high rent costs due to larger formats for brand building. However, newer stores have more reasonable rents and higher store-level contribution margins. The new CEO, John Chen, is expected to further improve sales and store contribution margins. Q: What are your near-term priorities for the company? A: Albert Li, CFO, outlined priorities including delivering sustainable revenue growth, enhancing supply chain capabilities, expanding store-level profitability, optimizing cost structure, accelerating sub-franchising expansion, and achieving EBITDA breakeven. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in TH International Limited? Here are five stocks we like better. TH International reported weaker Q1 2026 results, with revenue down 14.6% year over year and same-store sales down 13.2% as it continued closing underperforming stores and cut back on discount-driven promotions. Management is shifting focus toward franchising and profitability, with more than 10,500 franchise applications received, over 440 stores signed, and nearly 260 franchise locations opened by the end of March. Costs improved in some areas, but margins stayed under pressure: food and packaging costs fell, marketing spending dropped sharply, yet adjusted corporate EBITDA margin remained negative 11.8%; the company expects same-store sales to improve later in the year. TH International (NASDAQ:THCH), the operator of Tims China, reported weaker first-quarter 2026 sales as management continued to close underperforming stores, reduce discount-driven promotions and shift resources toward franchising and profitability. On the company’s earnings call, CEO Director Yongchen Lu said the coffee industry entered a seasonal slowdown in the quarter and that Tims China “proactively optimized its operating rhythm” by moderating promotions and reallocating resources toward franchise development and long-term profitability. Lu said the strategy put pressure on short-term revenue indicators but aligned with the company’s transition “from prioritizing scale growth to prioritizing quality growth.” → Meta Unveils Subscriptions: A New Offering With Real Growth Potential Tims China said total revenue fell 14.6% year over year in the first quarter, while system sales declined 14.2%. CFO Albert Li said the declines were primarily due to the closure of certain underperforming company-owned and operated stores and lower same-store sales. Lu said systemwide same-store sales fell 13.2% in the quarter, driven by an 8.3% decline in comparable transactions and a 4.8% decline in average comparable ticket size. He attributed part of the weakness to delivery aggregators significantly reducing subsidies, as well as the company’s own lower marketing spending and tighter discount controls. → Planet Labs: Coming Back Down to Earth The company continued its effort to prune underperforming stores during the quarter. Lu said Tims China expects to complete that process and resume net new store openings beginning in the second quarter of 2026. Despite the pressure, Lu said stores opened in 2024 and 2025 continued to perform well, particularly compact and made-to-order formats. He said 2024 vintage company-owned stores generated a store contribution margin of nearly 15% for full-year 2025 and in the lower teens during the first quarter of 2026, with an expected payback period of two to three years. The company expects 2025 vintage stores, which are still ramping up, to achieve similar unit economics. → The Energy Trade Is Bigger Than Oil Prices: 3 Stocks to Buy and 2 to Sell Management emphasized franchising as a key part of Tims China’s next stage of growth. Since launching its individual franchise business in December 2023, the company has received more than 10,500 applications, signed agreements for more than 440 stores and opened nearly 260 franchise stores by the end of March 2026, Lu said. Lu highlighted performance in special-channel locations such as railway stations, hospitals and highway rest areas, where franchise stores generated store contribution margins in the high teens in 2025 and are expected to achieve payback periods of about two years. He said the company plans to accelerate franchise openings in those channels. During the quarter, Tims China launched its 2026 nationwide franchise roadshow program and introduced updated franchise support policies, including multi-store incentives, high-revenue rebates and opening support packages. Lu said the company is seeking to attract high-quality franchise partners while building a foundation for scalable expansion. The company also said its “super franchise” business continued to contribute steady cash flow and profitability. Other revenue rose 7.7% year over year, while profit from other revenue increased 14% in the quarter. Li said food and packaging costs as a percentage of revenue from company-owned and operated stores improved by 2.0 percentage points from the fourth quarter of 2025 to 28.4% in the first quarter of 2026, reflecting supply chain improvements and scale benefits. Rental and property management fees declined 16.2% year over year to RMB 47.2 million, or $6.8 million, as the number of company-owned and operated stores fell to 541 as of March 31, 2026, from 569 a year earlier. Payroll and employee benefits expenses fell 10.4% to RMB 44.8 million, or $6.5 million. However, several cost categories increased as a percentage of company-operated store revenue. Rental and property management fees rose to 22.8% of such revenue, while payroll and benefits increased to 21.6%. Delivery costs rose 1.0% year over year to RMB 27.3 million, or $4.0 million, as delivery orders increased from 4.5 million to 4.9 million. Li said delivery revenue accounted for 65.1% of company-operated store revenue in the quarter, up from 53.1% a year earlier. Marketing expenses decreased 43.7% year over year to RMB 9.8 million, or $1.4 million, and fell to 3.8% of total revenue from 5.8% a year earlier. Adjusted general and administrative expenses declined 7.9% to RMB 43.4 million, or $6.3 million. Adjusted corporate EBITDA margin was negative 11.8%, compared with negative 9.8% in the prior-year period. Lu said Tims China launched 21 new products during the first quarter, including 15 beverages and six food items. The products focused on seasonal occasions, health-conscious offerings and localized flavors. The company cited the return of Cherry Zero, the launch of Apple Zero and the introduction of zero-sugar, zero-fat Luo Zero as examples of beverage innovation. On the food side, Lu said the Non-Chicken Bagel Sandwich and Non-Bagel supported the company’s localized product strategy. Apple Zero delivered the highest repurchase rate among spring product launches, he said. Tims China also pursued brand collaborations tied to Chinese New Year and younger consumers, including partnerships with the drama IP “The Queen of News,” Tian Tian Si Ji, Air Canada and NetEase Cloud Music. Lu said customers under 30 accounted for nearly half of transacting members in the quarter. The company added approximately 4 million new members during the quarter through a customer acquisition partnership with DiDi. Registered loyalty club members exceeded 35.9 million as of March 31, up 42.9% year over year. Lu said the company now has more than 35,000 members per store on average. As of March 31, Tims China had RMB 111.4 million, or $16.2 million, in cash, cash equivalents, deposits and restricted cash, down from RMB 129.7 million at the end of 2025. Li said the decline was mainly due to cash used in operations, partially offset by additional bank facility drawdowns. Li also said the company entered a definitive agreement with THRI, its brand owner, for the issuance of up to $55.0 million in additional senior secured convertible notes. He said the financing is intended to support store network expansion and strengthen the balance sheet. In response to an analyst question from Steve Silver of Argus Research Corporation, Lu said same-store sales had recently begun recovering after new marketing campaigns and that management expects better same-store sales in the second quarter and “much better” performance for the rest of the year. When asked about competition from tea players entering coffee with low-priced offerings, Lu said Tims China’s differentiation lies in its “coffee plus fresh prepared food” model, which he described as distinct from both coffee peers and milk tea brands. Li said the company’s near-term priorities include sustainable revenue growth, supply chain improvements, expanded store-level profitability, continued cost optimization, accelerated sub-franchising and achieving corporate EBITDA breakeven. TH International Limited operates Tim Hortons coffee shops in mainland China, Hong Kong, and Macau. The company offers brewed tea, coffee, milk tea, lemonade, hot chocolate, and coffee drinks. It is also involved in franchise related business. The company is based in Shanghai, the People's Republic of China. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "TH International Q1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for June 2026.

35.9 Million Registered Loyalty Club Members at Quarter-End,Representing 42.9% Year-over-Year Growth SHANGHAI and NEW YORK, June 09, 2026 (GLOBE NEWSWIRE) -- TH International Limited (Nasdaq: THCH), the parent company of the exclusive master franchisees of Tim Hortons coffee shops in China (“Tims China” or the “Company”) today announced its unaudited financial results for the first quarter 2026. FIRST QUARTER 2026 HIGHLIGHTS Total revenues of RMB256.7 million (USD37.2 million), representing a 14.6% decrease from the same quarter of 2025. System sales1 of RMB322.9 million (USD46.8 million), representing a 14.2% decrease from the same quarter of 2025. Net new store closures totaled 21 (a net closure of 5 made-to-order (“MTO”) stores and a net closure of 16 non-MTO stores, of which 7 were Tims Express stores). Company owned and operated store contribution2, previously reported as adjusted store EBITDA, was RMB3.7 million (USD0.5 million), compared to RMB17.2 million in the same quarter of 2025. Company owned and operated store contribution margin3, previously reported as adjusted store EBITDA margin, was 1.8%, compared to 6.7% in the same quarter of 2025. Registered loyalty club members totaled 35.9 million members as of March 31, 2026, representing a 42.9% year-over-year growth. __________________________________ 1 System sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores.2 Company owned and operated store contribution, is calculated as fully burdened gross profit4 of company owned and operated stores excluding depreciation & amortization. 3 Company owned and operated store contribution margin, is calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores.4 Fully burdened gross profit of company owned and operated stores, the most directly comparable GAAP measure to company owned and operated store contribution, was a loss of RMB17.9 million (USD2.6 million) for the three months ended March 31, 2026, compared to a loss of RMB11.2 million in the same quarter of 2025. COMPANY MANAGEMENT STATEMENT Mr. Yongchen Lu, CEO & Director of Tims China, stated, “In the first quarter, we continued our strategic adjustment to prune underperforming stores, and we expect to complete this process and resume net new store openings starting from the second quarter of 2026. Our sub-franchise businesses maintained steady contribution to cash flows and profitability. Other revenues increased by 7.7% year-over-year, and profits from other revenues achieved a year-over-year growth of 14.0% in Q1 2026. Our registered loyalty club membership exceeded 35.9 million as of March 31, 2026, representing 42.9% year-over-year growth and serving both as a solid foundation for growth and a testament to our customers’ support for and embrace of Tim China’s loyalty program.” Mr. Dong (Albert) Li, CFO of Tims China, commented, “We are pleased to enter into a definitive agreement with THRI for the issuance of up to US$55.0 million additional senior secured convertible notes, which underscores the strong commitment of our brand owner and founding shareholder. The proposed financing transaction provides pivotal capital to fund further expansion of our store network nationwide and to fortify our balance sheet.” FIRST QUARTER 2026 FINANCIAL RESULTS Total revenues were RMB256.7 million (USD37.2 million) for the three months ended March 31, 2026, representing a decrease of 14.6% from RMB300.7 million in the same quarter of 2025. Total revenues comprise: Revenues from Company owned and operated stores were RMB207.2 million (USD30.0 million) for the three months ended March 31, 2026, representing a decrease of 18.7% from RMB254.8 million in the same quarter of 2025. The decrease was primarily attributable to closures of certain underperforming stores as the number of company owned and operated stores decreased from 569 as of March 31, 2025 to 541 as of March 31, 2026, and a 12.4% decline in same-store sales growth for company owned and operated stores in the first quarter of 2026. The decrease was also attributable to a 7.5% year-over-year decrease in average ticket size, and an 11.2% decrease in the number of orders from 8.9 million in the first quarter of 2025 to 7.9 million in the same quarter of 2026. Other revenues were RMB49.5 million (USD7.2 million) for the three months ended March 31, 2026, representing an increase of 7.7% from RMB46.0 million in the same quarter of 2025. The increase was primarily due to the expansion of our franchise business as the number of our franchised stores increased from 455 as of March 31, 2025 to 485 as of March 31, 2026. Company owned and operated store costs and expenses were RMB218.0 million (USD31.6 million) for the three months ended March 31, 2026, representing a decrease of 15.2% from RMB257.2 million in the same quarter of 2025. Company owned and operated store costs and expenses comprise: Food and packaging costs were RMB58.9 million (USD8.5 million) for the three months ended March 31, 2026, representing a decrease of 23.9% from RMB77.5 million in the same quarter of 2025, which was in line with the revenue trend. As we continued to benefit from higher efficiencies in supply chains and cost reduction on raw materials, logistic and warehousing expenses, food and packaging costs as a percentage of revenues from company owned and operated stores decreased by 2.0 percentage points from 30.4% in the first quarter of 2025 to 28.4% in the same quarter of 2026. Rental and property management fees were RMB47.2 million (USD6.8 million) for the three months ended March 31, 2026, representing a decrease of 16.2% from RMB56.3 million in the same quarter of 2025, which was in line with the revenue trend as the number of our company-owned and operated stores decreased from 569 as of March 31, 2025 to 541 as of March 31, 2026. Rental and property management fees as a percentage of revenues from company owned and operated stores increased by 0.7 percentage points from 22.1% in the first quarter of 2025 to 22.8% in the same quarter of 2026. Payroll and employee benefits expenses were RMB44.8 million (USD6.5 million) for the three months ended March 31, 2026, representing a decrease of 10.4% from RMB50.0 million in the same quarter of 2025, which was in line with the revenue trend. Payroll and employee benefits expenses as a percentage of revenues from company owned and operated stores increased by 2.0 percentage points from 19.6% in the first quarter of 2025 to 21.6% in the same quarter of 2026. Delivery costs were RMB27.3 million (USD4.0 million) for the three months ended March 31, 2026, representing an increase of 1.0% from RMB27.0 million in the same quarter of 2025, which was in line with the 8.9% increase in delivery orders from 4.5 million in the first quarter of 2025 to 4.9 million in the same quarter of 2026, partially offset by a reduction in average delivery costs per order. Delivery costs as a percentage of revenues from company owned and operated stores increased by 2.6 percentage points to 13.2% in the first quarter of 2026, compared to 10.6% in the same quarter of 2025, which was primarily due to delivery revenue as a percentage of revenues from company owned and operated stores increased from 53.1% in Q1 2025 to 65.1% in Q1 2026. Other operating expenses were RMB18.2 million (USD2.6 million) for the three months ended March 31, 2026, representing an increase of 0.9% from RMB18.0 million in the same quarter of 2025. Other operating expenses as a percentage of revenues from company owned and operated stores increased by 1.7 percentage points to 8.8% in the first quarter of 2026, compared to 7.1% in the same quarter of 2025. Store depreciation and amortization expenses were RMB21.6 million (USD3.1 million) for the three months ended March 31, 2026, representing a decrease of 23.9% from RMB28.4 million in the same quarter of 2025, which was primarily due to impairment on property and equipment in relation to company owned and operated store closures and the reduced capital expenditures per store as a result of our initiatives to improve store unit economics. Store depreciation and amortization as a percentage of revenues from company owned and operated stores decreased by 0.7 percentage points to 10.4% in the first quarter of 2026, compared to 11.1% in the same quarter of 2025. Costs of other revenues were RMB33.0 million (USD4.8 million) for the three months ended March 31, 2026, representing an increase of 4.8% from RMB31.5 million in the same quarter of 2025, which was in line with the revenue trend. Costs of other revenues as a percentage of other revenues decreased by 1.9 percentage points from 68.6% in the first quarter of 2025 to 66.7% in the same quarter of 2026 due to higher margin we generated from retail business during the first quarter of 2026. Marketing expenses were RMB9.8 million (USD1.4 million) for the three months ended March 31, 2026, representing a decrease of 43.7% from RMB17.4 million in the same quarter of 2025, driven by our cost optimization measures. Accordingly, marketing expenses as a percentage of total revenues decreased by 2.0 percentage points from 5.8% in the first quarter of 2025 to 3.8% in the same quarter of 2026. General and administrative expenses were RMB48.0 million (USD7.0 million) for the three months ended March 31, 2026, representing a decrease of 7.3% from RMB51.8 million in the same quarter of 2025, which was primarily due to a RMB1.3 million (USD0.2 million) decrease in credit loss of account receivables, and a RMB1.5 million (USD0.2 million) decrease in professional and other service fees. As a result of the foregoing, adjusted general and administrative expenses, which excludes: (i) share-based compensation expenses of RMB1.5 million (USD0.2 million), and (ii) impairment losses of rental deposits of RMB3.1 million (USD0.4 million), were RMB43.4 million (USD6.3 million), representing a decrease of 7.9% from RMB47.2 million in the same quarter of 2025. Adjusted general and administrative expenses as a percentage of total revenues increased by 1.2 percentage points from 15.7% in the first quarter of 2025 to 16.9% in the same quarter of 2026. For more information on the Company’s non-GAAP financial measures, please see “Use of Non-GAAP Financial Measures” and “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures” set forth at the end of this earnings release. Franchise and royalty expenses were RMB13.5 million (USD2.0 million) for the three months ended March 31, 2026, representing a decrease of 2.6% from RMB13.9 million in the same quarter of 2025, which was in line with the revenue trend. Franchise and royalty expenses as a percentage of total revenues increased by 0.7 percentage points, from 4.6% in the first quarter of 2025 to 5.3% in the same quarter of 2026, as a result of higher royalty rate applicable. Impairment losses of long-lived assets were RMB5.9 million (USD0.9 million) for the three months ended March 31, 2026, compared to RMB11.6 million in the same quarter of 2025, which was primarily due to a decrease in the number of planned closures of underperforming company owned and operated stores. As a result of the foregoing, operating loss was RMB72.3 million (USD10.5 million) for the three months ended March 31, 2026, compared to RMB85.3 million in the same quarter of 2025. Adjusted Corporate EBITDA was a loss of RMB30.1 million (USD4.4 million) for the three months ended March 31, 2026, compared to a loss of RMB29.3 million in the same quarter of 2025. Adjusted Corporate EBITDA margin was negative 11.8% in the first quarter of 2026, compared to negative 9.8% in the same quarter of 2025. Changes in fair value of convertible notes were a loss of RMB32.6 million (USD4.7 million) for the three months ended March 31, 2026, compared to a gain of RMB29.5 million in the same quarter of 2025. Net loss was RMB109.3 million (USD15.8 million) for the three months ended March 31, 2026, compared to RMB58.9 million for the same quarter of 2025. Adjusted net loss, which excludes: (i) share-based compensation expenses of RMB1.5 million (USD0.2 million); (ii) impairment losses of long-lived assets of RMB5.9 million (USD0.9 million), (iii) impairment losses of rental deposits of RMB3.1 million (USD0.5 million), (iv) loss on disposal of property and equipment of RMB0.6 million (USD0.1 million), and (v) loss from changes in fair value of convertible notes of RMB32.6 million (USD4.7 million), was RMB65.6 million (USD9.5 million) for the three months ended March 31, 2026, compared to RMB69.4 million for the same quarter of 2025. Adjusted net loss margin was negative 25.6% in the first quarter of 2026, compared to negative 23.0% in the same quarter of 2025. Basic and diluted loss per ordinary share was RMB3.38 (USD0.49) in the first quarter of 2026, compared to RMB1.78 in the same quarter of 2025. Adjusted basic and diluted net loss per ordinary share was RMB2.04 (USD0.30) in the first quarter of 2026, compared to RMB2.10 in the same quarter of 2025. Liquidity As of March 31, 2026, the Company’s total cash and cash equivalents, restricted cash and time deposits were RMB111.4 million (USD16.2 million), compared to RMB129.7 million as of December 31, 2025. The change was primarily attributable to cash disbursements on business operations, partially offset by the draw-down of additional bank borrowings. KEY OPERATING DATA KEY DEFINITIONS Same-store sales growth. The percentage change in the sales of stores that have been operating for 12 months or longer during a certain period compared to the same period from the prior year. The same-store sales growth for any period of more than a month equals to the arithmetic average of the same-store sales growth of each month covered in the period. If a store was closed for seven days or more during any given month, its sales during that month and the same month in the comparison period are excluded for purposes of measuring same-store sales growth. Net new store closures. The number of stores permanently closed during the period minus the gross number of new stores opened during the period. System sales. Gross merchandise value of sales generated from both company owned and operated stores and franchised stores. Company owned and operated store contribution (previously reported as adjusted store EBITDA). Calculated as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization. Company owned and operated store contribution margin (previously reported as adjusted store EBITDA margin). Calculated as company owned and operated store contribution as a percentage of revenues from company owned and operated stores. Adjusted general and administrative expenses. Calculated as general and administrative expenses excluding share-based compensation expenses, professional fees related to financing programs, and impairment losses of rental deposits. Adjusted corporate EBITDA. Calculated as operating loss excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, and impairment losses of rental deposits. Adjusted corporate EBITDA margin. Calculated as adjusted corporate EBITDA as a percentage of total revenues. Adjusted net loss. Calculated as net loss excluding share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, impairment losses of rental deposits, and changes in fair value of convertible notes. Adjusted net loss margin. Calculated as adjusted net loss as a percentage of total revenues. Adjusted basic and diluted net loss per ordinary share. Calculated as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary shares. USE OF NON-GAAP FINANCIAL MEASURES The Company uses non-GAAP financial measures, namely company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) company owned and operated store contribution as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization; (ii) company owned and operated store contribution margin as company owned and operated store contribution as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, professional fees related to financing programs, and impairment losses of rental deposits; (iv) adjusted corporate EBITDA as operating loss excluding certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, and impairment losses of rental deposits; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss excluding share-based compensation expenses, impairment losses of long-lived assets, loss on disposal of property and equipment, professional fees related to financing programs, impairment losses of rental deposits, and changes in fair value of convertible notes; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; and (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share. The Company believes company owned and operated store contribution, company owned and operated store contribution margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors' overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making. These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure. EXCHANGE RATE INFORMATION This earnings release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB6.8980 to USD1.00, the exchange rate in effect on March 31, 2026 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any rate or at all. CONFERENCE CALL The Company will hold a conference call today, on Tuesday, June 9, 2026, at 8:00 am Eastern Time (on Tuesday, June 9, 2026, at 8:00 pm Beijing Time) to discuss the financial results. Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below. https://register-conf.media-server.com/register/BI87efb84978714709b23f062bc05715df Participants may also view the live webcast by registering through below weblink: https://edge.media-server.com/mmc/p/h28sz2td The webcast features a ‘Submit Your Question’ tab at the top, where you will have the opportunity to submit your questions before and during the call. A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”. FORWARD-LOOKING STATEMENTS Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based. ABOUT TH INTERNATIONAL LIMITED TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau. The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com. IMPORTANT NOTICE REGARDING THE TIM HORTONS® BRAND The TIM HORTONS® brand and related trademarks is used by Tims China pursuant to a franchise agreement with Tim Hortons Restaurants International GmbH and its affiliates (collectively, the “Identified Persons”). The Identified Persons are entities entirely separate and distinct from Tims China and its subsidiaries (the “Group”). No Identified Persons exercises any control over the business, operations, finances or management of the Group, and no Identified Person is responsible for any obligations or liabilities of the Group. INVESTOR AND MEDIA CONTACTS Investor Relations [email protected] Public and Media Relations Patty [email protected]