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Tims China reports 57% increase in total revenues despite Covid lockdowns

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SHANGHAI and NEW YORK, USA – TH International Limited, the exclusive operator of Tim Hortons coffee shops in China (“Tims China” or the “Company”) announced its unaudited financial results for the fourth quarter and full year ended December 31, 2022. During the fourth quarter of 2022, business operations were severely affected due to the resurgence of the pandemic and multiple rounds of lockdowns across major cities in the PRC.

In December, the PRC government significantly changed its COVID policies, including removal of mass testing and central quarantine requirements, as well as lifting of travel restrictions.

A significant wave of infections occurred and many chose to stay at home. As a result, dine-in traffic declined substantially.

To cope with and to adapt to challenges from the pandemic, the company continued to focus on digital capabilities in order to capture the growing demand from delivery and takeaway services. As a result, the number of delivery and takeaway orders increased by 47.3% from the fourth quarter of 2021 to the fourth quarter of 2022.

Following the easing of pandemic-related measures, the company has gradually resumed normal operations and the overall business environment and consumer sentiment have dramatically improved. This recovery is well demonstrated in the same-store sales performance, which reached 17.1% in February 2023.

Fourth Quarter 2022 Highlights

  • Total revenues were RMB301.5 million (USD43.7 million), representing a 34.6% increase from the same quarter of 2021.
  • Net new store openings totaled 131 (93 company owned and operated stores and 38 franchised stores).
  • Adjusted store EBITDA¹ was RMB12.8 million (USD1.9 million), representing a 45.7% increase from the same quarter of 2021.
  • Adjusted store EBITDA margin² was 4.7%, representing an increase of 0.6 percentage points from the same quarter of 2021.

¹ Adjusted store EBITDA is calculated as fully-burdened gross profit³ of company owned and operated stores excluding depreciation & amortization and store pre-opening expenses.
² Adjusted store EBITDA margin is calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.
³ Fully-burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of RMB46.4 million (USD6.7 million) for the three months ended December 31, 2022, compared to a loss of RMB52.7 million in the same quarter of 2021.

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Tims China: Full Year 2022 Highlights

  • Total revenues were RMB1,011.1 million (USD146.6 million), representing a 57.2% increase from 2021.
  • Net new store openings totaled 227 (174 company owned and operated stores and 53 franchised stores) in 2022, reaching 617 total stores at year-end (547 company owned and operated stores and 70 franchised stores).
  • Registered loyalty club members totaled 11.3 million as of December 31, 2022, representing an 88.5% increase from 2021.

Mr. Yongchen Lu, CEO & Director of Tims China, commented, “We demonstrated resilience and agility during the fourth quarter of 2022 and are pleased with our achievements, especially considering the challenges brought about by the COVID-19 pandemic, which were particularly acute in December given peaks in infection rates across the country.

Despite the difficult circumstances, we managed to grow total revenues year-over-year by 34.6%, expand our store network to 617 across 39 cities, launch a series of new bestseller products such as ‘mulled wine flavored brewed coffee’ and ‘salted egg yolk wrap’, and grow our registered loyalty club membership to over 11 million by year-end.

With the end of ‘zero-COVID control measures’ by the PRC government authorities in December 2022, we are very excited to embark on a new era of development while continuing to drive strong revenue growth, win market share, and achieve margin expansion in the coming quarters.”

Mr. Lu added, “In 2023, we will continue to execute our differentiated ‘Coffee Plus’ growth strategy by offering creative and customized beverage and food combos at compelling values.

This initiative has been highly successful: the percentage of orders with food increased from 38.5% in the fourth quarter of 2021 to 47.1% in the fourth quarter of 2022. We plan to surpass 1,000 system-wide stores by year-end and further enhance our customer-facing technology, key pillars of our strategy of driving ‘absolute convenience’ for our guests.”

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