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Tims China reports total revenues up 50% in 1Q

Total revenues increased 49.8% year-over-year for the first quarter 2023. The company reported 31 net new store openings in the first quarter, 648 system-wide stores at quarter-end and 12.4 Million registered loyalty club members at quarter-end. Adjusted store EBITDA margin increased 13.8 percentage points from the first quarter 2022 to 1.9%. Continued recovery: 8.0% same-store sales growth for company owned and operated stores in the first quarter 2023, including 17.1% in February and 19.4% in March

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SHANGHAI, China and NEW YORK, USA – TH International Limited, the exclusive operator of Tim Hortons coffee shops and Popeyes restaurants in China (“Tims China” or the “Company”) announced its unaudited financial results for the first quarter 2023. Total revenues were RMB336.5 million (USD49.0 million), representing a 49.8% increase from the same quarter of 2022.

Net new store openings totaled 31 (4 company owned and operated stores and 27 franchised stores). Adjusted store EBITDA¹ was RMB6.0 million (USD0.9 million), compared to a loss of RMB25.0 million in the same quarter in 2022. Adjusted store EBITDA margin² was 1.9%, representing an increase of 13.8 percentage points from the same quarter in 2022.

Tims China: First Quarter 2023 Financial Results

Total revenues reached RMB336.5 million (USD49.0 million) for the three months ended March 31, 2023, representing an increase of 49.8% from RMB224.7 million in the same quarter of 2022. Total revenues comprise:

  • Revenues from company owned and operated stores were RMB310.5 million (USD45.2 million) for the three months ended March 31, 2023, representing an increase of 47.1% from RMB211.0 million in the same quarter of 2022. The growth was primarily driven by an increase in the number of company owned and operated stores from 403 as of March 31, 2022 to 551 as of March 31, 2023 and an 8.0% same-store sales growth for company owned and operated stores in the first quarter of 2023.
  • Other revenues were RMB26.0 million (USD3.8 million) for the three months ended March 31, 2023, representing an increase of 91.2% from RMB13.6 million in the same quarter of 2022. The growth was primarily attributable to the rapid expansion of our e-commerce business and an increase in franchise fees and revenues from other franchise support activities, which was attributable to an increase in the number of franchised stores from 21 as of March 31, 2022 to 97 as of March 31, 2023.

Company operated store costs and expenses were RMB336.5 million (USD49.0 million) for the three months ended March 31, 2023, representing an increase of 24.6% from RMB270.2 million in the same quarter of 2022. Company operated store costs and expenses comprise:

  • Food and packaging expenses were RMB111.3 million (USD16.2 million), representing an increase of 60.0% from RMB69.6 million, in line with our revenue growth and store network expansion. Food and packaging costs as a percentage of revenues from company owned and operated stores increased by 2.9 percentage points from 33.0% in the first quarter of 2022 to 35.9% in the first quarter of 2023 as we offered higher sales discount and promotional activities to our customers.
  • Rental and property management fee were RMB71.4 million (USD10.4 million), representing an increase of 22.3% from RMB58.4 million, mainly due to the increase in the number of company owned and operated stores from 403 as of March 31, 2022 to 551 as of March 31, 2023. Rental and property management fee as a percentage of revenues from company owned and operated stores decreased by 4.7 percentage points from 27.7% in the first quarter of 2022 to 23.0% in the first quarter of 2023.
  • Payroll and employee benefits expenses were RMB73.0 million (USD10.6 million), representing an increase of 1.6% from RMB71.8 million, in line with our revenue growth and store network expansion. Payroll and employee benefits as a percentage of revenues from company owned and operated stores decreased by 10.5 percentage points from 34.0% in the first quarter of 2022 to 23.5% in the first quarter of 2023, primarily due to the refined staffing arrangement of our store operation personnel and optimization of our labor structure, including hiring more part-time employees.
  • Delivery costs were RMB22.8 million (USD3.3 million), representing an increase of 53.6% from RMB14.8 million, due to increased home-delivery orders. Delivery costs as a percentage of revenues from company owned and operated stores increased by 0.3 percentage points from 7.0% in the first quarter of 2022 to 7.3% in the first quarter of 2023.
  • Other operating expenses were RMB25.1 million (USD3.7 million), representing a decrease of 15.5% from RMB29.7 million, due to our continuous efforts to optimize our cost structure and drive operating leverage through revenue growth and store network expansion. Other operating expenses as a percentage of revenues from company owned and operated stores decreased by 6.0 percentage points from 14.1% in the first quarter of 2022 to 8.1% in the first quarter of 2023.
  • Store depreciation and amortization were RMB33.0 million (USD4.8 million), representing an increase of 27.4% from RMB25.9 million, driven by an increase in the number of company owned and operated stores from 403 as of March 31, 2022 to 551 as of March 31, 2023. Store depreciation and amortization as a percentage of revenues from company owned and operated stores decreased by 1.6 percentage points from 12.2% in the first quarter of 2022 to 10.6% in the first quarter of 2023.

Cost of other revenues was RMB18.9 million (USD2.7 million) for the three months ended March 31, 2023, representing an increase of 114.9% from RMB8.8 million in the same quarter of 2022, which was primarily driven by an increase in the number of franchised stores from 21 as of March 31, 2022 to 97 as of March 31, 2023, and the incurrence of cost of product sales related to our e-commerce business during the first quarter of 2023. Cost of other revenues as a percentage of other revenues increased by 8.0 percentage points from 64.5% in the first quarter of 2022 to 72.5% in the first quarter of 2023.

Marketing expenses were RMB18.3 million (USD2.7 million) for the three months ended March 31, 2023, representing an increase of 44.1% from RMB12.7 million in the same quarter of 2022, which was primarily attributable to the increase in the number of our system-wide stores from 424 as of March 31, 2022 to 648 as of March 31, 2023. Marketing expenses as a percentage of total revenues decreased by 0.3 percentage points from 5.7% in the first quarter of 2022 to 5.4% in the first quarter of 2023.

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General and administrative expenses were RMB70.6 million (USD10.3 million) for the three months ended March 31, 2023, representing an increase of 39.8% from RMB50.5 million in the same quarter of 2022, which was primarily due to: (i) increased payroll and employee benefits as a result of growing headcount; and (ii) increased share-based compensation expenses recognized. Adjusted general and administrative expenses, which excludes share-based compensation expenses of RMB3.2 million (USD0.5 million), were RMB67.5 million (USD9.8 million). Adjusted general and administrative expenses as a percentage of total revenues decreased by 2.5 percentage points from 22.5% in the first quarter of 2022 to 20.0% in the first quarter of 2023. For more information on the Company’s non-GAAP financial measures, please see the section “Non-GAAP Financial Measures” and the table captioned “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 RMB11.9 million (USD1.7 million) for the three months ended March 31, 2023, representing an increase of 52.0% from RMB7.8 million in the same quarter of 2022, which was primarily driven by the increase in the number of our system-wide stores from 424 as of March 31, 2022 to 648 as of March 31, 2023. Franchise and royalty expenses as a percentage of total revenues remained flat at 3.5% in the first quarters of 2022 and 2023.

As a result of the foregoing, operating loss was RMB130.4 million (USD19.0 million) for the three months ended March 31, 2023, compared to RMB134.9 million in the same quarter of 2022.

Adjusted Corporate EBITDA was a loss of RMB74.6 million (USD10.9 million) for the three months ended March 31, 2023, compared to a loss of RMB83.5 million in the same quarter of 2022. Adjusted Corporate EBITDA margin was negative 22.2% in the first quarter of 2023, representing an improvement of 15.0 percentage points from negative 37.2% in the first quarter of 2022.

Net loss was RMB174.5 million (USD25.4 million) for the three months ended March 31, 2023, compared to RMB151.3 million for the same quarter of 2022. Adjusted net loss was RMB117.1 million (USD17.1 million) for the three months ended March 31, 2023, compared to RMB116.7 million for the same quarter of 2022. Adjusted net loss margin was negative 34.8% in the first quarter of 2023, representing an improvement of 17.2 percentage points from negative 52.0% in the first quarter of 2022.

Basic and diluted net loss per ordinary share was RMB1.25 (USD0.18) in the first quarter of 2023, compared to RMB1.21 in the first quarter of 2022. Adjusted basic and diluted net loss per ordinary share was RMB0.84 (USD0.12) in the first quarter of 2023, compared to RMB0.93 in the first quarter of 2022.

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 RMB35.9 million (USD5.2 million) for the three months ended March 31, 2023, compared to a loss of RMB65.5 million in the same quarter of 2022.

CIMBALI

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