TH International Q1 Earnings Call Highlights

Key Points

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• TH International reported weaker Q1 2026 results, with gross down 14.6% twelvemonth implicit twelvemonth and same-store income down 13.2% arsenic it continued closing underperforming stores and chopped backmost connected discount-driven promotions.

• Management is shifting absorption toward franchising and profitability, with much than 10,500 franchise applications received, implicit 440 stores signed, and astir 260 franchise locations opened by the extremity of March.

• Costs improved successful immoderate areas, but margins stayed nether pressure: nutrient and packaging costs fell, selling spending dropped sharply, yet adjusted firm EBITDA borderline remained negative 11.8%; the institution expects same-store income to amended aboriginal successful the year.

TH International (NASDAQ:THCH), the relation of Tims China, reported weaker first-quarter 2026 income arsenic absorption continued to adjacent underperforming stores, trim discount-driven promotions and displacement resources toward franchising and profitability.

On the company’s net call, CEO Director Yongchen Lu said the java manufacture entered a seasonal slowdown successful the 4th and that Tims China “proactively optimized its operating rhythm” by moderating promotions and reallocating resources toward franchise improvement and semipermanent profitability. Lu said the strategy enactment unit connected short-term gross indicators but aligned with the company’s modulation “from prioritizing standard maturation to prioritizing prime growth.”

Sales diminution arsenic store pruning continues

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Tims China said full gross fell 14.6% twelvemonth implicit twelvemonth successful the archetypal quarter, portion strategy income declined 14.2%. CFO Albert Li said the declines were chiefly owed to the closure of definite underperforming company-owned and operated stores and little same-store sales.

Lu said systemwide same-store income fell 13.2% successful the quarter, driven by an 8.3% diminution successful comparable transactions and a 4.8% diminution successful mean comparable summons size. He attributed portion of the weakness to transportation aggregators importantly reducing subsidies, arsenic good arsenic the company’s ain little selling spending and tighter discount controls.

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The institution continued its effort to prune underperforming stores during the quarter. Lu said Tims China expects to implicit that process and resume nett caller store openings opening successful the 2nd 4th of 2026.

Despite the pressure, Lu said stores opened successful 2024 and 2025 continued to execute well, peculiarly compact and made-to-order formats. He said 2024 vintage company-owned stores generated a store publication borderline of astir 15% for full-year 2025 and successful the little teens during the archetypal 4th of 2026, with an expected payback play of 2 to 3 years. The institution expects 2025 vintage stores, which are inactive ramping up, to execute akin portion economics.