SHANGHAI, China and NEW YORK, USA – TH International Limited, the exclusive operator of Tim Hortons coffee shops in China (Tims China), yesterday announced its unaudited financial results for the three-month and nine-month periods ended September 30, 2022. Total revenues were RMB305.7 million (USD43.0 million) for the three months ended September 30, 2022, representing an increase of 67.9% from RMB182.1 million in the same quarter of 2021.
Net new store openings totaled 46 (35 company owned and operated stores and 11 franchised stores) for the three months ended September 30, 2022. System-wide stores reached 486 (454 company owned and operated stores and 32 franchised stores) as of September 30, 2022, compared to 440 as of June 30, 2022 and 280 as of September 30, 2021.
Same-store sales growth for company owned and operated stores was 7.5% for the three months ended September 30, 2022, compared to 6.6% in the same quarter of 2021.
Registered loyalty club members totaled 8.9 million as of September 30, 2022, representing an 85.8% increase from 4.8 million as of September 30, 2021.
Adjusted store EBITDA(1), was RMB19.4 million (USD2.7 million) for the three months ended September 30, 2022, representing a 336.6% increase from RMB4.4 million in the same quarter of 2021.
Adjusted store EBITDA margin, which stands for adjusted store EBITDA as a percentage of our revenues from company owned and operated stores, was 6.7% for the three months ended September 30, 2022, representing an increase of 4.1 percentage points from 2.6% in the same quarter of 2021.
(1) Adjusted store EBITDA is calculated as fully-burdened gross profit(2) of company owned and operated stores excluding depreciation & amortization and store pre-opening expenses.
(2) Fully-burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of RMB21.0 million (USD3.0 million) for the three months ended September 30, 2022, representing a 59.4% improvement from a loss of RMB51.4 million in the same quarter of 2021.
Tims China: Company management statement
Mr. Yongchen Lu, CEO of Tims China, commented, “We are very pleased to report strong financial and operational results for our first quarter as a public company. Our robust top-line performance reflected contributions from store network expansion combined with solid same-store sales growth, which we attribute to growing customer recognition of the absolute convenience, true local relevance, and continuous innovation offered to Tims China customers. As we continue to build greater brand awareness and loyalty, we are also increasing the number of our loyalty club members, exemplifying our success in building a genuine community. Our recent partnerships and collaborations with Sinopec Easy Joy and Alibaba Group’s Freshippo provide us new avenues for growth, particularly with the compact “Tims Express” store format, ready-to-drink (RTD) coffee, and other co-branded products.”
Mr. Dong (Albert) Li, CFO of Tims China, commented, “We achieved solid store-level margin improvement during the third quarter of 2022 through our continuous efforts to optimize our cost structure and drive operating leverage through revenue growth, which demonstrated both strong execution and resilience despite COVID. Leveraging our highly differentiated “Coffee Plus” business model and growing brand influence, we are confident that we will continue building brand love and growing our customer base effectively, improving our operational efficiency, and delivering sustainable revenue and profitability growth for our shareholders in the long-run.”
Impact of Covid-19 and mitigation efforts
“We have demonstrated our resilience and agility throughout the COVID-19 pandemic, but serious challenges remain” says the company. “The COVID-19 pandemic continued to adversely affect our store operations and the sales of affected cities, primarily as a result of temporary store closures, reduced operating hours, disallowed dine-in services, decreased customer traffic, and disruptions to the supply chain and logistics. In the third quarter of 2022, the Company experienced approximately 23 daily temporary store closures on average, compared to approximately 138 daily temporary store closures on average in the second quarter. Entering the fourth quarter, new infections continued to increase in October and November with resurgent outbreaks across China. The Company experienced approximately 36 daily temporary store closures on average in October.”
Despite the volatile environment, the Company grew total revenues year-over-year by 67.9% and achieved same-store sales growth for company owned and operated stores of 7.5% during the third quarter of 2022. We captured the growing demand for delivery and takeaway services, and the number of home-delivery orders fulfilled increased by 111.1% from the third quarter of 2021 to the third quarter of 2022.
Due to the uncertainty of the development of the COVID-19 pandemic, it remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and the actions and measures undertaken by government authorities to contain the COVID-19 pandemic, which may impose continuing adverse effects on our results of operations, cash flows and financial position going forward.
