Earnings call · Jun 2026 (Q2 FY26)

TH International Q2 FY26 earnings call THCH

Aug 18, 2026 Source

Executive summary

TH International Limited Q2 FY26 — Revenue and Same-Store Sales Decline Amid Strategic Adjustments

Tims China experienced a challenging quarter with significant declines in revenue and same-store sales, driven by underperforming store closures, reduced delivery aggregator subsidies, and underspending in marketing. The new CEO outlined a strategic pivot focusing on product innovation, operational efficiency, and disciplined store network expansion in top-tier cities, aiming for a more balanced company-owned and franchised store mix. The company secured additional financing to support these initiatives and is committed to regaining customer traffic and achieving corporate EBITDA breakeven.

Highlights

Registered loyalty club members grew to 37.1 million, a 41.7% YoY increase.
Food and packaging cost as a percentage of revenue from company-owned stores decreased by 1.8 percentage points to 28.3% in Q2 2026.
Successfully closed an initial tranche of USD 15.8 million in additional senior secured convertible notes in July 2026.

Concerns

Total revenues decreased by 21.7% YoY to RMB 273.4 million.
System sales decreased by 15.1% YoY to RMB 347.8 million.
Same-store sales growth was negative 17.8% due to a 16.3% comparable transaction decline and a 1.5% average comparable ticket size decline.
Adjusted corporate EBITDA margin was negative 7.6% in Q2 2026, compared to positive 0.6% in Q2 2025.

THCH operating KPIs by quarter

THCH operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Mar 2026 Q1 FY26	This call Jun 2026 Q2 FY26	Change vs prior quarter
Loyalty program members	35.9M+ As of March 31, 2026, our registered loyalty club members exceeded 35.9 million, reflecting a remarkable 42.9% year-over-year growth. Source transcript	37.1M+ As of June 30, 2026, our registered loyalty club members exceeded 37.1 million, reflecting a remarkable 41.7% year-over-year growth. Source transcript	—
Stores Company-owned and operated	541 Rental and property management fees were RMB 47.2 million (USD 6.8 million) for the 3 months ended March 31, 2026, representing a decrease of 16.2% from RMB 56.3 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. Source transcript	544 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. Source transcript	+0.6%
Total orders Delivery	4.9M Delivery costs were RMB 27.3 million (USD 4.0 million) for the 3 months ended March 31, 2026, representing an increase of 1.0% from RMB 27.0 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 cost per order. Source transcript	7.2M 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. Source transcript	+46.9%

Operating figures the company states on every call, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
New products	launch	Q2 2026

Deals & partnerships

Tim Hortons Restaurant International GmbH Additional senior secured convertible notes USD 15.8 million

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, closed in July 2026. This is part of a USD 55 million series of proposed financing.

Risks & headwinds

Decline in revenue and same-store sales Q2 2026

Total revenues dropped by 21.7% YoY to RMB 273.4 million; system sales dropped by 15.1% YoY to RMB 347.8 million; same-store sales growth decreased by 17.8%.

Mitigation:Strategic adjustment of closing underperforming stores, increased focus on product innovation, marketing investment, and disciplined store network expansion.

Loss of market share to competition Q2 2026

Top line revenue and same-store sales were both in significant decline as we are losing share to competition.

Mitigation:Significantly step up efforts to win back customers and gain new ones through superior products, offerings, experience, and hospitality; focus on value proposition (product, experience, pricing).

Reduced delivery aggregator subsidies Q2 2026

The decline [in same-store sales] was partly due to the delivery aggregators backing down their subsidized significantly.

Mitigation:Enhance digital capabilities to meet growing demand for delivery and take-away services; focus on marketing effectiveness.

Underspend in marketing and advertising Q2 2026

partly due to our underspend in marketing and advertising spending and also a certain discount control.

Mitigation:Marketing investment expected to increase significantly in H2 2026, with a focus on effectiveness and return on investment.

Increased operating expenses as percentage of revenue Q2 2026

Rental and property management fees as a percentage of revenues from company-owned and operated stores increased by 1.5 percentage points to 21.7%; Payroll and employee benefits expenses as a percentage of revenue increased by 2.1 percentage points to 19.9%; Delivery costs as a percentage of revenue increased by 1.3 percentage points to 13.1%; Other operating expenses as a percentage of revenue increased by 0.7 percentage points to 7.9%.

Mitigation:Refining store unit economics, boosting operational efficiencies, continuously optimizing cost structure of corporate marketing and G&A expenses, negotiating permanent rent concessions.

What to watch in Q3 FY26

Product innovation progress

later in the year

Current 27 new products launched in Q2 2026; efforts underway to improve core products and introduce new items.

Target New products ready for launch, particularly milk-based coffee offerings and new bakery items.

Why it matters

Product innovation is a top priority for the new CEO to regain customers and market share.

I look forward to share more details when we have the new product ready sometime later in the year.

Q&A highlights

What are the key strategic priorities for Tims China to achieve profitability, and what is the timeline for implementation?

CEO John Cheung outlined three top priorities: raising the game in product innovation (core products, new items, coffee offerings), improving store economics (efficiency in rent, labor, food costs, closing underperforming stores), and building capabilities in innovation, marketing, operations, and business development. He stated that all cylinders are firing but could not provide a specific timeline for results.

“Our top priority is to raise our game in innovation to offer more competitive products and experience to our customers.”

asked by Steven Silver · answered by Kwok Wah Cheung

2 min read 5 chapters

Detailed narrative

Strategic Shift Under New CEO

John Cheung, the new CEO, emphasized a period of transition and a focus on business fundamentals to regain and attract customers. His framework includes accelerating product innovation, strengthening marketing, enhancing operational excellence, and disciplined store network development. He highlighted the imperative to raise the company's game to win back customers and gain new users through superior products, offerings, and experience.

Product Innovation and Quality Focus

The company is prioritizing product innovation based on thorough consumer understanding and insight. Efforts include improving core products like bagels and lattes, introducing new items such as Melt and other bakery products for afternoon dayparts, and working with coffee bean suppliers to optimize coffee taste for Chinese consumers. The goal is to offer superior products and experiences to differentiate from competitors.

Operational Efficiency and Store Economics

Tims China is committed to improving store economics through continued efficiency efforts across rent, labor, and food product costs. This involves negotiating permanent rent concessions with landlords and strategically closing underperforming stores, an initiative that commenced prior to the new CEO's arrival. These measures aim to set a foundation for long-term sustainable growth and enhance store-level profitability.

Disciplined Store Network Expansion

The company plans to expand its store footprint with discipline, focusing on top-tier cities and specific high-traffic trade zones. These include office work areas, major transportation hubs, airports, and universities, where traffic data allows for more accurate sales projections. The future store mix aims for a more balanced approach, with both company-owned and franchised stores contributing roughly equally to the new network.

Investment in Capabilities and Technology

To enable its strategic priorities, Tims China is investing in strengthening capabilities across innovation, marketing, operations, and business development. The company also plans to leverage technology, particularly AI, to increase efficiency in areas such as inventory management, labor shift planning, marketing material production, and personalized member communications. This technological adoption is expected to drive productivity gains.

AI-generated summary of the company's earnings call. Not investment advice.