Bay Street News

Tims China Announces First Quarter 2024 Financial Results

Resilient Total Revenues Increased 3.1% Year over Year for the First Quarter 2024

System Sales Increased 7.1% Year-over-Year for the First Quarter 2024

Continuous Margin Improvement with Seven Consecutive Positive Quarterly Adjusted Store EBITDA

20.3 Million Registered Loyalty Club Members at Quarter-End,
Representing 63.6% Year-over-Year Growth

SHANGHAI and NEW YORK, June 05, 2024 (GLOBE NEWSWIRE) — TH International Limited (Nasdaq: THCH), the exclusive operator of Tim Hortons coffee shops and Popeyes restaurants in China (“Tims China” or the “Company”) today announced its unaudited financial results for the first quarter 2024.

FIRST QUARTER 2024 HIGHLIGHTS

_________________________

1 System sales is calculated as the gross merchandise value of sales generated from both company owned and operated stores and franchised stores.
2 Adjusted store EBITDA is calculated as fully burdened gross profit4 of company owned and operated stores excluding depreciation & amortization and store pre-opening expenses.
3 Adjusted store EBITDA margin is calculated as adjusted store EBITDA as a percentage of revenues from company owned and operated stores.
4 Fully burdened gross profit of company owned and operated stores, the most comparable GAAP measure to adjusted store EBITDA, was a loss of RMB33.4 million (USD4.6 million) for the three months ended March 31, 2024, compared to a loss of RMB35.9 million in the same quarter of 2023.

COMPANY MANAGEMENT STATEMENT

Mr. Yongchen Lu, CEO & Director of Tims China, commented, “In Q1 2024, our system sales grew by 7.1%, and we continued to improve our bottom-line performance, marching towards achieving our first quarterly adjusted corporate EBITDA breakeven this year. Our registered loyalty club membership exceeded 20 million as of March 31, 2024, a 63.6% year-over-year growth, serving both as a pivotal catalyst for growth and a testament to our customers’ support and embrace of Tims China’s loyalty program.

Continuous product innovation remains a cornerstone of our strategic vision; we launched 14 new beverages and 18 new food products during the quarter. We just celebrated the meaningful milestones of our 5th anniversary in China as well as the 60th anniversary of the “Tim Hortons” brand in February. To commemorate both remarkable milestones and double celebrations, Tims China launched its Chinese version of “Double Double” latte series. Our collaborations with Tangle Angel and Dove Chocolate have also achieved significant success during the quarter.”

Mr. Lu added, “Our Popeyes brand maintains its robust growth trajectory. So far, we have successfully launched 14 Popeyes restaurants and are actively expanding our product offerings beyond the core fried chicken products. Our restaurants represent a solid base for further growth in Shanghai and beyond.”

Mr. Dong (Albert) Li, CFO of Tims China, commented, “During the first quarter of 2024, and in the face of headwinds, we continued to enhance our operational efficiency. We pared back costs at the headquarter level, and we pruned our underperforming stores. These actions allowed us to deliver year-over-year reductions in food and packaging costs, rental expenses, and labor costs (as a percentage of revenues from company owned and operated stores) by 1.0 percentage points, 0.9 percentage points, and 1.3 percentage points, respectively. Our adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points year-over-year.”

Mr. Li continued, “Going forward, and with driving profitable, and capital-efficient growth being front and center of everything we do, we will continue to optimize our store unit economics, roll out our differentiating made-to-order fresh food preparation model to drive traffic, enhance our supply chain capabilities and efficiencies, and facilitate our franchisees to manage the growth and profitability of their stores effectively.”

FIRST QUARTER 2024 FINANCIAL RESULTS

Total revenues reached RMB346.8 million (USD48.0 million) for the three months ended March 31, 2024, representing an increase of 3.1% from RMB336.5 million in the same quarter of 2023. Total revenues comprise:

Company owned and operated store costs and expenses were RMB334.1 million (USD46.3 million) for the three months ended March 31, 2024, representing a decrease of 0.7% from RMB336.5 million in the same quarter of 2023. Company owned and operated store costs and expenses comprise:

Costs for other revenues were RMB25.0 million (USD3.5 million) for the three months ended March 31, 2024, representing an increase of 32.6% from RMB18.9 million in the same quarter of 2023, which was primarily driven by an increase in the number of franchised stores from 97 as of March 31, 2023 to 302 as of March 31, 2024. Costs for other revenues as a percentage of other revenues decreased by 2.6 percentage points from 72.5% in the first quarter of 2023 to 69.9% in the same quarter of 2024 due to higher margin contribution from our franchised business being realized during the first quarter of 2024.

Marketing expenses were RMB20.7 million (USD2.9 million) for the three months ended March 31, 2024, representing an increase of 13.4% from RMB18.3 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Marketing expenses as a percentage of total revenues increased by 0.6 percentage points from 5.4% in the first quarter of 2023 to 6.0% in the same quarter of 2024.

General and administrative expenses were RMB58.7 million (USD8.1 million) for the three months ended March 31, 2024, representing a decrease of 16.9% from RMB70.6 million in the same quarter of 2023, which was primarily due to a reduction of our headquarter headcount. Adjusted general and administrative expenses, which excludes share-based compensation expenses of RMB1.0 million (USD0.1 million), and impairment losses of rental deposits of RMB2.5 million (USD0.3 million), were RMB55.2 million (USD7.6 million), representing a decrease of 18.1% from RMB67.5 million in the same quarter of 2023. Adjusted general and administrative expenses as a percentage of total revenues decreased by 4.1 percentage points from 20.0% in the first quarter of 2023 to 15.9% in the same quarter of 2024. For more information on the Company’s non-GAAP financial measures, please see the section “Use of 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 RMB14.1 million (USD2.0 million) for the three months ended March 31, 2024, representing an increase of 18.7% from RMB11.9 million in the same quarter of 2023, which was primarily driven by the increase in the number of our system-wide stores from 648 as of March 31, 2023 to 917 as of March 31, 2024. Franchise and royalty expenses as a percentage of total revenues increased by 0.6 percentage points, from 3.5% in the first quarter of 2023 to 4.1% in the same quarter of 2024.

Impairment losses of long-lived assets were RMB19.0 million (USD2.6 million) for the three months ended March 31, 2024, compared to RMB4.4 million in the same quarter of 2023, which was primarily because of planned closings of underperforming company owned and operated stores.

As a result of the foregoing, operating loss was RMB129.4 million (USD17.9 million) for the three months ended March 31, 2024, compared to RMB130.4 million in the same quarter of 2023.

Adjusted Corporate EBITDA was a loss of RMB53.6 million (USD7.4 million) for the three months ended March 31, 2024, compared to a loss of RMB74.6 million in the same quarter of 2023. Adjusted Corporate EBITDA margin was negative 15.4% in the first quarter of 2024, representing an improvement of 6.8 percentage points from negative 22.2% in the same quarter of 2023.

Net loss was RMB142.8 million (USD19.8 million) for the three months ended March 31, 2024, compared to RMB174.5 million for the same quarter of 2023. Adjusted net loss was RMB97.8 million (USD13.6 million) for the three months ended March 31, 2024, compared to RMB117.1 million for the same quarter of 2023. Adjusted net loss margin was negative 28.2% in the first quarter of 2024, representing an improvement of 6.6 percentage points from negative 34.8% in the same quarter of 2023.

Basic and diluted net loss per ordinary share was RMB0.90 (USD0.12) in the first quarter of 2024, compared to RMB1.25 in the same quarter of 2023. Adjusted basic and diluted net loss per ordinary share was RMB0.62 (USD0.10) in the first quarter of 2024, compared to RMB0.84 in the same quarter of 2023.

Liquidity

As of March 31, 2024, the Company’s total cash and cash equivalents and time deposits were RMB218.2 million (USD30.2 million), compared to RMB220.8 million as of December 31, 2023. The change was primarily attributable to the cash disbursements on the back of the expansion of our business and store network nationwide, repayment of bank borrowings, offset by the US$20.0 million junior promissory notes financing provided by Cartesian Capital Group, our existing shareholder.

KEY OPERATING DATA

  For the three months ended or as of    
    Mar 31,   Jun 30,   Sep 30,   Dec 31,   Mar 31,
  2023   2023   2023   2023   2024
                     
Total stores   648     700     763     912     917  
Company owned and operated stores   551     571     589     629     615  
Franchised stores   97     129     174     283     302  
Same-store sales growth for system-wide stores   7.5 %   19.9 %   0.1 %   2.6 %   -13.6 %
Same-store sales growth for company owned and operated stores   8.0 %   20.4 %   -0.4 %   2.5 %   -11.7 %
Registered loyalty club members (in thousands)   12,386     14,721     16,898     18,714     20,264  
Adjusted store EBITDA (Renminbi in thousands)   6,002     18,244     29,310     15,859     6,124  
Adjusted store EBITDA margin   1.9 %   5.0 %   7.5 %   4.6 %   2.0 %
                               

KEY DEFINITIONS

USE OF NON-GAAP FINANCIAL MEASURES

The Company uses non-GAAP financial measures, namely adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share in evaluating its operating results and for financial and operational decision-making purposes. The Company defines (i) adjusted store EBITDA as fully burdened gross profit of company owned and operated stores excluding depreciation and amortization, and store pre-opening expenses; (ii) adjusted store EBITDA margin as adjusted store EBITDA as a percentage of revenues from company owned and operated stores; (iii) adjusted general and administrative expenses as general and administrative expenses excluding share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, and expenses related to the Option Shares, and professional fees related to warrant exchange and other financing programs; (iv) adjusted corporate EBITDA as operating loss excluding store pre-opening expenses, and certain non-cash expenses consisting of depreciation and amortization, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, and loss on disposal of property and equipment; (v) adjusted corporate EBITDA margin as adjusted corporate EBITDA as a percentage of total revenues; (vi) adjusted net loss as net loss excluding store pre-opening expenses, share-based compensation expenses, expenses related to the Commitment Shares, the ESA Offering Costs, expenses related to the Option Shares, professional fees related to warrant exchange and other financing programs, impairment losses of long-lived assets, loss on disposal of property and equipment, changes in fair value of convertible notes, changes in fair value of warrant liabilities; and changes in fair value of ESA derivative liabilities; (vii) adjusted net loss margin as adjusted net loss as a percentage of total revenues; and (viii) adjusted basic and diluted net loss per ordinary share as adjusted net loss attributable to the Company’s ordinary shareholders divided by weighted-average number of basic and diluted ordinary share. The Company believes adjusted store EBITDA, adjusted store EBITDA margin, adjusted general and administrative expenses, adjusted corporate EBITDA, adjusted corporate EBITDA margin, adjusted net loss, adjusted net loss margin, and adjusted basic and diluted net loss per ordinary share enhance investors’ overall understanding of its financial performance and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

These non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. As these non-GAAP financial measures have limitations as analytical tools and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliation of Non-GAAP Measures to the Most Directly Comparable GAAP Measures.” The Company encourages investors and others to review its financial information in its entirety and not rely on any single financial measure.

EXCHANGE RATE INFORMATION

This earnings release contains translations of certain RMB amounts into U.S. dollars (“USD”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to USD were made at the rate of RMB7.2203 to USD1.00, the exchange rate in effect on March 29, 2024 set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or USD amounts referred could be converted into USD or RMB, as the case may be, at any particular rate or at all.

CONFERENCE CALL

The Company will hold a conference call today, on Wednesday, June 5, 2024, at 8:00 am Eastern Time (on Wednesday, June 5, 2024, at 8:00 pm Beijing Time) to discuss the financial results.

Participants are strongly encouraged to pre-register for the conference call, by using the weblink provided below.

https://register.vevent.com/register/BI94870283e9124554bcb820c11f01f505

Participants may also view the live webcast by registering through below weblink:

https://edge.media-server.com/mmc/p/srctfy6e

The webcast features a ‘Submit Your Question’ tab at the top, where you will have the opportunity to submit your questions before and during the call.

A live and archived webcast of the conference call will also be available at the Company’s Investor Relations website at https://ir.timschina.com under “Events and Presentations”.

FORWARD-LOOKING STATEMENTS

Certain statements in this earnings release may be considered forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, such as the Company’s ability to further grow its business and store network, optimize its cost structure, improve its operational efficiency, and achieve profitable growth. Forward-looking statements are statements that are not historical facts and generally relate to future events or the Company’s future financial or other performance metrics. In some cases, you can identify forward-looking statements by terminology such as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those expressed or implied by such forward looking statements. New risks and uncertainties may emerge from time to time, and it is not possible to predict all risks and uncertainties. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by the Company and its management, as the case may be, are inherently uncertain and subject to material change. Factors that may cause actual results to differ materially from current expectations include various factors beyond management’s control, including, but not limited to, general economic conditions and other risks, uncertainties and factors set forth in the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 20-F, and other filings it makes with the Securities and Exchange Commission. Nothing in this communication should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements in this communication, which speak only as of the date they are made and are qualified in their entirety by reference to the cautionary statements herein. Except as required by law, the Company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with respect thereto or any change in events, conditions, or circumstances on which any statement is based.

ABOUT TH INTERNATIONAL LIMITED

TH International Limited (Nasdaq: THCH) (“Tims China”) is the parent company of the exclusive master franchisees of Tim Hortons coffee shops in mainland China, Hong Kong and Macau and Popeyes restaurants in mainland China and Macau. Tims China was founded by Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (TSX: QSR) (NYSE: QSR).

The Company’s philosophy is rooted in world-class execution and data-driven decision making and centered around true local relevance, continuous innovation, genuine community, and absolute convenience. For more information, please visit https://www.timschina.com.

INVESTOR AND MEDIA CONTACTS

Investor Relations

Gemma Bakx
IR@timschina.com, or gemma.bakx@cartesiangroup.com

Public and Media Relations

Patty Yu
Patty.Yu@timschina.com

TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of RMB and US$, except for number of shares)
             
    As of
    December 31,
2023
  March 31, 2024
(Unaudited)
    RMB   RMB   US$
             
ASSETS            
Current assets:            
Cash and cash equivalents   203,587     196,890     27,269  
Time deposits   17,165     21,285     2,948  
Accounts receivable, net   27,562     27,703     3,837  
Inventories   50,719     40,252     5,575  
Prepaid expenses and other current assets   159,587     164,645     22,803  
Total current assets   458,620     450,775     62,432  
             
Non-current assets:            
Property and equipment, net   691,876     640,123     88,656  
Intangible assets, net   147,448     145,747     20,186  
Operating lease right-of-use assets   849,079     737,614     102,158  
Other non-current assets   68,416     65,172     9,026  
Total non-current assets   1,756,819     1,588,656     220,026  
Total assets   2,215,439     2,039,431     282,458  
             
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Current liabilities:            
Bank borrowings, current   538,233     422,641     58,535  
Accounts payable   224,849     256,046     35,462  
Contract liabilities   40,715     43,238     5,988  
Amount due to related parties   53,004     208,933     28,937  
Operating lease liabilities   200,878     205,103     28,406  
Other current liabilities   338,154     319,829     44,297  
Total current liabilities   1,395,833     1,455,790     201,625  
             
Non-current liabilities:            
Bank borrowings, non-current   5,266     2,890     400  
Convertible notes, at fair value   420,712     435,633     60,334  
Contract liabilities   5,272     5,051     700  
Amount due to related parties   94,200     96,492     13,364  
Operating lease liabilities   707,689     602,500     83,445  
Other non-current liabilities   8,896     8,447     1,170  
Total non-current liabilities   1,242,035     1,151,013     159,413  
Total liabilities   2,637,868     2,606,803     361,038  
             
Shareholders’ equity:            
Ordinary shares   10     10     1  
Additional paid-in capital   1,807,715     1,812,164     250,982  
Accumulated losses   (2,256,424 )   (2,400,468 )   (332,461 )
Accumulated other comprehensive income   21,492     14,928     2,068  
Treasury shares            
Total (deficit) equity attributable to shareholders of the Company   (427,207 )   (573,366 )   (79,410 )
Non-controlling interests   4,778     5,994     830  
Total shareholders’ (deficit) equity   (422,429 )   (567,372 )   (78,580 )
             
Commitments and Contingencies            
             
Total liabilities and shareholders’ equity (deficit)   2,215,439     2,039,431     282,458  
             
             
TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME/(LOSS)
(Amounts in thousands of RMB and US$, except for per share data)
             
    For the three months ended March 31,
    2023   2024
    RMB   RMB   US$
Revenues:            
Company owned and operated stores   310,451     311,037     43,078  
Other revenues   26,028     35,778     4,955  
Total revenues   336,479     346,815     48,033  
             
Costs and expenses, net:            
Company owned and operated stores            
Food and packaging   111,326     108,523     15,030  
Rental and property management fee   71,410     68,586     9,499  
Payroll and employee benefits   72,960     69,038     9,562  
Delivery costs   22,782     28,637     3,966  
Other operating expenses   25,088     25,329     3,508  
Store depreciation and amortization   32,974     34,021     4,712  
Company owned and operated store costs and expenses   336,540     334,134     46,277  
             
Costs of other revenues   18,868     25,024     3,466  
Marketing expenses   18,303     20,748     2,874  
General and administrative expenses   70,620     58,698     8,128  
Franchise and royalty expenses   11,905     14,132     1,957  
Other operating costs and expenses   5,572     4,183     579  
Loss on disposal of property and equipment   896     2,004     278  
Impairment losses of long-lived assets   4,418     18,965     2,627  
Other income   226     1,675     232  
Total costs and expenses, net   466,896     476,213     65,954  
             
Operating loss   (130,417 )   (129,398 )   (17,921 )
             
Interest income   2,023     992     137  
Interest expenses   (4,336 )   (5,591 )   (774 )
Foreign currency transaction loss   (1,788 )   3,950     547  
Changes in fair value of Deferred Contingent consideration       (2,130 )   (295 )
Changes in fair value of convertible notes   (14,272 )   (10,651 )   (1,475 )
Changes in fair value of warrant liabilities   (58,184 )        
Changes in fair value of ESA derivative liabilities   32,523          
             
Loss before income taxes   (174,451 )   (142,828 )   (19,781 )
Income tax expenses            
Net loss   (174,451 )   (142,828 )   (19,781 )
             
Less: Net (income) loss attributable to non-controlling interests   433     1,217     169  
Net Loss attributable to shareholders of the Company   (174,884 )   (144,045 )   (19,950 )
Basic and diluted loss per Ordinary Share   (1.25 )   (0.90 )   (0.12 )
             
Net loss   (174,451 )   (142,828 )   (19,781 )
             
Other comprehensive income (loss)            
Unrealized gain on short-term investment, net of nil income taxes   700          
Fair value changes of convertible notes due to instrument-specific credit risk, net of nil income taxes   (2,607 )   (3,550 )   (492 )
Foreign currency translation adjustment, net of nil income taxes   1,029     (3,033 )   (420 )
             
Total comprehensive loss   (175,329 )   (149,411 )   (20,693 )
             
Less: Comprehensive loss attributable to non- controlling interests   433     1,217     169  
Comprehensive loss attributable to shareholders of the Company   (175,762 )   (150,628 )   (20,862 )
             
TH INTERNATIONAL LIMITED AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of RMB and US$)
             
    For the three months ended March 31,
    2023   2024
    RMB   RMB   US$
Net cash used in operating activities   (85,360 )   (26,746 )   (3,704 )
Net cash provided by/(used in) investing activities   50,238     (7,264 )   (1,006 )
Net cash provided by financing activities   163,983     25,975     3,597  
Effect of foreign currency exchange rate changes on cash   (3,368 )   1,338     185  
Net increase/(decrease) in cash   125,493     (6,697 )   (928 )
Cash at beginning of the period   239,077     203,587     28,196  
Cash at end of the period   364,570     196,890     27,268  
             
                 
TH INTERNATIONAL LIMITED AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP MEASURES
(Unaudited, amounts in thousands of RMB and US$, except for number of shares and per share data)
                 
A. Adjusted store EBITDA and adjusted store EBITDA margin            
                 
    For the three months ended March 31, 2024
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Revenues – company owned and operated stores   296,375     14,662     311,037     43,078  
Food and packaging costs – company owned and operated stores   (102,709 )   (5,814 )   (108,523 )   (15,030 )
Rental expenses – company owned and operated stores   (64,608 )   (3,978 )   (68,586 )   (9,499 )
Payroll and employee benefits – company owned and operated stores   (65,179 )   (3,859 )   (69,038 )   (9,562 )
Delivery costs – company owned and operated stores   (27,534 )   (1,103 )   (28,637 )   (3,966 )
Other operating expenses – company owned and operated stores   (24,217 )   (1,112 )   (25,329 )   (3,508 )
Store depreciation and amortization   (33,227 )   (794 )   (34,021 )   (4,712 )
Franchise and royalty expenses – company owned and operated stores   (9,839 )   (455 )   (10,294 )   (1,426 )
Fully-burdened gross loss – company owned and operated stores   (30,938 )   (2,453 )   (33,391 )   (4,625 )
Store depreciation and amortization   33,227     794     34,021     4,712  
Store pre-opening expenses   4,952     542     5,494     761  
Adjusted Store EBITDA   7,241     (1,117 )   6,124     848  
Adjusted Store EBITDA Margin   2.4 %   -7.6 %   2.0 %   2.0 %
                 
    For the three months ended March 31, 2023
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Revenues – company owned and operated stores   310,451         310,451     45,205  
Food and packaging costs – company owned and operated stores   (111,326 )       (111,326 )   (16,210 )
Rental expenses – company owned and operated stores   (71,410 )       (71,410 )   (10,398 )
Payroll and employee benefits – company owned and operated stores   (72,960 )       (72,960 )   (10,624 )
Delivery costs – company owned and operated stores   (22,782 )       (22,782 )   (3,318 )
Other operating expenses – company owned and operated stores   (25,088 )       (25,088 )   (3,653 )
Store depreciation and amortization   (32,974 )       (32,974 )   (4,801 )
Franchise and royalty expenses – company owned and operated stores   (9,823 )       (9,823 )   (1,430 )
Fully-burdened gross loss – company owned and operated stores   (35,912 )       (35,912 )   (5,229 )
Store depreciation and amortization   32,974         32,974     4,801  
Store pre-opening expenses   8,940         8,940     1,302  
Adjusted Store EBITDA   6,002         6,002     874  
Adjusted Store EBITDA Margin   1.9 %       1.9 %   1.9 %
                 
B. Adjusted general and administrative expenses            
    For the three months ended March 31, 2024
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
General and administrative expenses   (54,467 )   (4,231 )   (58,698 )   (8,128 )
Adjusted for:                
Share-based compensation expenses   1,014         1,014     140  
Impairment losses of rental deposits   2,457         2,457     340  
Adjusted General and administrative expenses   (50,996 )   (4,231 )   (55,227 )   (7,648 )
Adjusted General and administrative expenses as a % of total revenue   15.4 %   28.8 %   15.9 %   15.9 %
                 
    For the three months ended March 31, 2023
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
General and administrative expenses   (70,620 )       (70,620 )   (10,286 )
Adjusted for:                
Share-based compensation expenses   3,161         3,161     460  
Adjusted General and administrative expenses   (67,459 )       (67,459 )   (9,826 )
Adjusted General and administrative expenses as a % of total revenue   20.0 %       20.0 %   20.0 %
                 
C. Adjusted corporate EBITDA and adjusted corporate EBITDA margin            
                 
    For the three months ended March 31, 2024
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Operating loss   (121,262 )   (8,136 )   (129,398 )   (17,921 )
Adjusted for:                
Store pre-opening expenses   4,952     542     5,494     761  
Depreciation and amortization   42,225     1,415     43,640     6,044  
Share-based compensation expenses   1,014         1,014     140  
Impairment losses of rental deposits   2,457         2,457     340  
One-off expense of store closure   2,265         2,265     314  
Impairment losses of long-lived assets   18,965         18,965     2,627  
Loss on disposal of property and equipment   2,004         2,004     278  
Adjusted Corporate EBITDA   (47,380 )   (6,179 )   (53,559 )   (7,417 )
Adjusted Corporate EBITDA Margin   -14.3 %   -42.1 %   -15.4 %   -15.4 %
                 
    For the three months ended March 31, 2023
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Operating loss   (130,417 )       (130,417 )   (18,992 )
Adjusted for:                
Store pre-opening expenses   8,940         8,940     1,302  
Depreciation and amortization   38,357         38,357     5,585  
Share-based compensation expenses   3,161         3,161     460  
Impairment losses of long-lived assets   4,418         4,418     643  
Loss on disposal of property and equipment   896         896     130  
Adjusted Corporate EBITDA   (74,645 )       (74,645 )   (10,872 )
Adjusted Corporate EBITDA Margin   -22.2 %       -22.2 %   -22.2 %
                 
D. Adjusted net loss and adjusted net loss margin            
                 
    For the three months ended March 31, 2024
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Net loss   (134,689 )   (8,139 )   (142,828 )   (19,781 )
Adjusted for:                
Store pre-opening expenses   4,952     542     5,494     761  
Share-based compensation expenses   1,014         1,014     140  
Impairment losses of long-lived assets   18,965         18,965     2,627  
Impairment losses of rental deposits   2,457         2,457     340  
One-off expense of store closure   2,265         2,265     314  
Loss on disposal of property and equipment   2,004         2,004     278  
Changes in fair value of Deferred Contingent consideration   2,130         2,130     295  
Changes in fair value of convertible notes   10,651         10,651     1,475  
Adjusted Net loss   (90,251 )   (7,597 )   (97,848 )   (13,551 )
Adjusted Net loss Margin   -27.2 %   -51.8 %   -28.2 %   -28.2 %
                 
    For the three months ended March 31, 2023
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Net loss   (174,451 )       (174,451 )   (25,402 )
Adjusted for:                
Store pre-opening expenses   8,940         8,940     1,302  
Share-based compensation expenses   3,161         3,161     460  
Impairment losses of long-lived assets   4,418         4,418     643  
Loss on disposal of property and equipment   896         896     130  
Changes in fair value of convertible notes   14,272         14,272     2,078  
Changes in fair value of warrant liabilities   58,184         58,184     8,472  
Changes in fair value of ESA derivative liabilities   (32,523 )       (32,523 )   (4,736 )
Adjusted Net loss   (117,103 )       (117,103 )   (17,053 )
Adjusted Net loss Margin   -34.8 %       -34.8 %   -34.8 %
                 
E. Adjusted basic and diluted net loss per Ordinary Share            
                 
    For the three months ended March 31, 2024
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Net Loss attributable to shareholders of the Company   (135,906 )   (8,139 )   (144,045 )   (19,950 )
Adjusted for:                
Store pre-opening expenses   4,952     542     5,494     761  
Share-based compensation expenses   1,014         1,014     140  
Impairment losses of long-lived assets   18,965         18,965     2,627  
Impairment losses of rental deposits   2,457         2,457     340  
One-off expense of store closure   2,265         2,265     314  
Loss on disposal of property and equipment   2,004         2,004     278  
Changes in fair value of Deferred Contingent consideration   2,130         2,130     295  
Changes in fair value of convertible notes   10,651         10,651     1,475  
Adjusted Net loss attributable to shareholders of the Company   (91,468 )   (7,597 )   (99,065 )   (13,720 )
Weighted average shares outstanding used in calculating basic and diluted loss per share   160,633,868     160,633,868     160,633,868 160,633,868  
Adjusted basic and diluted net loss per Ordinary Share   (0.57 )   (0.05 )   (0.62 )   (0.09 )
                 
    For the three months ended March 31, 2023
    Tims   Popeyes   Total
    RMB   RMB   RMB   US$
Net Loss attributable to shareholders of the Company   (174,884 )       (174,884 )   (25,465 )
Adjusted for:                
Store pre-opening expenses   8,940         8,940     1,302  
Share-based compensation expenses   3,161         3,161     460  
Impairment losses of long-lived assets   4,418         4,418     643  
Loss on disposal of property and equipment   896         896     130  
Changes in fair value of convertible notes   14,272         14,272     2,078  
Changes in fair value of warrant liabilities   58,184         58,184     8,472  
Changes in fair value of ESA derivative liabilities   (32,523 )       (32,523 )   (4,736 )
Adjusted Net loss attributable to shareholders of the Company   (117,536 )       (117,536 )   (17,116 )
Weighted average shares outstanding used in calculating basic and diluted loss per share   139,612,628         139,612,628 139,612,628  
Adjusted basic and diluted net loss per Ordinary Share   (0.84 )       (0.84 )   (0.12 )
                 


Bay Street News