This article first appeared on GuruFocus .
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Revenue:Total revenues dropped by 14.6% year-over-year.
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System Sales:Decreased by 14.2% year-over-year.
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Same-Store Sales Growth:Negative 13.2% for the system.
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Store Contribution Margin:Nearly 15% for 2024 vintage-year stores in 2025, lower 10s in Q1 2026.
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Store Locations:Decreased from 569 as of March 31, 2025, to 541 as of March 31, 2026.
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Franchise Applications:Over 10,500 applications received, over 440 stores signed up, nearly 260 stores opened by end of March 2026.
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Other Revenues:Increased by 7.7% year-over-year.
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Profits from Other Revenues:Achieved a year-over-year growth of 14%.
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Digital Orders:Increased to 87.5% of total orders in Q1 2026 from 86.3% in Q1 2025.
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Food and Packaging Costs:Reduced by 2.0 percentage points to 28.4% of revenues in Q1 2026.
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Rental and Property Management Fees:RMB47.2 million, decreased by 16.2% year-over-year.
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Payroll and Employee Benefits:RMB44.8 million, decreased by 10.4% year-over-year.
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Marketing Expenses:RMB9.8 million, decreased by 43.7% year-over-year.
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Adjusted General and Administrative Expenses:RMB43.4 million, decreased by 7.9% year-over-year.
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Adjusted Corporate EBITDA Margin:Negative 11.8% in Q1 2026.
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Cash and Cash Equivalents:RMB111.4 million as of March 31, 2026.
Release Date: June 09, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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TH International Ltd ( NASDAQ:THCH ) has successfully launched its 2026 nationwide franchise load-share program, attracting over 10,500 applications and signing up over 440 stores, showcasing strong market confidence in its franchise model.
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The company has seen strong performance from its 2024 and 2025 vintage stores, with store contribution margins reaching nearly 15% in 2025 and expected payback periods within two to three years.
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TH International Ltd ( NASDAQ:THCH ) has expanded its presence across diversified locations, including transportation hubs and university campuses, enhancing brand penetration and consumer reach.
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The company has introduced upgraded franchise support policies, including multi-store incentives and high revenue rebates, to attract high-quality partners and lay a foundation for long-term scalable expansion.
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Digital orders as a percentage of total orders increased to 87.5% in Q1 2026, reflecting enhanced digital capabilities and growing demand for delivery and takeaway services.
Negative Points
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TH International Ltd ( NASDAQ:THCH ) experienced a 14.6% year-over-year drop in total revenues and a 14.2% decrease in system sales, primarily due to the closure of underperforming stores and a decline in same-store sales growth.
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Same-store sales growth faced pressure, with an overall comparable transaction decline of 8.3% and average comparable ticket size decline of 4.8%, leading to a negative 13.2% same-store sales growth.
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The company faced increased competition from tea players entering the coffee business with lower-priced offerings, potentially impacting its business strategy.
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Rental and property management fees as a percentage of revenues from company-owned and operated stores increased by 0.7 percentage points, indicating higher costs relative to revenue.
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Adjusted corporate EBITDA margin was negative 11.8% in Q1 2026, compared to negative 9.8% in the same quarter of 2025, highlighting ongoing financial challenges.
Q & A Highlights
Q: Can you discuss your current thinking on the same-store sales growth for the rest of 2026, considering the aggressive delivery aggregator subsidies since Q2 of last year? A: Yongchen Lu, CEO, stated that same-store sales have been recovering well recently, especially after launching several marketing campaigns. He expects better same-store sales in the second quarter and for the rest of the year.
Q: What are your expectations on store margin profiles moving forward, given the strong performance of 2024 and 2025 stores and special channel stores? A: Albert Li, CFO, explained that they expect the margin profile to improve gradually. With the recovery in same-store sales, higher revenues at the store level are anticipated. The company is also optimizing underperforming stores and expects higher-margin stores to take a larger revenue share. Additionally, supply chain optimization and launching higher-margin products will help improve gross margins.
Q: Could you talk about the current competitive landscape, especially with tea players entering the coffee business with lower-priced offerings? A: Yongchen Lu, CEO, acknowledged the aggressive entry of tea players into the coffee sector but emphasized TH International's differentiation by offering coffee plus freshly prepared food, setting them apart from both coffee and tea competitors.
Q: How do you plan to address the high rent costs associated with early vintage stores? A: Yongchen Lu, CEO, noted that early vintage stores had high rent costs due to larger formats for brand building. However, newer stores have more reasonable rents and higher store-level contribution margins. The new CEO, John Chen, is expected to further improve sales and store contribution margins.
Q: What are your near-term priorities for the company? A: Albert Li, CFO, outlined priorities including delivering sustainable revenue growth, enhancing supply chain capabilities, expanding store-level profitability, optimizing cost structure, accelerating sub-franchising expansion, and achieving EBITDA breakeven.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
