TH International Ltd (THCH) 2024 Q3 法說會逐字稿

Ladies and gentlemen, welcome to Tims China's Third Quarter 2024 Earnings Conference Call.

女士們，先生們，歡迎參加Tims China 2024年第三季財報電話會議。

(Operator instructions).

（操作員指令）。

I would like to turn the call over to Gemma Bakx who heads Tims China's investor relations efforts for prepared remarks and introductions. Please go-ahead, Gemma.

我想將電話轉給 Tims 中國投資者關係部負責人 Gemma Bakx，請她發表準備好的演講和介紹。請繼續，傑瑪。

Thank you. Good morning and good evening, everyone and thank you for joining us on today's call.

謝謝。大家早安，晚上好，感謝大家參加今天的電話會議。

My name is Gemma Bakx. I'm Head of Investor Relations. Tims China announced its third quarter 2024 financial results earlier today. The press release as well as an accompanying presentation, which contains operational and financial highlights, are now available on the company's IR website at ir.timschina.com.

我的名字是 Gemma Bakx。我是投資人關係主管。Tims中國今天稍早公佈了其2024年第三季財務業績。該新聞稿以及包含營運和財務亮點的隨附簡報現已在該公司的 IR 網站 ir.timschina.com 上發布。

Today, you will hear from Yongchen Lu, our CEO and Director and Albert Li, our CFO. After the company's prepared remarks, the management team will conduct a question-and-answer session. You can find the webcast of today's earnings call on our web IR website as well.

今天，您將聽到我們的執行長兼董事陸永晨和財務長李偉的發言。在公司準備好的發言後，管理團隊將進行問答環節。您也可以在我們的網路 IR 網站上找到今天的收益電話會議網路直播。

Before we get started, I'd like to remind you that our earnings presentation and investor materials contain forward-looking statements which are subject to future events and uncertainties, statements that are not historical facts, including but not limited to statements about the company's beliefs and expectations are forward-looking statements. These forward-looking statements involve inherent risks and uncertainties, and our actual results may differ materially from those forward-looking statements. All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and risk factors included in our filings with the SEC. This presentation also includes certain non-GAAP financial measures which we believe can be helpful in evaluating our performance. However, those measures should not be considered substitutes for the comparable GAAP measures. The accompanying reconciliation information related to those non-GAAP and GAAP measures can be found in our earnings press release issued earlier today. With that said, I'd like to turn it over to Yongchen Lu, our CEO and Director. Please go-ahead, Yongchen.

在我們開始之前，我想提醒您，我們的收益報告和投資者資料包含前瞻性陳述，這些陳述受未來事件和不確定性的影響，非歷史事實的陳述，包括但不限於有關公司信念和期望的陳述都是前瞻性陳述。這些前瞻性陳述涉及固有風險和不確定性，我們的實際結果可能與這些前瞻性陳述有重大差異。所有前瞻性陳述應與我們收益報告中的警示聲明以及我們向美國證券交易委員會提交的文件中包含的風險因素一起考慮。本報告也包括某些非 GAAP 財務指標，我們認為這些指標有助於評估我們的業績。然而，這些指標不應被視為可比較 GAAP 指標的替代品。在我們今天稍早發布的收益新聞稿中可以找到與這些非 GAAP 和 GAAP 指標相關的隨附對帳資訊。說了這麼多，我想把發言權交給我們的執行長兼董事陸永晨。請繼續，永辰。

Thank you, Gemma. Good morning and good evening, everyone.

謝謝你，傑瑪。大家早安，晚上好。

In the third quarter of 2024, we maintain Adjusted corporate EBITDA profitability despite the ongoing price competition in the Chinese coffee market. After achieving our first ever [Adjusted corporate EBITDA] probability in the second quarter of 2024, we are committed to focusing on a product differentiation and a product providing great value for our customers. We achieved our highest ever quarterly company owned and operated store contribution margin of 13.3%, previously disclosed as [Adjusted corporate EBITDA margin] and a year-over-year margin expansion of 5.8% points demonstrating our continuous efforts towards delivering further improvements in operational efficiencies and supply chain capabilities.

2024 年第三季度，儘管中國咖啡市場價格競爭持續，我們仍保持調整後企業 EBITDA 獲利能力。在 2024 年第二季實現首次 [調整後企業 EBITDA] 機率後，我們致力於專注於產品差異化和為客戶提供巨大價值的產品。我們實現了有史以來最高的季度公司自有和經營店貢獻利潤率 13.3%，之前披露為 [調整後企業 EBITDA 利潤率]，利潤率同比擴大 5.8 個百分點，這表明我們不斷努力進一步提高營運效率和供應鏈能力。

In line with our differentiated strategy of coffee plus warm food, we prioritize delivering freshly prepared, healthy, and high-quality products at affordable prices to our customers.

秉承「咖啡加熱食」的差異化策略，我們優先為顧客提供新鮮、健康、優質的產品和實惠的價格。

Our fresh prepared food, we have completed the made-to -order renovation of 539 new and existing stores by the end of October, adding working stations designed for efficient, fresh-and-handmade food preparation and open kitchens. With this investment, our guests can watch our staff craft fresh meals from start to finish, our healthy and high-quality product offerings. We launch low-sugar, high-fiber and plant-based options with a particular emphasis on freshness and the preservation of nutrition and the flavor of our high-quality ingredients. We also provide transparent nutrition and calories information our menu so that our guests can evaluate the health benefits of our products and make decisions easily. In order to make our healthy coffee plus bagels and bagel sandwich options accessible to broader audiences, our [ID] team launch bagel products with few than 400 calorie, limiting all (inaudible) bagels and (inaudible) bagel to fewer than 300 calories and promising Five-Zeros in all our beverage product offerings that is zero nondairy creamer, zero coffee whitener, zero hydro hydrogenated vegetable oil, zero trans fats and zero instant tea powder.

我們的新鮮烹調食品，截至10月底，我們已完成539家新店和現有門市的客製化改造，增加了高效、新鮮手工製作食品的工作站和開放式廚房。透過這項投資，我們的客人可以觀看我們的員工從頭到尾製作新鮮的餐點以及我們提供的健康和高品質的產品。我們推出低糖、高纖維和植物性食品，特別注重新新鮮和營養的保存以及優質原料的風味。我們還在菜單中提供透明的營養和卡路里信息，以便我們的客人可以評估我們產品的健康益處並輕鬆做出決定。為了讓更多人可以享用我們健康的咖啡、百吉餅和百吉餅三明治，我們的 [ID] 團隊推出了熱量少於 400 卡路里的百吉餅產品，將所有（聽不清）百吉餅和（聽不清楚）百吉餅的熱量限制在 300 卡路里以下，並承諾我們所有飲料產品均不含非乳製乳、增白劑、氫化咖啡粉、增白劑、氫油、增白劑。

On providing great value, we price our products competitively, especially our combos, our breakfast combos, 1 cup of coffee and then 1-1 items start only from [RMB] 14.9 and that's about $2. Our lunch combo starts at [RMB] 21.9. That's about not only $3.

在提供巨大價值方面，我們的產品定價極具競爭力，尤其是我們的套餐，我們的早餐套餐、1 杯咖啡以及 1-1 件商品起價僅為 [人民幣] 14.9 元，約合 2 美元。我們的午餐套餐起價為[人民幣] 21.9元。這不僅僅只是 3 美元。

In addition, we have launched the [B] card which our guests pay [RMB] 6.6 to get four times the right to buy drink, one drink and -- one food item. Each time at a 40% discount. Our guests can get much more than [RMB] 6.6 savings. Even for one-time usage, the cards have been a success with our guests. We sold over 120,000 cards in Q3. They have been a very effective tool to drive purchase frequency. Those who purchased a card demonstrate a 4.6 times increase in purchase frequency compared to those who did not purchase the card.

此外，我們還推出了[B]卡，客人只需支付[人民幣] 6.6 元，即可獲得四次購買飲料、一杯飲料和一份食品的權利。每次均可享40%折扣。我們的客人可以享受遠不止[人民幣]6.6元的優惠。即使僅使用一次，這些卡片也受到了我們客人的歡迎。我們在第三季銷售了超過 12 萬張卡片。它們是推動購買頻率的非常有效的工具。購買該卡的人與未購買該卡的人相比，購買頻率增加了4.6倍。

Moreover, our efforts have driven sales contributing to a total of [RMB] 7.6 million in revenue. During the third quarter of this year, we continue to deliver capital efficient growth, and we remain committed to offering absolute convenience for our guests. Our strategic partnership with sub franchisees is underpinning the expansion of our store network including our density in existing cities for quicker services and broadening our outreach into new cities to welcome new guests. We have generated strong momentum on individual Franchising since we launched the program. Late last year, we have received over 5,000 applications, opened 43 already, and signed additional 94. As of the end of September, we entered during the third quarter of 2024 including [Harbin] -- leverage our brand experience, leveraging our brand influence and the high-quality products, and the service we provide. Every time we open a new store in a new city, we have met with an enthusiastic welcome and support from our guests. For instance, our inaugural store in Harbin achieved over [RMB] 100,000 in sales during its first three business days, gathering considerable media attention by September 30th 2024. Our registered globally recover members have reached 22.8 million, reflecting a remarkable 35.3% year over year growth. The average number of members per store has now surpassed 24,000 serving as a strong catalyst for our future growth and clearly demonstrating our customers consistent support for teams China loyal programs. The ongoing support from our customers inspires our team to continue to deliver the best value for holiday products.

此外，我們的努力也推動了銷售，共貢獻了 760 萬元的收入。今年第三季度，我們繼續實現資本高效成長，並致力於為客人提供絕對的便利性。我們與經銷商的策略合作夥伴關係為我們的門市網路擴張奠定了基礎，包括增加現有城市的密度以提供更快的服務，以及擴大我們在新城市的覆蓋範圍以接待新客人。自從我們推出該計劃以來，我們在個人特許經營方面取得了強勁進展。去年底，我們收到了5000多份申請，已經開放了43份，另外簽署了94份。截至 9 月底，我們進入 2024 年第三季度，包括 [哈爾濱]——利用我們的品牌經驗、利用我們的品牌影響力和優質的產品以及我們提供的服務。每當我們在一個新城市開設新店時，我們都將受到客人的熱烈歡迎和支持。例如，我們在哈爾濱的首家店在開業後的前三個工作日就實現了超過 10 萬元人民幣的銷售額，到 2024 年 9 月 30 日引起了媒體的廣泛關注。我們的全球註冊會員已達2,280萬，年增35.3%。目前每家門市的平均會員數量已超過24,000名，這為我們未來的成長提供了強大的催化劑，也清楚地表明了我們的客戶對中國團隊忠誠度計畫的一貫支持。客戶的持續支持激勵著我們的團隊繼續提供最有價值的假日產品。

In Q3 2024 we introduced ten new beverages and nine new food items. We have been integrating more healthy ingredients into newly launched products alongside our principle of freshly handmade, our successful products not only resonate with current health-driven changes but also cater to the increasing self-care demands of our Chinese consumers. A [prime] example is the introduction of our [five-red] multigrain bagel and [five-black] multigrain bagels during the annual Tims Bagel Festival in September. These products merge teams signature [green] bagel concept with the principles of the traditional Chinese herbs. In recognition of our guests focus on a healthy lifestyle. We collaborate with mainland the panda mainland, a hugely popular panda star with its healthy green diet quickly proved to be an excellent mascot for us. Thanks to the innovative products and our eye-catching mascot. The 2024 Tims Bagel Festival gathered over 63 million media exposures. (inaudible) alone contributes 7 million exposures and sparked up 160% surge in user-generated content, compared to August. searches for Tims bagel nearly doubled in September, boosting Tims brand ranking within the coffee industry by one position.

2024 年第三季度，我們推出了十種新飲料和九種新食品。我們在堅持新鮮手工製作原則的同時，不斷將更多健康成分融入新推出的產品中，我們成功的產品不僅順應了當前健康驅動的變化，也滿足了中國消費者日益增長的自我保健需求。一個[主要]例子是，我們在每年 9 月的 Tims 百吉餅節期間推出的[五紅] 雜糧百吉餅和[五黑] 雜糧百吉餅。這些產品將團隊標誌性的[綠色]百吉餅概念與傳統中草藥的原理融為一體。表彰我們的客人注重健康的生活方式。我們與大熊貓大陸合作，它是一隻非常受歡迎的熊貓明星，其健康的綠色飲食很快就證明它是我們極好的吉祥物。感謝創新的產品和我們引人注目的吉祥物。2024 年 Tims Bagel Festival 的媒體曝光量超過 6,300 萬次。 （聽不清楚）光是這一點就貢獻了 700 萬次曝光，並引發了與 8 月相比 160% 的用戶生成內容激增。 9 月份，Tims bagel 的搜尋量幾乎翻了一番，使 Tims 品牌在咖啡產業的排名上升了一位。

At this time, I would like to turn over to our CFO Albert Li to discuss our third quarter financial performance in more detail. Albert.

現在，我想請我們的財務長 Albert Li 更詳細地討論我們第三季的財務表現。艾伯特。

Thank you, Yong Chen.

謝謝你，陳勇。

In the third quarter of 2024, we delivered Adjusted corporate EBITDA profitability. Again, we remain dedicated to enhancing our financial performance by refining our store unit economics and driving efficiencies at the corporate level. Concurrently, our rapidly growing sub franchising business continues to generate a steady stream of cash flows and profitability blustering our margins.

2024 年第三季度，我們實現了調整後企業 EBITDA 獲利。再次，我們將繼續致力於透過改善門市單位經濟狀況和提高公司層面的效率來提高我們的財務表現。同時，我們快速成長的特許經營業務持續產生穩定的現金流和獲利能力，大大提升我們的利潤率。

We remain committed to delivering cost-effective high-quality products to our growing customer base. Our overall monthly average transacting customers reached 3.3 million in Q4 2024. A 2.4% increase from 3.2 million in the same quarter of 2023. Additionally, digital orders as a percentage of total orders rose from 82.6% in Q3 2023 to 86.6% in Q3 2024.

我們始終致力於向不斷增長的客戶群提供具有成本效益的高品質產品。2024 年第四季度，我們的整體每月平均交易客戶數達到 330 萬。比 2023 年同期的 320 萬增加 2.4%。此外，數位訂單佔總訂單的比例從 2023 年第三季的 82.6% 上升到 2024 年第三季的 86.6%。

We continue to enhance our digital capabilities to meet the growing demand for delivery and takeaway services. During the third quarter of 2024, we made more significant strides in enhancing our operational efficiency through refund in our supply chain management and economy of scale. We reduce the food and packaging costs as a percentage of revenues from company owned and operated stores by 6.1% points. Year over year, we continued to streamline our operations by optimizing unit economics. This led to a year over year reduction in labor costs and others to operating expenses as a percentage of revenues from company owned and operated stores by 3.0% points and 1.1% points respectively.

我們持續增強數位化能力，以滿足日益增長的外送和外送服務需求。2024年第三季度，我們透過供應鏈管理退款和規模經濟在提升營運效率方面取得了更顯著的進展。我們將食品和包裝成本占公司自營商店收入的百分比降低了 6.1%。與去年同期相比，我們不斷透過優化單位經濟來簡化我們的營運。這使得勞動成本和其他營業費用占公司自有和經營商店收入的百分比同比分別下降了 3.0% 和 1.1%。

Benefiting from our cost optimization measures and increased brand recognition. Our marketing expenses as a percentage of total revenues decreased by 2.3% points year over year.

受益於我們的成本優化措施和品牌認知度的提升。我們的行銷費用佔總收入的比例較去年同期下降了2.3個百分點。

Additionally, we streamlined our headquarter costs resulting in a significant reduction in adjusted general and administrative expenses as a percentage of total revenues by 2.7% points year over year.

此外，我們精簡了總部成本，導致調整後的一般及行政開支佔總收入的百分比比去年同期大幅下降 2.7%。

As a result, we achieved our highest ever quarterly company owned and operated store contribution margin of 13.3% and consecutively quarterly Adjusted corporate EBITDA a profitability after the second quarter of 2024 turning to liquidity as of September 30 2024 the company's total cash and cash equivalents and time deposits were RMB 203.7 million (USD29.1 million), compared to RMB219.5 million as of December 31, 2023 the change was primarily attributable to the financing from our funding shareholders partially offset by cash disbursement on the back of the expansion of our business and store network nationwide and the repayment of certain bank borrowings moving forward, our strategic focus remains firmly on delivering profitable capital, efficient growth. We are committed to bolstering our brand and broadening our appeal by offering great value for money with our fresh and healthy food selections.

結果，我們實現了有史以來最高的季度公司自有和經營門店貢獻利潤率13.3%，並且連續幾個季度調整後企業EBITDA在2024年第二季度轉為流動性後實現盈利截至2024年9月30日，公司的總現金和現金等價物和定期存款為人民幣2.037億美元（2910億美元我們資金股東的融資，部分被我們在全國範圍內的業務和門店網絡擴張以及償還某些銀行借款的現金支出所抵消。我們致力於透過提供物超所值的新鮮健康食品來提升我們的品牌並擴大我們的吸引力。

Additionally, we are collaborating closely with our sub franchisees to boost customer traffic and optimize our supply chain efficiency, thereby enhancing overall store economics and our bottom-line profitability.

此外，我們還與我們的經銷商密切合作，以增加客戶流量並優化我們的供應鏈效率，從而提高整體商店經濟效益和我們的底線盈利能力。

I will now turn over to Yongchen for concluding remarks, followed by Q&A.

現在我將請陳永晨作總結發言，然後進行問答。

Thank you, Albert. Now before we turn to Q&A, I would like to highlight the two core messages to take away today. First Tims China is committed to continuing to distinguish itself by delivering great value and differentiate our products to our guests, avoiding direct participation in the ongoing price and war.

謝謝你，阿爾伯特。現在，在我們進入問答環節之前，我想強調一下今天要傳達的兩個核心訊息。First Tims China 致力於繼續透過向客人提供巨大價值和差異化的產品來保持自己的特色，避免直接參與正在進行的價格戰。

Technically, we are equally committed to pursue capital, efficient growth most particularly by deployment of our proven small format stores and further growth of our sub franchising network.

從技術上講，我們同樣致力於追求資本、高效成長，特別是透過部署我們成熟的小型商店和進一步發展我們的特許經營網絡。

Together. These two initiatives help us continue to drive improving profitability.

一起。這兩項措施有助於我們持續提高獲利能力。

I would like to take this opportunity to express my and our heartfelt gratitude to the diligent work of every Tims China employee, the love of our guests, the support and encouragement from our partners and the trust of our investors and stakeholders. Now, I will turn the call over to Gemma for today's Q&A session. Gemma.

我謹藉此機會，向每一位Tims中國員工的辛勤工作、賓客們的厚愛、合作夥伴的支持鼓勵、投資者和利益相關者們的信任，表示我和我們最誠摯的感謝。現在，我將把今天的問答環節交給 Gemma。芽。

Thank you, Albert and thank you, Yongchen. Let's begin with the first question.

謝謝你，Albert，謝謝你，Yongchen。讓我們從第一個問題開始。

(Operator instructions)

（操作員指令）

Steve Silver from Argus Research Corporation. Please go ahead.

阿格斯研究公司的史蒂夫‧西爾弗 (Steve Silver)請繼續。

Thank you, operator and thanks for, taking my questions. It's great to see that the costs are being contained as the revenue growth navigates the industry wide challenges. I'm curious as to how much room do you see for continuing expense leverage, moving forward?

謝謝接線員，謝謝您回答我的問題。很高興看到，在收入成長克服整個行業挑戰的同時，成本也得到了控制。我很好奇，您認為未來繼續利用費用槓桿的空間有多大？

Yeah, I mean the, you mean the op the operating cost leverage, right? Steve. Yes.

是的，我的意思是，你的意思是營運成本槓桿，對嗎？史蒂夫。是的。

As a percentage of sales.

佔銷售額的百分比。

Yes.

是的。

Yeah, I mean definitely, I mean, as you know, our major cost items include the food and paper, rent and labor and then, okay, you know, the office G&A. So I mean, as we can see, you know, F MP are available, but we are still able to reduce F&P no cost in the material, you know, year over year. As Albert mentioned, we have reduced over 6% points and for labor, no, almost half are fixed and for rent, the majority is fixed and for genity, the majority are not fixed. So when we, you know, increase our revenue, these fixed cost will be allocated. So we'll, that's why we'll continue to see the margin improvement when we know increase our revenues.

是的，我的意思是，如你所知，我們的主要成本項目包括食品和紙張、租金和勞動力，然後，好吧，你知道，辦公室的一般及行政費用。所以我的意思是，正如我們所看到的，F MP 是可用的，但我們仍然能夠逐年減少材料中的 F&P 成本。正如阿爾伯特所提到的，我們已經降低了超過 6% 的點數，對於勞動力，幾乎有一半是固定的；對於租金，大多數是固定的；對於天賦，大多數不是固定的。因此，當我們增加收入時，這些固定成本就會被分配。所以，這就是為什麼當我們增加收入時，我們將繼續看到利潤率的提高。

That's helpful. Thank you. So in the prepared remarks, you mentioned that there were 5,000 subfranchise applications received to date. Is there a time line for converting many of these two I guess granted status and then on to operating status?

這很有幫助。謝謝。所以在準備好的評論中，您提到迄今為止已經收到了 5,000 份特許經營申請。我猜，將這兩種已授予狀態轉換為營運狀態是否有一個時間表？

Yeah, I mean there, there, there's, there are, there are some timelines but I mean, most important, you know, we are extremely, you know, careful in choosing the right partners and the choosing the right locations because, okay, the right partners and the right locations are critical factors to, to be successful. Not in, in opening the f stores. So, I mean, although we receive no more than 5,000 applications, we are, you know, very strict embedding process. We are now we are using a third party to conducting background checks. We interview, you know, the the the applicants very carefully tracking their experience and the willingness to see whether they fit us. And also we use networking planning team and our real estate team to get to know their locations, whether not the locations are right for to open stores. So, I mean, the the the progress is strong so far and as we mentioned, we opened 4,243 already and sign additional 94. So we'll see a much faster progress in the 1st 4th quarter and the year and the next year.

是的，我的意思是，在那裡，那裡，那裡，有一些時間表，但我的意思是，最重要的是，你知道，我們在選擇正確的合作夥伴和正確的地點時非常小心，因為，好的，正確的合作夥伴和正確的地點是成功的關鍵因素。不在，在開f店。所以，我的意思是，儘管我們收到的申請不超過 5,000 份，但我們的嵌入流程非常嚴格。我們現在正在使用第三方進行背景調查。你知道，我們會對申請人進行面試，非常仔細地追蹤他們的經驗和意願，以了解他們是否適合我們。我們也利用網路規劃團隊和房地產團隊來了解他們的位置，看看這些位置是否適合開店。所以，我的意思是，到目前為止進展順利，正如我們所提到的，我們已經開設了 4,243 個，並簽署了另外 94 個。因此，我們將在今年第一、第四季以及明年看到更快的進展。

Great. And one last one for me, you mentioned the 22.8 million loyalty members growing at a very healthy rate. Do you have any data that shows the impact of the loyalty program on repeat customers and perhaps any differences in transaction size among the loyalty members?

偉大的。最後一個問題，您提到 2280 萬忠誠會員的數量正在以非常健康的速度增長。您是否有任何數據可以顯示忠誠度計畫對回頭客的影響，以及忠誠度會員之間的交易規模是否有差異？

Yes, we do. I mean, no, I mean, the loyal members tend to have much more purchase frequency. Then. Okay. Nonmembers, that's why the member program is powerful. And especially as you know, we just discussed about the, the, the the the bubble at the car.

是的，我們知道。我的意思是，忠誠的會員往往有更多的購買頻率。然後。好的。非會員，這就是會員計劃強大的原因。特別是如您所知，我們剛剛討論了汽車上的泡沫。

You know, I mean, the the the members purchase the car the multiple times rights for 6.6. I mean, in third quarter alone, the purchase frequency is 4.6 times more than the average members. So I mean, we'll, we'll use various effective tools to drive the frequency among our members, which we can do a lot of work over the days or months to come.

你知道，我的意思是，會員以 6.6 美元的價格購買汽車的多次使用權。我的意思是，僅在第三季度，購買頻率就比普通會員高出 4.6 倍。所以我的意思是，我們將使用各種有效的工具來推動我們成員之間的頻率，我們可以在未來幾天或幾個月內做很多工作。

Great. Thank you so much for taking the questions.

偉大的。非常感謝您回答這些問題。

Thank you.

謝謝。

As a reminder. If you would like to ask a question over the phone lines, you can press star one and one on your keypad whilst we wait for any more telephone questions. I think Gemma, do you have a question?

提醒一下。如果您想透過電話提問，您可以按下鍵盤上的星號“1”和“1”，我們會等待更多電話問題。我想，傑瑪，你有問題嗎？

There's a question that reached us and it is to ask, please give an update on the status of the Franchising. The number of units with the outlook is anything qualitative about the types of applications you have you touched on it already? Yong Chen. And the other question is if you could please give an update about the pricing competition in coffee. How's the bundling combination meal strategy? How's that going?

我們收到了一個問題，請更新一下特許經營的現狀。具有前景的單位數量對於您已經接觸過的應用類型有任何定性嗎？陳勇.另一個問題是，您能否介紹一下咖啡價格競爭的最新情況。捆綁套餐策略怎麼樣？怎麼樣？

Yeah, I mean the the price competition is still ongoing, you know, much longer than I expected. But I mean for, for teams again, no, we really not differentiate ourselves using coffee plus fresh prepare war food and affordable price. The strategy not really differentiate teams from our peers. So we don't need to compete, head to head. And I mean, and we price our products competitively. Now, for example, our coffee starts from [RMB] 16 and our price competitive life especially with our combos. Now, as I mentioned earlier, our breakfast combos, cup1 of coffee and one fresh prepared food start from [RMB] 14.9 about $2. And our lunch combo start from [RMB] 21.9 about $3. And again, we use the card, the multiple R car and so our guests can enjoy cup1 of coffee plus one and 40% discount. So that's why we see a much more of purchase frequency for those people who buy the car. So I mean we use combos, we use okay, the benefits of members and to price our product competitively in the market.

是的，我的意思是價格競爭仍在繼續，比我預期的要持續更長的時間。但我的意思是，對於團隊來說，不，我們真的沒有透過咖啡、新鮮準備的戰爭食品和實惠的價格來區分自己。該策略並沒有真正將我們的團隊與同行區分開來。所以我們不需要面對面的競爭。我的意思是，我們的產品定價很有競爭力。例如現在，我們的咖啡起價為16元人民幣，我們的組合咖啡價格極具競爭力。現在，正如我之前提到的，我們的早餐套餐，一杯咖啡和一份新鮮烹製的食物起價為 14.9 元人民幣，約合 2 美元。我們的午餐套餐起價為21.9元人民幣，約3美元。再次，我們使用卡，多輛 R 車，因此我們的客人可以享受一杯咖啡加一杯以及 40％ 的折扣。所以這就是為什麼我們看到購買汽車的人的購買頻率更高。所以我的意思是我們使用組合，我們使用會員的福利，並在市場上使我們的產品具有競爭力的價格。

Gemma.

芽。

Thank you so much, Yong Chen. Sarah. Are there, are there any other questions? If not? I have one.

非常感謝你，陳勇。莎拉。還有什麼問題嗎？如果不？我有一個。

Not yet. Just a reminder. It's star one and one on your keypad. Thank you.

還沒有。只是提醒一下。它是鍵盤上的星號 1 和 1。謝謝。

Another question that came in. Yong Chen Albert is how important are the renovated open kitchens for Tim's franchises and and, and why?

又一個問題出現了。Yong Chen Albert：改造開放式廚房對於Tim's連鎖店來說有多重要，為什麼？

Yeah, I mean this is very important since no, I just mentioned that the fresh prepared food is the big differentiating point for teams compared with other coffee brand in China and the open kitchen will allow our guests to watch our staff craft fresh meals from start to finish and firstly prepare food coupled with a cup of coffee or drink at affordable price. Really, we really know differentiate teams from our peers and help teams expand into more day parts, for example, into lunch day part and even dinner day part. And that will help, you know, continue to drive sales growth over time back to you.

是的，我認為這非常重要，因為我剛才提到，與中國其他咖啡品牌相比，新鮮烹製的食物是團隊的一大區別點，而開放式廚房可以讓我們的客人觀看我們的員工從頭到尾製作新鮮的飯菜，首先準備食物，再配上一杯咖啡或以實惠的價格提供的飲料。確實，我們確實知道如何將團隊與同行區分開來，並幫助團隊擴展到更多的時段，例如，午餐時段，甚至晚餐時段。這將有助於隨著時間的推移繼續推動銷售成長。

Thank you, Sarah. Are there any other questions in your queue? Otherwise, I have one more that came in.

謝謝你，莎拉。您還有其他問題嗎？否則，我還會再來一個。

None on the phone. Currently, once again, that's star 11, if you have questions over the phone.

電話裡沒有聲音。目前，再說一次，那是 11 號星，如果您有電話疑問。

One question that reached us is whether you can speak to the capital required for the company owned stores versus the capital Light way to fund the subfranchise and, and, and include the payback.

我們遇到的一個問題是，您是否可以談談公司自有商店所需的資本與為特許經營分公司提供資金所需的資本，以及包括回報。

Yeah. Okay. Sure. So I I will take this this questions, right. So yeah, currently our cap CapEx for a typical store is around on the like 450 to 500,000 or so. So it's basically around us dollar 70,000 and with a payback period of actually between 2 to 3 years. So actually, we, we believe it is a very attractive unit economics and actually we will continue to use this actually store model to attract like a large number of franchisees and audiences. Yeah. So I actually we, we, we, we think the payback period of 2 to 3 years is very attractive and it is a proven track record.

是的。好的。當然。所以我會回答這個問題，對吧。是的，目前我們一個典型商店的資本支出上限大約在 45 萬到 50 萬左右。所以基本上是在 70,000 美元左右，回報期實際上在 2 到 3 年之間。因此實際上，我們相信這是一個非常有吸引力的單位經濟學，實際上我們將繼續使用這種實際商店模式來吸引大量的特許經營商和觀眾。是的。因此，實際上，我們認為 2 至 3 年的回報期非常有吸引力，而且這是經過驗證的記錄。

Thank you, Sarah.

謝謝你，莎拉。

No questions on the phone lines.

電話裡沒有提問。

All right, then I think we might be through.

好的，那我想我們可能就完成了。

Great. Thank you. Thank you all and thank you, thank you for your time and.

偉大的。謝謝。謝謝大家，謝謝大家，謝謝大家抽出時間。

Thank you all for dialing in and we look forward to connecting in the coming days and weeks. Of course, if you have any questions for us, please let us know. Thank you very, very much and see you soon.

感謝大家撥通電話，我們期待在未來幾天和幾週內繼續聯繫。當然，如果您對我們有任何疑問，請告訴我們。非常非常感謝，很快再見。

You too. Thank you. Bye.

你也是。謝謝。再見。

Thank you. This concludes today's conference call. Thank you for participating and you may now disconnect.

謝謝。今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。