TH International 2025 Q3 Earnings Narrowed Losses Amid 12.8% System Sales Growth

TH International (THCH) reported mixed results for Q3 2025, narrowing losses while navigating competitive pressures and operational challenges. The company’s system sales rose 12.8% year-over-year, outpacing revenue declines, as management emphasized strategic expansion and margin improvements.

Revenue

Total revenue for TH International fell 5.5% to $282.88 million in Q3 2025, contrasting with a 12.8% rise in system sales to $590 million. Revenue breakdown showed that company-owned and operated stores drove $282.88 million in sales, with other revenues—including franchise and royalty income—contributing $75.13 million, bringing total revenues to $358.02 million. The decline in company-owned revenue reflects planned store closures of underperforming locations.

Earnings/Net Income

The company reduced its net loss to $73.76 million in Q3 2025, a 15.6% improvement from $87.39 million in the prior-year period. Earnings per share also improved, with a loss of $2.24 per share compared to $2.75 in 2024 Q3. Despite these gains, TH International has posted losses in four consecutive Q3 periods, underscoring persistent financial challenges.

Post-Earnings Price Action Review

Following the earnings release, THCH’s stock price declined 1.36% on the day, 4.51% for the week, and 5.58% month-to-date. The negative sentiment reflects concerns over margin pressures, competitive threats, and ongoing cash burn, despite management’s emphasis on improved unit economics and expansion plans.

CEO Commentary

CEO Yongchen Lu highlighted progress in unit economics, with subfranchisees achieving a 2–3-year payback period. He cited the success of 8,400 franchise applications and the "Light & Fit Lunch Box" platform, which drove 36.5% food revenue contribution. However, challenges remain, including intensified competition from tea brands and rising delivery costs.

Guidance

Management aims to expand store contribution margins to mid- to high-teens by 2026 through supply chain optimizations, pricing adjustments, and premium product launches. CFO Dong Li noted plans to secure additional financing to support expansion and generate positive operating cash flow.

Additional News

1. Eco-Friendly Innovation: TH International launched an eco-friendly straw in collaboration with Tencent’s CarbonXmade program, aiming to promote sustainability across key markets.

2. Financing Activities: The company issued $89.9 million in senior secured convertible notes and restructured existing debt, extending maturities to 2029 and repurchasing 2026 notes.

3. Loyalty Growth: Registered loyalty club members surged to 27.9 million, a 22.3% year-over-year increase, signaling strong customer retention potential.

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