TH International's Q4 2024: Navigating Franchising Growth, Product Innovation, and Coffee Cost Challenges

These are the key contradictions discussed in TH International Limited's latest 2024Q4 earnings call, specifically including: Franchising Progress and Expansion, Product Innovation and Speed, and Coffee Bean Cost Management:



Profitability and Operational Efficiency:
- Tim's China reported an improvement in company-owned and operated store contribution margin by 5.3 percentage points and adjusted corporate EBITDA margin by 9.9 percentage points year-over-year in 2024.
- The improvements were attributed to enhanced operational efficiencies, supply chain optimizations, rigorous cost controls, streamlining operations, and optimizing staffing arrangements.

Store Expansion and Subfranchise Model:
- By the end of Q4 2024, Tim's China had 1,000 stores, with a significant portion of growth driven by the subfranchise model, which saw an increase from 283 stores as of December 31, 2023, to 446 stores as of December 31, 2024.
- The subfranchise strategy was employed due to its capital efficiency, ensuring sustainable scalability and optimizing resource allocation.

Product Innovation and Revenue Boost:
- Tim's China introduced 92 new products in 2024, contributing approximately 25% of total net revenue, with a focus on fresh and healthy offerings.
- The introduction of new products like the light bagel burger lunch box helped to boost daytime revenue and attracted new customers, contributing to an average of 20-plus incremental daily transactions per store.