Tim Hortons China Reports Q2 Revenue Decline, But Improves Profitability

Tims China, the master licensee of Tim Hortons in China, reported a 4.9% YoY decline in revenue to RMB 349 million ($48.7 million) in Q2, with a 12.5% fall in company-operated store revenue. The decline was primarily driven by the COVID-19 pandemic and adverse weather conditions. Despite this, the company improved its profitability, with a net income of RMB 51.1 million ($7.3 million) in Q2, compared to a net loss of RMB 12.1 million ($1.7 million) in the same period last year.

Tims China, the master licensee of Tim Hortons in China, reported a 4.9% year-over-year (YoY) decline in revenue to RMB 349 million ($48.7 million) in the second quarter of 2025. The company's company-operated store revenue fell by 12.5%, primarily due to the closure of 49 underperforming stores, including 41 small-format Tims Express locations [1]. The decline was also influenced by the ongoing impact of the COVID-19 pandemic and adverse weather conditions.

Despite the revenue decline, Tims China demonstrated improved profitability. The company reported a net income of RMB 51.1 million ($7.3 million) in Q2 2025, compared to a net loss of RMB 12.1 million ($1.7 million) in the same period last year. This improvement was driven by a 50% year-over-year increase in franchised store revenues, which totaled RMB 67.1 million ($9.4 million). The company's adjusted corporate EBITDA was also positive for the quarter, indicating a strong focus on operational efficiencies.

Looking ahead, Tims China is continuing its strategy to close underperforming company-operated stores to enhance profitability. The company's CFO highlighted that in the first half of 2025, the contribution margin of company-owned and operated stores increased by 2.7 percentage points, and the adjusted corporate EBITDA margin improved by 2.8 percentage points year-over-year. Specifically, food and packaging costs, labor costs, and other operating expenses as a percentage of revenues from company-owned and operated stores decreased by 0.8, 1.0, and 0.4 percentage points, respectively [1].

Tims China is majority owned by TH International Limited (NASDAQ:THCH), which was co-founded by the private equity firm Cartesian Capital Group and Tim Hortons Restaurants International, a subsidiary of Restaurant Brands International (NYSE:QSR). The company's performance reflects the broader challenges faced by the restaurant industry in China, including the impact of the COVID-19 pandemic and adverse weather conditions.

References:

[1] Tim Hortons' China Improves Profitability Despite Revenue Decline. Seeking Alpha. Retrieved from https://seekingalpha.com/news/4489532-tims-china-improves-profitability-despite-a-decline-in-revenue