TH International Limited Ordinary Shares reports Q4 2025 earnings with strategic insights on franchise growth, product innovation, and future outlook.

In its latest earnings call, TH International Limited Ordinary Shares provided a comprehensive overview of its financial performance and strategic initiatives for the fiscal year 2025. The company, which operates in a highly competitive market, demonstrated resilience despite challenges brought about by intensified competition from aggregator platforms. Key highlights include a slight decline in same-store sales growth, improved EBITDA margins, and a robust commitment to product innovation and franchise expansion.

Financial Performance

TH International Limited reported a 4.0% year-over-year growth in system sales during the fourth quarter of 2025, reaching RMB 359.4 million. However, total revenues decreased by 7.3% year over year, mainly due to the closure of underperforming stores as the company shifts focus towards franchise growth. Key financial metrics include:

Adjusted Corporate EBITDA Margin: Improved by 3.3 percentage points year over year.
Store Contribution Margin: For company-owned stores, this slightly decreased from 7.4% in 2024 to 7% in 2025, primarily due to increased delivery costs associated with aggregator platform dynamics.
Monthly Average Transacting Customers: Rose to 3.43 million, marking a 14.3% increase from the previous year.
Digital Orders: Increased as a percentage of total orders from 86.1% in Q4 2024 to 89.3% in Q4 2025, indicating a strong shift towards online services.

The company's management emphasized operational efficiencies, cost control measures, and supply chain optimizations that contributed to profitability improvements despite revenue challenges. Food and packaging costs, as a percentage of revenue from company-owned stores, decreased by 1.4 percentage points, demonstrating effective cost management strategies.

Strategic Initiatives

Franchise Expansion

A significant focus for TH International Limited has been the expansion of its franchise model. Since launching individual franchise opportunities in December 2023, the company has received over 10,000 applications and successfully opened more than 300 stores by the end of 2025. The company's strategy includes:

Targeting Special Channels: Franchise stores in locations such as railway stations and hospitals have shown high contribution margins, which are expected to accelerate in the coming years.
Optimizing Resource Allocation: The company aims to strengthen its brand presence while ensuring sustainable scalability through effective resource management.
Innovative Product Offerings: In 2025, TH International Limited launched 178 new products, contributing over 25% of total sales. This includes a diverse range of beverages and food items, reflecting the company's commitment to product innovation.

Marketing and Customer Engagement

The company has been actively enhancing brand relevance through marketing campaigns that resonate with cultural themes, including collaborations with popular TV series. Additionally, the company has expanded its sustainability initiatives, launching programs like “bring your own cup,” which has attracted over 200,000 participants and significantly contributed to reducing carbon emissions.

Future Outlook

Looking ahead, TH International Limited is optimistic about its growth prospects for 2026. Management has outlined a clear strategy focused on:

Continued Franchise Growth: The company anticipates achieving net store openings of at least 100 in 2026, with an emphasis on both company-owned and franchise stores.
Sustaining Profitability: With profitability as a primary goal, management plans to further enhance supply chain efficiencies and optimize store unit economics.
Innovation in Offerings: The introduction of made-to-order fresh food preparation models and continued product innovation are expected to drive traffic and enhance customer engagement.

Management also indicated a targeted reduction in food and packaging costs as a percentage of revenues by another 1 to 2 percentage points in 2026, further improving the company's margin profile.

“We are committed to improving our financial performance by refining store unit economics and boosting operational efficiencies.” — CFO Albert Lee

Conclusion

The earnings call for TH International Limited Ordinary Shares revealed a company that, despite facing competitive pressures and a challenging market environment, has made significant strides in operational efficiency, marketing innovation, and strategic franchise expansion. While total revenues declined, the management's focus on enhancing margins and sustainable growth strategies positions the company well for future success. Investors should keep an eye on the company’s plans for 2026, particularly in terms of new store openings, product innovation, and leveraging its franchise model to drive growth. Overall, the company's commitment to resilience and adaptability in a dynamic market landscape bodes well for its long-term trajectory.