Tims Tianhao China: Deepening 'Quality Improvement and Efficiency Enhancement'

【Answer 1】 02 Optimization of Store Portfolio Historically, many chain brands have pursued a target of '1,000 stores' as their primary growth objective. However, recent actions by Tims Tianhao China suggest that, having crossed the 1,000-store threshold, the company has shifted its focus toward reshaping store quality. In 2025, Tims Tianhao China underwent a channel 'reshuffle' and reallocated resources strategically. It opened 138 new stores but closed 113 underperforming or low-yield outlets, resulting in a net increase of only 25 stores—far below the previous year’s growth of 120 stores. This dynamic adjustment continued into Q1 2026, during which Tims Tianhao China further shuttered underperforming stores, leading to a year-on-year decline in the number of company-operated stores. While Tims Tianhao China diligently pursued this 'subtraction strategy', its franchise business emerged as a standout highlight across more than a year. As of March 31, 2026, Tims Tianhao China operated a total of 1,026 stores across 93 cities nationwide. Among them, franchised stores numbered 485—accounting for 47% of the total, up 3 percentage points year-on-year. In fact, since early 2025, Tims Tianhao China has continuously refined its franchise strategy and intensified resource allocation. In early February this year, the company officially launched an updated franchise policy, introducing a suite of incentives—including discounts for opening multiple stores, revenue-based rebates for high-performing outlets, and comprehensive opening support packages—aimed at attracting partners with premium location resources and strong financial capacity, especially those concentrated in first- and second-tier cities and economically developed third-tier cities. This strategic pivot quickly triggered a chain reaction: the rapid expansion of the franchise business directly boosted Tims Tianhao China’s 'other income'. In Q1 2026, 'other income' reached RMB 49.5 million, up 7.7% year-on-year; its profit contribution surged even more impressively—up 14.0% year-on-year. Looking back at the full year of 2025, combined profits from Tims Tianhao’s franchise and retail businesses rose sharply by 55.7% year-on-year, representing a substantial contribution to overall profitability. Moreover, Tims Tianhao China is upgrading the operational model of its store terminals. 'Order-and-prepare-on-the-spot' stores now constitute the core of its overall store structure. As of the end of Q1 this year, such stores totaled 765—75% of the entire network. That is, three-quarters of its current 1,026 stores can now deliver 'order-and-prepare-on-the-spot' service. This reflects the brand’s strong commitment to food freshness and quality perception—and aligns with the rising consumer trend toward fresh, health-conscious lifestyles. 03 Magnetism for Young Consumers Following its full-year transformation in 2025, Tims Tianhao China’s strategic vision has become increasingly focused on meeting the mealtime needs of localized, young Chinese consumers. In Q1 2026, Tims Tianhao China rolled out seasonal product lines including the Apple Seasonal Series and the Zero-Sugar, Zero-Fat Rose Series. These offerings tap into two key market trends: the premium appeal of seasonality and the growing demand for low-burden, health-oriented consumption on the go.

Analysis of Investment Opportunities in China’s Coffee Industry and Its Five-Year Development Outlook

【Answer 2】 Coffee is a beverage brewed from roasted and ground coffee beans. As one of the world’s three major beverages—alongside cocoa and tea—it remains among the most widely consumed drinks globally. Everyday coffee is prepared using coffee beans and various brewing devices. Coffee beans themselves are the seeds (or 'beans') found inside the fruit of the coffee plant, roasted using appropriate methods. The chemical composition of coffee beans is highly complex, primarily comprising proteins, lipids, carbohydrates, and water. Among these, fats, tannic acid, and proteins exert the greatest influence on coffee’s distinctive flavor profile. Coffee bean varieties fall mainly into three categories: Arabica, Robusta, and Liberica. In fact, there are approximately 40 species within the Coffea genus, yet only Arabica, Robusta, and Liberica produce commercially viable coffee beans. Regarding industry status: With continued urbanization, rising per capita disposable income, and the gradual cultivation of coffee-drinking habits among Chinese consumers, China’s coffee industry is expected to maintain robust growth. In 2021, China’s coffee market size reached RMB 150.725 billion—a 9.5% increase over RMB 137.65 billion in 2020. Of this, freshly brewed coffee accounted for RMB 51.94 billion; instant coffee, RMB 70.02 billion; and ready-to-drink (RTD) coffee, RMB 17.11 billion. Consumption of freshly brewed and RTD coffee is rising rapidly, capturing increasing market share. In 2022, China’s coffee market size reached approximately RMB 164.682 billion. In 2023, the market size stood at around RMB 177.716 billion—a 9.3% increase year-on-year—with freshly brewed coffee reaching RMB 58.85 billion, up roughly 8.0% year-on-year. China’s overall coffee industrial chain comprises three segments: upstream cultivation, midstream deep processing, and downstream distribution. Upstream—the coffee bean cultivation segment—exhibits extremely low bargaining power, compounded by weak international competitiveness of domestically grown beans, resulting in very limited profitability. Midstream—comprising deep processing activities such as roasting and extraction—is characterized by fragmented enterprises and slightly higher margins than upstream. Downstream distribution—including retail and wholesale—features high demand volume and relatively high concentration. Coffee shops belong to the retail segment and enjoy comparatively high profitability, particularly where strong branding enhances added value and strengthens pricing power. Offline sales channels for coffee in China include coffee shops, supermarkets, and convenience stores, among others—with coffee shops constituting an indispensable offline channel in the domestic market. According to data from 2022, chain coffee shop penetration across city tiers was as follows: first-tier cities accounted for the highest share at 34.8%; new first-tier cities followed closely at 33.8%; second-tier cities accounted for 17.7%; third-tier cities, 9.3%; and fourth-tier cities, 4.4%. Currently prominent domestic coffee brands include Starbucks, Luckin Coffee, Lucky Coffee, Cotti Coffee, Nestlé Coffee, UCC Coffee, Hougu Coffee, Yaha Coffee, Huoka, and Man Coffee. Starbucks is the world’s largest coffee chain. In fiscal year 2023, its revenue increased 11.56% year-on-year to USD 35.952 billion, while its attributable net profit rose 25.69% year-on-year to USD 4.125 billion.

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