Tims China continues to ‘prune’ underperforming stores in cost-cutting drive

Tims China’s revenue increased 6% quarter-on-quarter to RMB 366.8m ($50.5m) | Photo credit: Tims China

Tims China has achieved its first positive adjusted corporate EBITDA after a second consecutive quarter of cost-saving initiatives and store closures. 
 

The Shanghai-based operator posted adjusted corporate EBITDA of RMB 4.1m ($0.6m) in the three months ending 30 June 2024, compared to a RMB 40.8m ($5.7m) loss in the second quarter of 2023. Tims China also narrowed its net loss during the period from RMB 142.8m ($19.8m) in the first quarter to RMB 46.4m ($6.4m). 

“This important milestone comes as we deliver eight consecutive quarters of adjusted store EBITDA profitability, with our highest ever adjusted store EBITDA margin of 10.3%,” said Yongchen Lu, CEO, Tims China. 

Tims China’s revenue increased 6% quarter-on-quarter to RMB 366.8m ($50.5m) but fell significantly below its record RMB 411.7m ($56.8m) second quarter sales last year.  

After closing 15 ‘underperforming’ company-owned stores in the first quarter, Tims China ‘pruned’ an additional 34 sites in the second, opening just one net new outlet to reach 907 stores across 71 cities.  
The move, in stark contrast to the 149 net new stores opened during the fourth quarter of 2023, has been key to driving store profitability, according to Chief Financial Officer Dong Li. Year-on-year reductions in food and packaging, rental expenses, labour and staffing also contributed to improved profitability. 

Delivery was the only expense to climb during the quarter, growing 10% year-on-year to RMB 32.2m ($4.4m).  
 

Digital orders, which encompass both delivery and mobile ordering for pick-up, now make up 86.5% of total transactions – up from 80% 12 months ago.  

Formed by Canadian restaurant group Restaurant Brands International (RBI) and New York-based private equity firm Cartesian Capital in 2018, Tims China opened its first Tim Hortons store in Shanghai in 2019. 

The company’s second quarter earnings come nearly two months after RBI and Cartesian Capital agreed to invest up to $50m into the joint venture. Announcing the investment, Tims Chia CEO Lu said ‘fortifying’ the company’s balance sheet would help ensure its long-term success in China’s ‘highly competitive' branded coffee shop market.