TH International narrows Q1 loss, secures $55 million financing
TH International Limited reported a 14.6% year-over-year decline in Q1 2026 revenues to RMB256.7 million, alongside a net loss of RMB109.3 million, driven by store closures and lower same-store sales. The company is optimizing costs, reducing food and packaging expenses, and focusing on high-margin franchise stores, with plans to resume net new store openings in Q2 2026. Additionally, TH International secured $55 million in financing and announced a leadership transition, appointing Zhong Chen as CEO effective June 15, 2026.
*this image is generated using AI for illustrative purposes only.
TH International Limited (NASDAQ: THCH) reported a 14.6% decrease in total revenues to RMB256.7 million for the first quarter ended March 31, 2026, while narrowing its net loss to RMB109.3 million compared to RMB58.9 million in the prior year. The company is shifting its strategy from expansion to improving store quality, with plans to resume net new store openings starting from the second quarter of 2026. To support this transition, TH International entered into a definitive agreement for up to $55 million in additional senior secured convertible notes with its brand owner, THRI.
Financial Performance
System sales fell 14.2% year-over-year to RMB322.9 million, driven by a strategic adjustment to prune underperforming stores and a 13.2% decline in same-store sales. Company owned and operated store contribution was RMB3.7 million, down from RMB17.2 million in the prior year, with a contribution margin of 1.8%. Cost optimization measures reduced food and packaging costs by 2.0 percentage points to 28.4% of revenues, while marketing expenses decreased 43.7% to RMB9.8 million. Adjusted corporate EBITDA margin was negative 11.8%.
| Metric | Q1 2026 | Q1 2025 | Change |
|---|---|---|---|
| Total Revenues | RMB256.7 million | RMB300.7 million | -14.6% |
| System Sales | RMB322.9 million | RMB376.3 million | -14.2% |
| Net Loss | RMB109.3 million | RMB58.9 million | N/A |
| Store Contribution | RMB3.7 million | RMB17.2 million | N/A |
Operational Metrics
Net new store closures totaled 21 in the first quarter, bringing total stores to 1,026 as of March 31, 2026. Franchised stores increased to 485 from 455 in the prior year, contributing to a 7.7% year-over-year increase in other revenues to RMB49.5 million. The company reported strong performance from 2024 and 2025 vintage stores, with contribution margins in the mid-teens to high teens, particularly in tier-one cities and special channels like railway stations.
Registered loyalty club members grew 42.9% to 35.9 million, with nearly 50% of transacting members under the age of 30. The company received over 10,500 applications for its individual franchise business since its launch in December 2023, successfully opening nearly 260 stores by the end of March 2026. Effective June 15, 2026, Yongchen Lu will transition to the role of Chairman, with Zhong Chen appointed as the new CEO.
How will the change in leadership impact the execution of the new store quality strategy?
What is the expected timeline for achieving positive corporate EBITDA margins under the new strategy?
Can the strong performance of newer vintage stores be sustained as they scale beyond tier-one cities?
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