This is an English adaptation of a FoodBud historical article originally published on July 21, 2022.
On July 20, 2022, Tims China’s planned public listing made further progress. Silver Crest, the SPAC pursuing the transaction, said it would hold a shareholder meeting on August 18. If approved, Silver Crest and Tims China would merge and list publicly.
At the Silver Crest shareholder meeting, at least two-thirds of ordinary shareholders needed to vote in favor of the merger proposal. If the merger with Tims China failed, Silver Crest would continue looking for another target, with a deadline of January 19, 2023. If it failed to complete a business combination with Tims China or another company, it could face dissolution and liquidation.
Tims China reported revenue of:
Its 2021 revenue was roughly three times the 2020 level, a rapid growth rate.
Net losses also widened:
At the end of 2021, Tims China had RMB390 million in cash on its balance sheet.
In 2021, digital orders at company-operated stores, including delivery and app-based pickup, accounted for about 73% of revenue, up from 64.2% in 2020.
Within company-operated stores, revenue was split approximately as follows:
By the end of 2021, Tims China had 6 million members. Members who had belonged to the program for more than one year spent an average of about US$39, or roughly RMB264, in 2021.
Store openings accelerated over the period:
By the end of 2021, more than 100 additional stores were under construction or negotiation. Tims China operated 390 stores across 21 cities, including 373 company-operated stores and 17 franchised stores.
Tims China used three main store formats:
In September 2021, Tims China formed a strategic partnership with Metro, becoming Metro’s exclusive coffee partner and gaining the ability to open coffee shops inside nearly 100 Metro locations.
By the end of 2021, Tims China had 30 flagship stores, 275 standard stores, and 85 Tims Go stores.
Its stated expansion plan centered on five city clusters around Shanghai, Beijing, Shenzhen, Chengdu, and Chongqing. The company also planned to work with suitable franchisees to open franchised stores in lower-tier cities as a supplement to its store network.
Tims China’s revenue came mainly from four sources: product sales at company-operated stores, franchise fees, other franchise-related revenue such as equipment and raw material supply, and e-commerce. In 2021, company-operated store revenue accounted for the largest share, at 95.9%.
E-commerce began in 2021 and generated RMB14.32 million in revenue.
For company-operated stores in 2021, cost ratios were:
Delivery represented 38.9% of company-operated store revenue in 2021, equal to about RMB240 million. Calculated only against delivery orders, delivery logistics costs accounted for 16%.
FoodBud noted that, compared with Luckin Coffee’s data, Tims China’s rent and labor cost ratios were high.
At the end of 2021, Tims China had 3,291 full-time employees and 1,634 part-time employees.
According to disclosed information, notable Silver Crest shareholders included:
Silver Crest was led mainly by Ascendent Capital. Ascendent became publicly visible in China partly through its role as the largest shareholder of RYB Education during the RYB kindergarten incident. It had also previously invested in Meituan-Dianping and Wumart.
Other Silver Crest shareholders included a company owned by Christopher Lawrence, Derek Cheung, Andy Bryant, Steeve Hagege, Long Wei, and Tong Mei, which held 20%. Citadel, one of the world’s largest hedge funds, also held 20%.
Tims China’s disclosed shareholders included:
FoodBud noted that PAG was participating in Tims China’s listing through the SPAC. PAG had also previously taken a controlling stake in %Arabica.
PAG chairman Shan Jianwei had recently told 36Kr that China’s coffee market was large and highly competitive, and that the market could accommodate branded companies with distinctive products even if their networks were not the largest. He said PAG first evaluates whether an investment target has distinctiveness.
On the same day, Bloomberg reported that %Arabica’s China operator, Lucky Ace International, was seeking a new funding round at a valuation of up to US$1.2 billion. Lucky Ace planned to raise US$300 million to fund %Arabica’s expansion and had contacted potential investors.
According to people familiar with the matter cited in the report, Lucky Ace was valued at US$800-900 million in its previous funding round. %Arabica entered China in 2017, and its website showed 61 stores in China at the time. PAG and General Atlantic were both investors.
Note: Listing timeline, expansion plans, funding targets, valuations, and IPO/SPAC-related figures are historical as of the 2022 source article.