Tims China Updated First-Half 2022 Operating Data: RMB 400 Million Revenue and 440 Stores

This is an English adaptation of a FoodBud historical article originally published on October 18, 2022.

On October 14, 2022, Tims China updated its F-1 filing, mainly disclosing operating data for the first half of 2022.

Ownership and Control

According to Tims China's filing, Peter Yu, managing partner of Cartesian Capital, held 53.4% of the company through direct and indirect ownership. Cartesian Capital also occupied four seats on Tims China's board.

Among institutional shareholders, Tencent ranked second with a 13.6% stake, followed by Sequoia Capital with 9.8%.

The filing context also highlights a broader pattern in China's coffee-chain sector: Luckin Coffee was also controlled by a financial investor, with Centurium Capital having become Luckin's controlling shareholder earlier in 2022, holding more than 50% of voting rights.

First-Half 2022 Performance

In the first half of 2022, Tims China reported:

• Revenue of RMB 400 million, up 70% year on year
• Net loss of RMB 330 million
• 9 million registered members as of the filing date
• 7.5 million members as of June 30, 2022
• 6 million members as of the end of December 2021

As of June 30, 2022, Tims China had 440 stores, including 421 company-operated stores and 19 franchised stores. Another 200 stores were either under negotiation, signed, or under construction.

The store base included:

• 31 flagship stores
• 296 standard stores
• 113 Go stores

For company-operated stores in the first half of 2022, revenue was RMB 376 million. Cost details disclosed for those stores included:

• Raw materials, packaging and related costs: RMB 128 million, or 34%
• Rent: RMB 98.014 million, or 26%
• Labor: RMB 136 million, or 36%
• Delivery-related expenses: RMB 28.11 million

The company also disclosed coffee-bean cost pressure: in January 2022, its coffee-bean procurement cost rose 16.6% year on year. Its distribution centers supplied stores around two to three times per week.

For the six months ended June 30, 2022, company-operated store revenue came from:

• In-store ordering: 23.0%
• In-store pickup: 30.9%
• Delivery: 46.1%

As of the end of December 2021, Tims China had 3,291 full-time employees and 1,634 part-time employees. More than 90% of full-time employees worked in store operations.

Franchise Agreement Details

Tims China's 2018 franchise agreement with RBI, the parent company of Tim Hortons, included several key terms:

1. RBI granted Tims China's Hong Kong entity exclusive franchise rights for mainland China, Hong Kong and Macau. The store-opening target was more than 1,700 stores by August 31, 2028. 2. The initial franchise term was 20 years, expiring on June 11, 2038. Subject to certain conditions, it could be renewed for another 10 years. 3. RBI had the right to nominate one board member.

Tims China was required to pay RBI upfront franchise fees for both company-operated and franchised stores, as well as continuing franchise fees based on sales revenue. In 2021, the continuing franchise fee was about 2.4%, slightly below the common 3% benchmark cited in the article.

For the year ended December 31, 2021, Tims China paid:

• Upfront franchise fees: RMB 24.265 million
• Continuing franchise fees: RMB 15.576 million

Related-Party Transactions

Tims China purchased coffee beans from TDL, an RBI-affiliated company. Disclosed purchase amounts were:

• 2019: RMB 6.8 million
• 2020: RMB 8.9 million
• 2021: RMB 28.1 million
• First half of 2022: RMB 18.0 million

The filing also disclosed a data-related service arrangement. To address data-regulation issues, Cartesian Capital established Pangea Data. Cartesian Capital held 25% of Pangea Data, while Peng Zhang, Cartesian Capital's China head, held 75%.

Tims China signed an agreement with Pangea Data and paid service fees. For the six months ended June 30, 2022, Tims China paid Pangea Data RMB 3.4 million in service fees.

Note: IPO-related filing data, ownership figures, franchise targets and forward-looking store plans are historical figures from the October 2022 source.