Ladies and gentlemen, welcome to DPC Dash Limited Interim 2025 Earnings Conference Call. All participants will be in listen-only mode during management's prepared remarks, and there will be a question-and-answer session to follow. Today's conference will be recorded. At this time, I would like to turn the conference over to Kathy Zhong, IR Director of DPC Dash, who will share the process for today's call and provide some important disclosures. Please go ahead, ma'am.
Thank you, Operator. Hello everyone, and thank you for joining us on today's call. Again, as a reminder, you're all currently on mute. We will open up the floor during the Q&A session after management's prepared remarks. We will try to answer as many questions as time allows.
Today, you will hear from Ms. Aileen Wang, Executive Director and CEO of DPC Dash; Ms. Helen Wu, CFO of DPC Dash; and Mr. Michael Xu, CPO of DPC Dash. Aileen will provide insights into the company's overall performance and share recent developments. Helen will go a bit deeper into the first half financial results. The management team will address your questions after their remarks.
Before we continue, I'd like to remind you that our earnings call and investor materials contain forward-looking statements about our business that may be considered as forward-looking statements under applicable securities laws, which are based on various assumptions and other factors that are beyond the company's control and are subject to risks, future events, and uncertainties.
Accordingly, actual results may differ materially and adversely from those anticipated or implied in the forward-looking statements. You can identify these forward-looking statements because they include terminology such as may, will, expect, estimate, believe, going forward, plan, projection, aim, or other similar expressions. Statements that are not historical fact, including but not limited to the statements about the company's beliefs, plans, and expectations, are forward-looking statements.
All forward-looking statements should be considered in conjunction with the cautionary statements in our earnings release and the risk factors included in our filings with the Hong Kong Stock Exchange. Also, this call includes discussions of financial information and certain non-IFRS financial measures. Please refer to our results announcements and interim report to be published in accordance with the rules governing the listing of the securities on the Stock Exchange of Hong Kong Limited, which contain a reconciliation of the non-IFRS measures to IFRS measures.
All information provided in this earnings call is as of the date of this call. The company, our affiliates, advisors, and representatives undertake no obligation to update any forward-looking statements except as required by law. With that, I will turn the call over to Ms. Aileen Wang, Executive Director and CEO of DPC Dash. Aileen, please go ahead.
Hello everyone, and thank you for joining us today as we discuss DPC Dash Limited's results for the first half of the year of 2025. As the exclusive master franchisee for Domino's Pizza in Mainland China, Hong Kong SAR, and Macau SAR, we continue to see significant growth opportunities in the underserved China pizza market.
Our global franchisor, Domino's Pizza Inc. is one of the largest pizza companies worldwide, with more than 21,500 stores across over 90 markets as of June 30, 2025. This global presence gives us a strong foundation as we execute our 4D strategy Development, Delicious Pizza Value, Delivery, and Digital. We are pleased to share our robust financial results for the first half of the year of 2025.
Our total revenue reached RMB 2.59 billion, marking a solid 27% increase compared to the same period of last year, with 190 net new stores added during the period, bringing our total store count to 1,198 across 48 cities. Once again, we have delivered strong results, achieving close to 30% revenue growth. This consistent performance underscores the effective execution of our growth strategy and highlights the vast potential of China's QSR market. As of June 30, 2025, our market ranked as the third largest international market in Domino's Pizza's global network in terms of store count.
Our profitability has shown strong improvement across all levels. Store-level EBITDA reached RMB 502.8 million, up 27.7% year- over- year, with the margin at 19.4% compared to 19.3% last year. Store-level operating profit grew by 28% year-over-year to RMB 379.2 million, with the margin at 14.6% compared to 14.5% a year ago.
At the group level, adjusted EBITDA increased by 38.3% year-over-year to RMB 322.9 million, with the margin expanding to 12.4% from 11.4% in the prior year. Adjusted net profit rose by 79.6% to RMB 91.4 million, with the margin improving to 3.5% from 2.5% in the same period of 2024. These improvements demonstrate our ability to drive profitability. Let me share more details on the key drivers behind our performance.
On development, we maintain our disciplined expansion approach, strategically deepening our presence in existing cities by adding new stores while broadening our reach into new markets. By entering nine new cities in H1 2025, we now operate across 48 cities, expanding our footprint into more markets in China.
As of June 30, 2025, while maintaining a solid 7.2% growth in Tier 1 cities, reaching RMB 1.08 billion revenue, our non-Tier 1 markets delivered remarkable 46.6% revenue growth, reaching RMB 1.51 billion revenue. Non-Tier 1 cities contributed 58.2% of the total revenue, up from 50.4% just a year ago. Our youngest region, the Central and Western China region, reached 100 stores in just 2.5 years since the entry in December 2022.
This momentum clearly validates our strategic focus of expansion and a vast potential that will continue to offer growth opportunities going forward. After setting so many global sales records over the past couple of years, our first store in Shenyang continues the legend.
It not only set a new global record for the first 30-day sales, but it also surpassed the previous global annual sales record of RMB 31 million held by Xiamen SM Phase 3 store in just 198 days of operation. Similarly, our first store in Handan, which opened on August 3, 2025, delivered a record-breaking first-day sales, exceeding RMB 540,000 with over 6,000 orders.
As of June 30, 2025, we hold 48 of the top 50 positions for the first 30-day sales among Domino's global network. During the first half of the year, the 64 stores we operated across 15 new markets, opening in the end of 2024 and H1 2025, delivered impressive average daily sales of RMB 47,102. By August 15, 2025, 24 of these stores had already achieved a full cash payback within average payback months of 12 months.
More broadly, the stores in the new markets we have opened since December 2022 have maintained strong average daily sales around RMB 17,438, even as we continue to add new stores in these markets. This performance highlights our strong brand recognition, the effectiveness of our site selection, and operational excellence across the markets. Let's switch gears to talk about same-store sales.
The same-store sales landed at -1% for the first half of the year of 2025. We have shared before that for the new markets we entered since December 2022, we have been opening new stores with very strong sales performance, which continuously set new global sales records within Domino's system. As more of these high sales record stores gradually enter the same-store sales cycle, they start to bring negative same-store sales impact to the group same-store sales initially.
Carving out the impact of the stores in these new markets, the group's SSG remained positive, and Tier 1 markets' SSG also remained positive despite a high sales base, with the consecutive 31 quarters of positive same-store sales accumulated over the past seven years, as we mentioned before. We also believe this showcased the resilience of our results in the context of a challenging environment.
On the delicious pizza at value front, we continue to focus on menu innovations with a range of successful new product launches. This includes our popular durian series featuring new Dubai Chocolate and lychee flavors, the Beef Wellington-style pizza, the Tuscany-inspired salmon pizza, and the Cocoa Crust and Cocoa Volcano pizza. Our approach to product development and localization continues to generate exciting products that resonate strongly with Chinese customers across different markets.
Turning to delivery, we hold up to industry-leading service standards by faithfully executing our well-known 30-minute delivery promise. Our overall delivery on-time rate further improved to 94% of all the delivery orders. In Tier 1 cities, delivery sales as share of total sales increased from 70.4% to 73.7% during the first half of the year of 2025, reflecting growing consumer preference for our efficient delivery service. This is just the beginning of our delivery potential.
As we deepen our presence across non-Tier 1 cities, we will systematically roll out delivery services in these markets. This measured approach unlocks incremental growth opportunities, enabling us to extend proven Tier 1 service efficiencies to China's emerging markets when capacity allows it. Our digital initiatives delivered outstanding results, with loyalty membership growing 55% to 30.1 million members, and member revenue contribution increased to 66% from 63.6% a year ago.
We have attracted 13.2 million new customers placing the order over the past 12 months from all channels. These results demonstrate the effectiveness of our marketing campaigns and smart consumer engagement in driving growth. Looking ahead, we're continuing our expansion with confidence. With healthy unit economics and strengthening brand equity, from January to as of August 15, we have opened 233 stores, have 27 stores under construction, and have signed 35 sites.
This represents approximately 98% toward our goal of opening 300 new stores by 2025. Our strong execution capabilities and operational efficiency enable us to consistently deliver strong results in a dynamic market environment. We're well-positioned to further solidify our leadership and drive sustainable growth that creates long-term value for our shareholders. With that, I'll now hand the call over to Helen Wu, our CFO, to discuss the financial details.
Thank you, Aileen. Hello everyone. Thank you again for attending the earnings call tonight. To start, I will walk you through our financial highlights for the first half of 2025. Please note that all the numbers that we're presenting today are in RMB terms, and all presentations are on a year-over-year basis, unless otherwise stated. We delivered a strong financial result during the first half of 2025, demonstrating our resilience and the strategic execution in a dynamic market environment.
Our robust revenue growth, combined with our ongoing initiative to improve operational efficiency, has yielded improved profitability at both the store and corporate levels. For the first six months of this year, our revenue increased by 27% to RMB 2.59 billion from RMB 2.04 billion in the same period of 2024.
Breaking down our revenue performance by market segments, our Tier 1 city markets, including Beijing, Shanghai, Shenzhen, and Guangzhou, generated RMB 1.08 billion in revenue, representing 41.8% of the total revenue and a 7.2% year-over-year growth. This was driven by positive same-store sales growth in these highly competitive markets, supported by 17 incremental stores in operation during the reporting period.
Our non-Tier 1 city markets delivered exceptional growth of 46.6% year-over-year, reaching RMB 1.51 billion and representing 58.2% of the total revenue, up from 50.4% in prior year. The growth was fueled by our store network expansion of 184 net new stores added in these markets, making more stores in operation during the reporting period, and also the strong performance in newly entered markets. Our average daily sales per store declined by 4.4% year-over-year to 12,915 in the first half of 2025, from 13,515 in the same period of 2024.
This decrease was mainly attributable to the decrease in average daily sales in those post-December 2022 high-performing stores as they gradually stabilized sales over time. This stabilizing trend is a natural part of our unique business evolution for the new markets we are entering, and we remain focused on optimizing our store portfolio to maximize long-term sustainable growth of our business and also the profitability. A few notes before we get into the specifics of our costs.
First, our raw materials and consumables cost includes the costs related to both our stores and the central kitchen. Staff compensation expenses encompass the store-level cash-based salaries, which include labor costs at our central kitchen, corporate-level cash-based salaries, and share-based compensation. The vast majority of rental costs are incurred at our store level, as are a majority of plant and equipment depreciation, utility expenses, and advertising and promotion expenses.
Meanwhile, the majority of amortization of intangible assets is incurred at the corporate level, as is the majority of our other expenses on the P&L. Please refer to our income statement and financial statement footnotes for more context on both store and corporate-level cost components. With that, let's look at the costs and margins at both the store and corporate levels.
Our raw materials and consumables cost for the first six months of 2025 amounted to RMB 706.8 million, representing an increase of 26.7%. In line with our revenue growth, we have managed to keep the ratio of our raw materials and consumable costs to revenue stable at 27.3% in the first six months of 2024 and in the same period of 2025, as our proactive cost management initiative continues to yield results.
Advertising and promotion expenses as a percentage of revenue decreased to 5.3% in the first six months of this year, from 5.4% a year ago. This was mainly because our brand marketing activities became more targeted and cost-effective as we strengthened our brand through store network growth and remarkable performance in newly entered markets. Store-level cash-based staff compensation expenses as a percentage of revenue increased to 27.7% during the first half of the year, from 27.4% a year ago.
The increase was primarily attributable to the growth in the number of store-level employees per store. As we accelerated our store openings in the first half of 2025, we recruited more store-level staff for training in advance in order to better serve our customers and become more familiar with new markets. Cash-based compensation expenses for corporate-level staff as a percentage of our revenue.
This was primarily due to our corporate-level staff becoming more experienced and better equipped to support operations of an expanding network of stores, and also reflects the continued benefits of economies of scale for cost efficiency at the corporate level. Our rental or lease-related expenses are reflected in three lines on our income statements under the IFRS 16 accounting rule.
The first is depreciation of right-of-use assets. Second is variable lease rental payments, short-term rental, and other related expenses. These two lines aggregate amount was RMB 259.2 million during the first half of 2025, compared with RMB 201.7 million in the same period of last year, representing a 28.5% increase year-over-year. As a percentage of revenue, the charge rate was 9.99%. The third line is lease liability in the finance cost category, recorded under IFRS 16 accounting rule.
The aggregate three lines amount as a percentage of revenue was 11.48% as compared to 11.51% of the revenue in the same period of 2024. The charge rates for depreciation of plant and equipment, amortization of intangibles, utility expenses, store operation and maintenance expenses, and other expenses experienced a slight decrease respectively, with an aggregate decrease of 1% relative to our growing revenue.
By splitting the cost between store activities and corporate activities, we look at profitability performance at both the store level and group level. Building on our consistent effort to drive efficiency, our store-level operating profit achieved a robust growth. In the first half of 2025, our store-level operating profit reached RMB 379.2 million, a 28% year-over-year increase. We are particularly pleased that our store-level operating profit margin remained resilient at 14.6%, even as we invest in talent development and market expansion.
This positive trend also extends to the corporate level. Charge rates for both share-based, cash-based compensation expenses for corporate-level staff and the depreciation and amortization cost decreased during the first half of 2025. This improvement aligns with our continued revenue growth and unfolding benefits of scale and efficiency.
Building on our robust revenue growth, effective cost controls at the store level, and the increasing benefits of scale and efficiency at the corporate level, our group Adjusted EBITDA grew to RMB 322.9 million. EBITDA growth outpaced our revenue growth by a notable margin, rising 38.3% year-over-year from RMB 233.4 million in the first half of 2024, a sign of our strong operating leverage. Our group Adjusted EBITDA margin also saw positive growth, rising to 12.4% in the first six months of this year, from 11.4% in the same period of 2024.
As a result, our adjusted net profit, which reflects our core recurring business, reached RMB 91.4 million compared to an adjusted net profit of RMB 50.9 million in the first half of 2024. Our reported net profit after tax reached RMB 65.9 million in the first half of 2025 compared to RMB 10.9 million in the same period of 2024. You can find more details on the cost item at both store and corporate level in our results presentation, which is posted on our IR website.
Finally, some updates on the liquidity. Our cash position remained strong through the first half of the year. As of June 30, 2025, we held RMB 1.02 billion in cash and cash equivalents, which includes restricted cash. Additionally, we have an interest-bearing bank loan of RMB 200 million, with the final maturity set for 2028. Looking ahead, we remain confident in our ability to navigate the evolving market landscape.
Our strong fundamentals, continuous rising brand recognition by customers, proven execution capability, and strategic market positioning provide a solid foundation for our continued expansion in this under-penetrated pizza market in China. We will continue to execute our 4D strategy, with a primary focus on expanding our store network and gaining more market share, coupled with a balance of healthy and sustainable profitability level. This concludes my prepared remarks for today's earnings call. Operator, we are now ready to take some questions.
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
At this time, we will pause for a moment to assemble our roster. Our first question today will come from Lucy Yu of Bank of America. Please go ahead.
Hi, Michael and Helen . Thank you for taking my question. So I have three questions here. First one is, we have seen the same-store decline by 1%. Normally, negative same-store means that store-level margin will contract given the operating deleverage. But surprisingly, we are glad to see that our store-level operating margin was still up slightly year-over-year.
Could you please elaborate what we have done here? Second question is on store expansion. We already reached 43 cities so far, which is up a lot. Can I ask that our future expansion will continue to expand to new cities, or will we temporarily shift our focus on deepening penetration in existing cities?
Question number three is on the social security impact. There has been a lot of discussion on that. So if the social security got strictly implemented by the government, what kind of impact do we see on our company? Thank you.
Hey, Lucy, thank you for the question. I'll take the first one about the SSC and its relationship to the operating profit margin. I think this is the real unique part of our business so far at our stage because, as you said, typically we'll see a store when you open, you start from low, and then you gradually ramp up, and then you will see that actually you have positive same-store sales and the margins improving, right?
But I think we actually mentioned a lot of times that because we have a very strong brand momentum, so whenever we enter a new market, there's always record high sales, right? So for the first half, I would highlight that actually even though you see that actually our group-level same- store sales is negative, it's actually aided by the high global record-setting stores coming into the same- store sales cycle.
But I have to say that actually even though the sales level at these stores are still pretty solid, pretty high. So in terms of profit margin of these stores are still very strong. So that's one reason, right? And the second is that we're now still entering new markets. So these markets, these stores are not in the same sort of sales cycle yet, but these are also high profit margin contributing stores.
So that's why even if you see that actually you see a slightly negative same-store sales, but our profit margin, store-level profit margin is still actually pretty resilient, solid, and also moved out a little bit. So that's the reason. Now, you asked a good question. So I think at the same time, just leveraging this question, I also want to highlight that a company like us, which has a strong brand momentum when we have a solid base of the market that we've built up over the years, but also because we're entering the new markets and always hitting the global record high sales.
So this kind of a so-called SSC is probably not the only KPI or metric or the numbers that you should actually evaluate how good we're performing because we're a fast-growing company. We've been entering new markets with very, very high and strong sales.
And then gradually, when we add more stores, when these stores themselves, they're normalizing, even though you will see these stores recording initial negative same-store sales, which will have a negative impact on the same-store sales of the group. But in terms of profitability, it is still very solid. So that's why for a company like us, you probably need to look collectively at a few numbers. Are we growing the store counts? Are we gaining market share? Are we actually growing the top line?
Overall, as we scale up, are we improving the margins at the store level? And at the same time, are we actually unlocking continuously the benefits of economies of scale at the corporate level? And this is how we believe, our management believes that you should actually look at how we perform and how we've been carrying out the business.
In terms of the second question, store opening.
I can answer this question. Okay. When we allocate the new store openings each year, we will look at how many cities we have already opened and then whether we should go to new cities. Typically, based on the store potential and also the return of last year we allocate, we will gradually sort of open in existing cities.
The cities we open, and also we will check whether we should move to new cities based on several things. One is sort of the brand momentum and then the demand we see of consumers from those markets and also the readiness of the operation team, i.e., whether these cities, they're actually close to the supply chain centers, they're actually close to the cluster centers, we can leverage the existing operational resources, etc.
In terms of the allocation, I think for the stores we open sort of before the end of 2022, probably we'll still open 20%-30% of the new stores there. And then for the cities we opened since the end of 2022 to this year, the end of this year, probably we'll open about 40%-50% of the new stores. Then for the rest, we'll open sort of brand new markets.
It's a balanced approach between sort of the deeper and then our broader. I think your last question is about the security. Let me put it this way. At the very beginning, and even in our perspective, we say that actually in terms of store staffing, we actually have full-time and also we have a part-time.
This is actually determined, decided by our business model and also the flexibility of the staffing, right, so which actually works with us. So for our full-time, we are fully compliant with the Chinese regulatory regulations. The part-time, their social security is covered by their full-time job, which actually will cover their social security.
And we do have a part of the orders or deliveries actually outsourced to the delivery companies, which when we actually engage with these companies, we will request them to actually represent to us that they are in compliance with the relevant Chinese laws on the social security matter.
Thank you. That's very clear.
Our next question today will come from Viola Yang of UBS. Please go ahead.
Hi, again.
Hello, Viola.
Hi. Can you hear me?
Not very clear, actually. Yeah.
Hello. Can you hear me?
Yes. Go ahead. Yeah.
Great. Hi. This is Viola from UBS. Thank you to the management for taking my question. So my question is on the sales per store because you mentioned in the press release that the daily sales of new markets that have entered before or sorry, entered since the December of 2022 was over 30% higher than the average of your overall store portfolio. So can we add more color of the performance by store age?
I'm asking this question because I'm trying to understand how long it normally takes for a store to normalize to its normal sales level. And the second question is that based on our expansion pace, how long do we expect the base pressure to continue? And the last one is, ultimately, how do we expect the daily sales of Tier 2 and Tier 3 city stores comparing to the level we've achieved in the Tier 1 cities? Thank you so much.
Okay. I'll take this one. So thank you for your question. As you mentioned, right, when we enter these new markets, consumers love the brand. They're very excited. And then the sales is actually very high. They kept breaking the global record as we continue to open more new stores in the cities.
So we sort of before you can only go to this one store, now you probably have choices to go to 20 stores, 30 stores. So naturally, the average daily sales of these stores will actually go down. Now, that said, how much, what level will this be normalized, and when will that be normalized?
We actually don't know the answer yet because all these markets are very new, right? So none of them actually reached a sort of a steady state. I think it depends on several things. One thing is how big is the city in terms of store potential, and one thing is how many we choose to open, and then one thing is how quickly we open, and also the existing brand strength.
And also after sort of the first phase is gone, how do we decide to continue to build the brand, right? So all these factors will play some role in determining sort of the steady state. But so far, I can say that it's still sort of we're in the early phase. I couldn't tell. That's basically the three questions you're asking.
Okay. Got you. Thank you, Helen.
Our next question today will come from Lisa Liao of Jefferies. Please go ahead.
Hi, management. Thank you for taking my questions. This is Lisa Liao from Jefferies. Congratulations on our strong growth as always. So my question is mainly on the Tier 1 cities. So first of all, I wonder what measures did we do to achieve the positive same-store sales growth in the Tier 1 cities, especially Beijing and Shanghai?
Pretty outstanding results as in our mature markets with relatively high penetration and industry competition spheres. And also for other Tier 1 cities like Guangzhou and Shenzhen, I did a very simple calculation. So it seems compared to Beijing and Shanghai, the average store sales is something like close to 80% of the store sales. But also did very good same-store sales growth.
But what do we think about the potentials in Guangzhou and cities like Guangzhou and Shenzhen in the future, considering there is also a local competitor and also the people's preferences on pizza products in South China? Thank you so much.
Thank you for the question. So I heard two questions. One is on Tier 1 city, what did we do to maintain the positive same-store sales? To start with, I think in today's environment, for us to get the positive same-store sales for the Tier 1 cities, it's actually I think the team actually did a good job on that, right?
Back to the basics, I think when consumers choose the brand to eat, they typically will think about several things. The first thing is actually the product. So you can see that we continue to sort of innovate on the products.
For example, this year, it's actually the Dubai Chocolate flavor is actually quite popular. So we start to introduce that to combine with our Durian flavor, right, which is very interesting. And in the summertime, we find some of the consumers may find it's a little bit greasy to eat durian by itself. So then we added Lychee to make the taste more balanced, right? And then we are also quite innovative to introduce the Beef Wellington-style pizza, etc.
So you can see we continue to offer the exciting products to consumers. Like I mentioned before, I do think Tier 1 cities' consumers want this kind of product innovations and they resonate with their taste buds. So that's one. The second thing is that we continue to deliver this delivery certainly in the promise, right?
Now, you may say that lots of sort of channels may claim they can deliver certain minutes, but we actually managed to maintain or even improve our delivery on-time rate, so I think that actually means a lot to help people in their busy lives to get this convenience on-time and then make their life easier and less stressful, and then also we provide consistent value, as we mentioned before, and also on the digital side,
I think we not only sort of have existing channels, we open new channels, and then we emphasize the conversion, and then we emphasize down sort of interactions and customized offers to the members, and that's why you see the membership number also increase significantly, right, so all of these things, and also we continue to open stores, and that will help to continue to strengthen the brand positioning in Tier 1 cities.
So it's nothing magical, but doing the foundational things well and then consistently doing that, I think over the time, you'll win people on their hearts, right? So that's one. The second question is on sales, so Guangzhou and Shenzhen. Now, Guangzhou and Shenzhen, actually, when we opened Guangzhou and Shenzhen with a large opening number, it was actually before the COVID time, right?
So then right before the COVID time. And then so then their sales was about to take off, but then they actually went into the COVID period, which sort of delayed the sales growth. Nowadays, I think we sort of revamped the people base there, and also we emphasize the best practices from the old markets. And the same thing, right? The product, the service, the value, the digital, etc.
We emphasize on those sort of foundational benefits to offer that to customers, and we start to win consumers. And then this is actually a market with sort of two years in a row, very strong same- store sales. But that said, Beijing and Shanghai same- store sales is quite strong too. So I can see the same kind of growth pattern across the Tier 1 cities. So in terms of potential, I do think that given the momentum in south, there's no reason that we cannot reach Shanghai and Beijing potential, but it probably will take a few years.
Yeah. Got it. Thank you so much.
Our next question today will come from Linda Huang of Macquarie. Please go ahead.
Hi management. Thank you very much for this opportunity.
So, my question is regarding for the delivery competition in the Q2 because we know that the delivery aggregators launched very strong subsidies and benefited quite a lot of the fresh-made, the beverage chain. So, I just want to know that these delivery subsidies are positive or negative to our business.
Do you see that these subsidies were even stronger in July, August, or the subsidies are fading out? I just want to know how this impacts our business in 2025 and 2026 and how to evaluate that. Thank you very much.
Okay. I'll take this question. So, for the first half of the year, so the impact of the recent sort of the aggregator dynamics didn't actually have a lot of impact to us, right? Now, that said, recently, we did see there's more dynamics in this aspect.
As a name brand, we actually sort of benefit more in the whole sort of situation, right, because of more traffic and also the support from the aggregator platforms, right? So far, the benefit to us is actually positive. Now, that said, whether this sort of situation will continue, I think the situation is quite dynamic.
We'll continue to monitor that. But I do believe that as a delivery brand, right, so if the consumers, if the price falls off aggregators and then consumers, I do think they will have more of them will actually sort of form the habit to actually order delivery. And then as the delivery expert in this aspect, we will benefit just like we did in the COVID time, right? So that's my perspective.
I think the way we look at a third-party aggregator is always because it is a large platform, and we can always gain wider access to consumers. So we actually use them as more sort of a new customer acquisition channel, right? So given that these platforms, they are directing more traffic to these platforms like Meituan. So we are actually getting more exposure, which is good.
But we do our own delivery ourselves. So we will monitor the situation, but I think more importantly that once they experience the 30-minute delivery, the convenience from our delivery, right? They get used to this habit. And then we also, the way we manage that is we actually attract or acquire more new customers, using differentiated loyalty programs to convert them into our own platform.
So in the long run, we will consistently be doing that so that this platform will still continue to be our channels to acquire more new customers, convert them into our own platform. So this is how we actually operate that, how we look at it rather than purely actually relying on the traffic there to boost our business. So this is not the way we do that.
Okay. I got it. Thank you very much.
Our next question today will come from Walter Woo of CMB International. Please go ahead.
Hi. Hello. Can you hear me? Yes. Great. Hello, Aileen, Helen and Michael. This is Walter from CMBI. Congratulations once again on your impressive results, and thanks for the chance to ask questions. There's only one question from my side, and it's about the semi-new and new markets.
The performance in the semi-new and new markets has been extremely strong in recent years. But looking ahead, how do you foresee the theme store sales growth in these markets and perhaps in the medium terms, like two to three years? And also, how do you think about the margin trends evolving in these markets as well? Will it be higher than that in the mature markets, and will it continue to trend up in the future? Thank you.
Okay. I'll take this question. So I think you will observe the following things for the semi-new and new markets, right? So at the beginning, because people are looking forward to us coming to these markets. So once we opened there, we got very strong results there.
As I mentioned before, we should continue to open stores there, right, to build a brand and also to leverage the supply chain. As we continue to do that over time, at the beginning, I think the average daily sales for these stores on average will actually go down. But at the same time, we actually have levers to add to sort of these stores.
For example, at the beginning, we will sell crunched on capacity because the line is very long. We didn't open delivery. Nowadays, as we open more stores to shoulder the demand, and then we can actually open delivery gradually, right, as we mentioned. At the same time, we can actually replicate the other best practices proven in the Tier 1 cities. For example, the value.
Sometimes we don't even offer the full menu in those new stores, right? And then I think as you continue to build the stores and replicate these best practices in these markets, the brand will continue to get stronger. The other component I forgot to mention is actually people. Our people in these markets are very sort of young and new, right? They got hired, they got trained.
We want to train them more. But then because the new markets only exist maximum for three years, less than three years, right? So we don't have enough time to train them as much as we train people in Beijing and Shanghai in older markets. As they gain more experience, they can actually get faster. They can actually deliver sort of better service and products consistently to the consumers. That will actually create more demand for the brand too.
I think there's a curve. At the beginning, probably when you open more stores, that will be the major impact. As you continue to add those sales levers and build a brand and build a critical mass of the stores, you will start to see the inflection point. Then, like I mentioned before, this is also new in the system.
We don't know how soon, how long, but we will try our best to do the right thing, just focus on the foundational benefits to serve the customers, right?
Yeah. In terms of margin, obviously, because the sales is pretty high, right? Obviously, the margin is very, very strong, very high as well, higher, much higher than our group level, right?
But initially, when they actually the sales slightly coming down a bit as we add more stores, as the store itself starts to kind of normalize, it will come down naturally, right? But then in terms of profitability, it's still pretty strong, right? So it's actually higher than it still contributes positively to the group's overall profitability.
But when you see if you look even longer term, and then we need to talk about in these markets, there are more stores, and the market itself has scaled the economy in terms of how we operate these stores in the market. And the brand name penetration is brand name is stronger. With more stores there. So I do not have a definite answer for you yet in terms of where it could go. But then I think a positive sign is that actually we do believe that actually these will be maintained at the higher than the current group level profit margin for the stores.
Thank you. That's very helpful. Yes. Yeah. Very helpful. Thank you.
The next question will come from Jiawei Liu of CITIC Securities. Please go ahead.
Hi, management. Thank you for taking my question. This is Jiawei from CITIC Securities. You mentioned the importance of the member customer base. So I have questions regarding membership. Do you have any long-term plans for acquiring members, boosting member reputations, and designing member benefits? Thank you.
Okay. So it's about members. So you're right, right? So our membership actually member increased very quickly. And then at the same time, the members already contributed to 66% of the sales.
So we have existing mechanisms in terms of where to acquire the members across different channels and then also the existing strong-tier membership sort of loyalty program. And we also do sort of CDP, CRM program to design customized offers for different consumers.
Now, recently, we find that in the new markets, it's actually very interesting because when we open the new markets, we get a lot of consumers coming in at the beginning, and then we actually leverage the time to interact with them to get them into the membership program. And we do understand that to get people in is not the intention, but to get the members to come back is important, which is not only sort of the offer but also the first-time experience.
I think our operations team has continued to optimize their capacity, their training to make sure the service and also the food quality from the first time is actually very good. So typically, loyalty members' frequency is actually higher than average customers. And then as the market actually gets more mature, the frequency of the consumers will get higher too, right?
So we do think that with more new markets sort of entering, becoming more tenured, and then we will see the same pattern happening for them. And we're very happy that the frequency we see for the beginning phase of the new markets has already sort of speed up compared to before. So it's relatively higher than what we see before.
And then I think in terms of the benefits, the other interesting thing we find is that for the older markets and newer markets, people may want different things. So then when we design the benefits, we will actually fine-tune based on the city type, location type, etc.
Thank you. Very helpful.
We will take one more question. The next question will come from Shengw ei Lai of CICC. Please go ahead.
Hi, management. I'm Shengw ei Lai from CICC, and thanks for taking my question. I have one question. As your store density is relatively high in Beijing and Shanghai, what are future sales drivers in these cities, like new models, new dayparts, etc.? Thank you.
Got it. So I think even in sort of older cities, you will continue to leverage those existing levers.
For example, as you continue to open stores, right? Your brand gets strengthened, your market share gets bigger, and then as your brand goes up, you're also sort of the sales penetration and also frequency will naturally go up from the existing stores, and then also as the sales goes up in the city, your media will go up, right? And then we'll continue to do menu innovations.
Every single year, we actually present new innovations to consumers to create excitement. Sometimes it's pizza, sometimes it's side, sometimes it's drink, sometimes it's daypart, sometimes it's location, sometimes it's crust, right? And then for last year, the Volcano, we actually first used the cherry tea. Now this year, we have the chocolate and marshmallow. Yeah. Yeah. If you haven't tried that yet, you should try that.
We will continue to have new ideas to make it very fun and tasty for people to have our pizza and food, right? And then as we build more stores in these existing older cities, our speed is actually getting faster and faster for delivery, which I think convenience is very important for these busy people in these cities, right? And then for the value, we also have different levers.
And for the digital, as I mentioned, we have the data behind it. And then for digital, we have several areas we continue to focus on. So for example, the customer facing, right? How do you become omnichannel for those new channels? How do you actually make it easy to place orders? And then for the existing channels, how do you optimize the conversion into purchase, right? And then also for daypart, like you mentioned, right?
We opened the late-night daypart, and then it's not that you open it. Just the end of the story because it will take a while for people to realize you actually offer this daypart. You continue to build up for years, right? And then you have other dayparts you can open. For example, we have the afternoon tea, but probably we're not viewed as the afternoon tea daypart players yet. So how do you build that daypart, etc., right? So I do think that even for the existing markets, there are ways to continue to build up the sales and the brand.
Got it. Very clear. Thank you.
At this time, we will conclude our question and answer session. I'd like to turn the conference back over to management for any closing remarks.
Thank you for coming to our call. We look forward to continuing the conversation with you. Thank you.
The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your line.