SUPER HI INTERNATIONAL HOLDING Ltd. American Depositary Shares (HDL) Q2 2026 Earnings Report, Transcript and Summary

Dear esteemed investors and analysts, good evening. Thank you for joining Super Hi International 2026 second quarter earnings conference call. The company leaders attending today's meetings are Mr. Li Yu, Executive Director and CEO, and Ms. Qu Cong, Chief Financial Officer and Board Secretary. Today's meeting content may contain forward-looking statements, including, but not limited to, the company's statements regarding strategies and business plans, as well as outlook on performance prospects. The content of this earnings presentation and the comments in response to your questions represent management's view only as of today. Please refer to the latest safe harbor statement in the earnings press release, which applies to the conference call. The meeting is conducted in Chinese with an external agency providing simultaneous English interpretation. In case of any discrepancies, the Chinese content shall prevail. The presentation materials have been uploaded to the company's IR page. Please feel free to review them. Now, we invite Li Yu, CEO and Executive Director of Super Hi International, to review the company's performance for the second quarter of 2026.

Thank you, moderator. Can everybody hear me okay?

Yes, we can. Please go ahead.

Dear investors and analysts, good evening. I am Li Yu, CEO and Executive Director of Super Hi International. Let me present to you the key highlights of Super Hi International for the second quarter of 2026. This quarter, the company's earlier investment in employees and customers have further translated into operating improvements. Customer traffic and table turnover rates both improved year-over-year, while the employee cost ratio and several operating expense ratios declined, driving a significant year-over-year increase in operating profit. In Q2, Haidilao restaurants served 8.1 million customer visits, up 5.2% compared to the previous year, last year. Supported by customer traffic, overall table turnover rate for the quarter was 3.9 turns per day. Same-store turnover was 4.0 turns per day, both up 0.1 turn per day year-over-year. Both dine-in service at Haidilao restaurants and also were expanding revenue sources, revenue from delivery and other businesses both doubled this quarter, driven by the above business, the company achieved total revenue of $219 million in the second quarter, representing a 10% increase year-over-year. This quarter, company's operating profit increased by 118.9% Y-o-Y. The operating profit margin increased by 1.8 percentage point Y-o-Y. Profit growth has significantly outpaced revenue growth, reflecting the continued conversion of company's earlier investment and the beginning of the operating leverage release. Now I will review the major operational initiatives this quarter. First, continue to enhance the operational management of Haidilao restaurants. This quarter, we maintained management flexibility with each region autonomously adjusting operating strategies based on the local business conditions, market conditions, and consumer trends. At the same time, we further strengthened the professionalism and support capabilities of the headquarter platform by introducing digital tools and new technologies. We enhanced our insights into the industry markets and consumers, empowering frontline restaurants in areas such as menu items, marketing, and labor efficiency, thereby making improvements in the precisions and execution efficiencies. This second quarter is a traditional low season, judging from the table turnover performance, we believe that these initiatives have delivered a positive response. Second, in term of products and menus. In the first half of this year, the company fully integrated local consumer dietary habits, consumption trends, and dining scenarios to drive menu optimization and new product development. For instance, in Southeast Asia, we introduced local flavors such as lemongrass, satay, and basil, extended soup bases, snacks, and beverage combinations around the core products to enhance the cross-selling. At the same time, we optimized the existing products by improving taste, presentation, and product combination, lowering the barrier for customer trial and enhanced product appeal. In addition, the company continuously conducts dynamic operations based on new product sales performance, customer feedback, and regional market characteristics, providing customer with a more value-oriented and differentiated consumption experience. Third, in terms of membership and marketing, as of the end of June, the number of overseas members reached 9.46 million. This quarter, we continue to improve customer management loop around sustained marketing, precise traffic acquisition, and member operations. On the other hand, each region combined local consumption habits, holiday occasions, the preference of younger customer groups to continue to enhance brand exposures and reach new customers through IP collaborations, new product launches, and new local events. On the other hand, we place a greater emphasis on post-marketing customer retention by further strengthening tiered membership operations using member exclusive activities, differentiated benefits, customer communications, and in-store experience optimizations. We improve the member activities and visit frequency. We are continuously exploring more across the scenario and the multi-branded membership benefits, hoping to gradually transfer one-time marketing traffic into long-term membership relationships, further enhancing customer repurchase and store operating resilience. In terms of store expansion this quarter, we opened 1 new Haidilao restaurant in South Korea, 1 one in Vietnam. In the first half of this year, we opened a total of 3 Haidilao restaurants. At end of Q2, we operated a total of 129 Haidilao restaurants overseas. To date, the number of signed, but not yet opened Haidilao stores remain in the double digits. Meanwhile, based on the current construction schedules in July and August, we expect several new stores to be opened successfully in the second half of the year, and the full year new store opening target is in the double digits. As of this quarter, the Pomegranate Plan has operated a cumulative total of 12 brands and 22 second brand restaurant overseas. We continue to optimize the Hi Bowl Malatang project, which originated in Canada, and we are now opening up the second Hi Bowl store in Japan. At the same time, the Izakaya project in Japan is also steadily improving its sustainability with the potential for further replication. Various country markets are exploring opportunities to independently incubate or replicate existing second brand formats. That is my conclusion for the business performance for this quarter and like to invite Qu Cong to present the financial results.

Thank you, Mr. Li. I will now report about the financial results. In the Q2 of 2026, the company achieved a total revenue of $219 million, an increase of 10% year-over-year. Haidilao restaurant operating revenue was $198 million, up by 4.6% year-over-year. Number of Haidilao restaurants increased by a net of 3 compared to the same period last year. Company served around 8.1 million customer visits in this quarter, an increase of 5.2% year-over-year continuously to support the restaurant business. Beyond the dining business, the company continued to expand the revenue sources. Delivery service reached $7.562 million, up by 105% year-over-year. During the period, each region continued to strengthen delivery operation investment, deepen collaboration with the major delivery platforms in each country, secure more promotional resources, and online traffic favorabilities. They enrich their delivery product offerings to enhance product appeal in the delivery scenario. Other business reached $13.4 million -- $13.39 million, up by 119.7% year-over-year, mainly contributed by sales of food and seasoning under the Haidilao brand and from the company's own central kitchens, as well as the active development of some new restaurant business under the Pomegranate Plan. Overall, in this quarter, delivery and other business together generated $21 million in revenue, up by 114.3% year-over-year. Their share of total company revenue increased from about 5% in the same period last year to nearly 9.6% to further diversifying company's revenue. In terms of cost and expenses, overall operating efficiency improved compared to the same period last year. In the second quarter, raw material and consumable cost was $74 million, with a gross profit margin of 65.9%, down slightly by 0.1 percentage point year-over-year. Restaurant operating gross margin remains stable, mainly because of the central kitchen and the supply chain business has grown significantly versus last year. In terms of employee cost, $74.51 million in the employee cost to revenue ratio decreased from 35.3% in the same period of last year, down approximately 1% decrease as past years efforts in employee capacity building, staffing, and store management optimization have gradually been implemented. The labor efficiency improvements have begun to materialize. Rent and related expenses were $5.6 million, accounting for approximately 2.6% of revenue, down about 0.4 percentage, mainly due to revenue growth, diluting rent expenses, as well as adjustment in restaurant network layout reductions. In short term, utility expenses of $7 million, accounting for approximately 3.3% of revenue, down 0.3% year-over-year. Depreciation and amortization, $21 million, accounting for 9.6% of revenue, down about 0.3% year-on-year. In terms of travel, communications, and other operating related expenses, about $25.73 million, accounting for about 11.8%, remaining broadly stable year-on-year. Overall, the declines in the employee cost ratio and expenses ratio for rent utilities, depreciation, amortization were important factors in the operating margin improvement this quarter. Raw material and other expenses resources still have room for further optimization. In Q2, the company achieved operating profit of USD 8.1 million, up by 118.9% from $3.7 million in the same period last year. Operating margin increased from 1.9% in the same period last year to 3.7%, up 1.8 percentage point year-over-year. As revenue grew, the employee cost ratio and several fixed operating expense ratio declined, driving the earlier investment in employees, customers, and the store management to gradually translate into operating efficiency improvements. Although operating profit improved significantly, non-operating items in this quarter were mainly affected by exchange rate fluctuations. The same period last year, there was a net foreign exchange gain of $16.33 million. For this quarter, there was a loss of $4.34 million, a negative swing of more than $20 million year-over-year. The company recorded a net loss of after-tax of $1.93 million for this quarter, compared to a net profit of $16.39 million in the same period last year. Although final net profit was affected by non-operating factors, the company's core operating profitability improved significantly. In terms of operating cash flow, companies for this quarter was a net inflow of $28 million, an increase of 6.2%, compared with a net inflow of $26 million in the same period as of June 30 this year. Company's cash reserve was approximately $266 million, and overall liquidity remains ample to be used for continued store expansion. In terms of key restaurant operating metrics, the company served approximately 8.1 million customers visits this quarter, up by 5.2%. And this reflects that Haidilao's turnover ratio as well as same day period is going up. Further improvement in the store customer traffic and overall spending per store for the quarter was $24.3. Daily revenue was [ $17,400 ] down slightly by 1.1%. And this overall restaurant operations, customer traffic, table turnover have improved this quarter, though single store operating quality in certain regions have room for further optimization. By region, market performance diverged this quarter. Earlier, the table turnover in Southeast Asia and East Asia continue to improve. Turnover raised in North America and other regions faced pressure. For Southeast Asia and the restaurant revenue for this quarter was $98.66 million, up about 3.9%. This is mainly driven by high customer traffic. And then in terms of average spending per customers was $18.6, flat year-over-year. Overall, Southeast Asian stores maintain a steady and upward operating trend. In East Asia, Haidilao restaurant revenue was $33.7 million, up about 9.9% year-on-year. Average table turnover increased from 4.8 turns per day -- 4.9 turns per day, continuing to maintain at a high level. And this is mainly because the customer decreased spending from $29.4 in the same period, down by $2 to $27.4. On a constant currency basis, the average spending per customer in both countries actually increased year-over-year, excluding exchange rate disturbances. East Asia continues to maintain a strong operating trend with good customer traffic and table turnover performance. In North America, Haidilao restaurant's revenue was approximately $40 million, up about 6.6% year-over-year, with the store count increasing from 20 to 22. Average table turnover 4 turns. And in terms of the average spending per customer increased from $39.1 the same period to $41, but a higher average check has not fully offset the impact of the lower turnover. North America still need to focus on improving customer traffic and operating efficiency. Other regions, the restaurant revenue was $25.1 million and down by 1.8%. Average table turnover is 3.7 turns per day, down by 0.2 turn per day. This is mainly due to geopolitical volatility in the Middle East is still affecting the operation, though the impact is currently assessed to be gradually diminishing. Average spending per customer in other regions increased from $39.7 in the same period to $41, primarily driven by exchange rate effects. Overall regional operating performance in the second quarter showed some divergence. Southeast Asia improved. East Asia continued to maintain a high level. North America and other region need to further enhance the customer traffic and per store output. Same-store performance. There were 111 same-store restaurants. Same-store sales was approximately $179 million, down about 0.8%. Among them, same-store sales in Southeast Asia and East Asia increased by 2.5% and 0.9% year-over-year. Same store in other regions declined by 2.7% and 8.5%, and the same reason as consistent over trend overall. Going forward, the company will continue to focus on cooperation, customers, customer operations, and in-store operations, driving further conversion of customer traffic improvement into per store sales and profitability enhancement. We now welcome questions.

And our first question comes from Lai Shengwei from CICC. Please welcome.

Thank you, Mr. Li and Ms. Qu, thank you for giving me this opportunity. And I have 3 questions. Number one is that we can see that in China, right now, there is an emphasis on empowering through an intelligent middle platform. Does the overseas operation have any new ideas or plans regarding middle platform constructions or organized structure adjustment? And second is about the Pomegranate Plan. And how do you balance the mature single store model to share and do you balance the long-term investment cost of the new brands with the company's short-term performance? Do you currently have any relatively mature mechanisms and methodologies to further improve the probability? And my third question is about further optimization measures there are for cost and expensive controls going forward.

Thank you, Mr. Lai, for your question. There are a total of 3 questions, and I will take them one by one. In terms of the middle platform capability building, overseas is similar to China, but the overseas characteristic is that each country has different consumer habits, labor regulations, supply chain tax, and marketing environments. There is no single set of operating methods that can be directly replicated across all markets. Therefore, the principle for overseas Middle platform construction is the headquarters should build common capabilities well, whilst the regions and stores should run their local business well. In terms of division of labor, headquarters centrally build common capabilities such as digital systems, bulk supply chain, personal management, financial management, and a membership system, standards and infrastructure. Regional teams then adapt and implement these capabilities in combination with the local market conditions, whilst specific operational decisions are left to the frontline teams who know the local markets and customers. From an organizational perspective, HQ's role will increasingly become that of a supporting platform, and frontline autonomy and operation will continue to be preserved. But things such as food safety and service quality will not be relaxed in any way. Currently, there are 2 projects that are running relatively smoothly. One is Haidilao Malatang. Currently, we have both in Canada and one in Japan. It is a simple and fast casserole and easy-to-run low barrier. In terms of turnover efficiency and operating performance, both meet our expectations. We are also looking at the U.S., Canada, and other markets. We will continue to verify its reputability. Others is the Japanese Izakaya. It is a product offering focused on sashimi, yakitori, and Japanese side dishes. At the moment, in Tokyo, the customer acceptance and operation stability are continually improving, and the second store is being prepared in Osaka. Regarding the balance between long-term investment and short-term performance, we verify the certainty with a small cost. Each project starts with 1 or 2 stores. Investment per store is not large. Trial and error cost is controllable. It will not have a material impact on the short-term performance. During the process, if operating performance or customer experience does not meet expectations, we will make adjustment without blindly pursuing scale. So the real significant spending comes in the scale replication, and we only allocate replication resources to models that have been verified and proven viable. So once proven, the company has already designed the return paths and expectation for projects in the replication phase. Your third question about the cost control. Currently, it is not about compressing cost across the board, but to narrow the gaps between the stores. There is still imbalance in operating performance among stores. Lifting underperforming stores to the average levels and this is a better way forward. And if we continue to compress store-level investment, this will ultimately harm customer experience and that is not the efficiency we want, nor is it sustainable. We have identified 2 sources of improvement. The first is operating leverage as the second half enters the peak season. Customer traffic and the table turnover maintain good performance. Revenue growth itself will dilute relatively fixed costs such as labor run and depreciation. Second is the daily refinement of staffing and scheduling efficiency. Procurement and supply chain and inventory shrinkage, we will continue to optimize these areas as routine work and not dependent on peak season. And right now, we still focus on our investment in Pomegranate Plan, and we are not going to be stopping due to short-term profit pressure, but we will control the pace and strictly manage budgets. So as you can see with the new brands gradually contribute to revenue and the middle platform capability building completes its major investment phase, this gap will gradually narrow.

Thank you, Mr. Li, for your comprehensive response. Our next question comes from Zeng Jun from Huatai Securities.

Thank you, Mr. Li and Ms. Qu. This is from Zeng Jun from Huatai. I would like to congratulate the company on your very stable performance. My first question is that with the more Chinese hotpot and catering brands going overseas, how do you view the competition? And especially that you are quite competitive in the China market, how do you view the overseas competition? And especially for the Pomegranate Plan in this phase where the brands are not yet established, how do you view the competitors' entry, for instance, in terms of your brand spots, and what are the localized approach that you would adopt? And my second question is that we can see table turnover performance has been good, average is steadily rising. What specific measures are used to improve the stores that need improvement? And in addition, what are the planned measures that you have in mind?

Great. Thank you, Ms. Zeng, for your questions, and I will take the first few questions, and Ms. Qu will answer the third question. Number one, in terms of overseas market, apart from Chinese cuisine hotpot, we also look at the entire dining market. Currently, overseas consumers' acceptance of Asian cuisine and Chinese food continue to rise. There is a lot of room for development. Our main brand is in the hotpot segment and Chinese cuisine. We are still cultivating the market and raising consumer awareness far from a zero-sum competition at the moment. Therefore, more Chinese brands going overseas is a positive sign. It validates the real demand existing and will also accelerate the process of overseas customers getting to know and accept Chinese cuisine, expanding the overall category part. But of course, we maintain a healthy respect for competition. We will focus on doing our own things well, continue to enhance brand appeal through product, service, and customer experience, especially by diversifying our customer base and continually improving the proportion of local customers. For Pomegranate projects, they are relatively diverse, including incubating and operating restaurants serving local cuisine. It's not about brand, but it's about model and capability first. For these projects, being the first to enter is not the most critical factor. What matters the most is to really prove the single-store model and make it replicable. Second, in terms of the overseas brand building, we don't really need to increase the marketing spend to buy the buzz. We center on product, service, store experience to let buzz grow organically. Marketing expenses have always been kept at a reasonable level, and what we pursue is discussion, conversion, not just impressions. There are 3 layers. The first layer is to place marketing creativity and execution locally. Teams in each region have considerable flexibility to collaborate with local IPs, artists, and games to plan around local festivals and major events, and to interact with customers on the local online platforms so that the activities are rooted in local culture and feel familiar to local customers. Second is to make the products themselves carriers of communication. We launched a coriander-themed product series in some of the regions. Coriander as an ingredient is strongly loved or hated by people. And we built a complete product portfolio around this theme, extending from soup base to dishes and snacks. Generated excellent organic discussion and in-store conversion. We plan this every season, and with the same logic. The theme selection comes from the real interest of local customers, while supply chain and R&D are centrally supported by the company. And number three is to capture and retain the buzz. If it only comes once, then the value is limited. We continue to connect market activities, member operations, and online attention is directed to offline stores. After arrival, through membership benefits and refined operations, it is converted into repeat purchase and referrals. Buzz is the entry point. Membership and repurchase are the lasting accumulation. Finally, we must return to the fundamentals. No matter how front-end marketing changes, the metric of win value is all about customer satisfaction. Customer willing to come again and recommend us to other people. This is where the brand influence truly takes root. Marketing can amplify the process, but cannot replace it. The third question about turnover performance and what are the specific measures that we have. I'll have Ms. Qu to answer this question.

Thank you, Ms. Zeng, for your question. I will take your third question. For Q2, our overall increased by 0.1 turn year-over-year. The trend is healthy, but there is indeed divergence among regions. East Asia and Southeast Asia perform better, while North America and other regions still have room for improvement. Take North America as an example. The issue for some stores is that customer base structure is relatively concentrated, and the coverage of mainstream local customers is insufficient. For instance, if there are changes in the local immigration or visa policies, this can cause a fluctuation in traffic. In the short term, we'll drive store traffic by adjusting menu combination, off-peak operations. But at the end of the day, it's really about diversifying the customer structure, solidly develop surrounding customer groups and member operations, and localize the marketing, reducing reliance on any single customer segment. This is our long-term direction across all overseas markets. In other regions, there are external factors such as geopolitics, which are beyond our control. What we can do is to adjust operating strategies and control expenses in a timely manner based on local conditions. At the moment, we can see that the negative impacts are gradually diminishing. In terms of mechanisms, the headquarters' role is to help stores accurately identify problems, and using operating data to attribute underperforming stores by table turnover on a store-by-store basis, whether it's a customer base issue, a trade area issue, or operational issue. And we will be looking at solutions, for instance, whether we will be relocating, adjustments, rather than continuing to invest just to maintain the store count.

Next question, please. It comes from [ Wei Jiabao ] in CITIC.

This is [ Wei Jiabao ] from CITIC Securities. I have 3 questions. Number one is, what is the outlook for the average unit price per customer trend in Q3 and Q4, and why? What are the specific measures that you will be taking if there are price increase or decreases? And second, which region will be the focus for store openings in the coming quarters? Will you accelerate openings in the regions with a few current stores or enter into entirely new countries? Next question is on the investment and payback period in each region compared with the past, are they improving, are they flat, or increasing? And what are the reasons for these changes behind those, if any?

Thank you, Mr. Wei, for your question. Your first question with respect to the unit price for Q3 and Q4. Right now, we don't really have any plans for a uniform price adjustment. We will not just simply pass all cost on to customers. Each market will adjust autonomously based on the local customer acceptance, the competitive environment, and product structure. We pay more attention to the value perceived by customers rather than simply pursuing higher prices. For instance, we add new products across different price ranges, adjust the set meals and combo products, and give customers more choices. So that's our unit price. And with respect to store openings for the second half and we expect double-digit new stores to open in North America, East Asia, and Southeast Asia. In addition, there are still about a dozen stores with substantial progress, among which stores in North America and the U.K. are already in construction phase and will open successively over the next 2 years. Layout and business expansion in existing countries continue to be handled by each country in a bottom-up manner. And the project advancement pace in each country is basically consistent with its operating rhythm. For new entrants, headquarter will more cautiously assess market conditions, consumptions, and specific site locations. There is currently no definite entry plan for new countries. We are under discussion, but they are not yet definitive. On your third question, for new stores currently, we are looking at a standard payback period of 3 to 4 years, roughly. Southeast Asia, relatively faster, and Europe and America, relatively slower, versus the past, each region has become more careful and prudent in site selections. So the overall store payback periods are more controllable, and quality has also improved. For single store investment fluctuates due to factors such as location, store size, and decoration style. In the meantime, decoration and labor cost in some markets have indeed risen over the past 2 years. We will continue to control investments by optimizing store formats, decoration design, local procurement, and construction management, and overall per store expenditure remains stable.

Our next question comes from [indiscernible], Ms. Jenny Lee.

Thank you for giving me this opportunity to ask a question. I have 2 questions here. Number one, which is about the localization of supply chain. For instance, Singapore and Malaysia in these areas in Southeast Asia. Do you have central kitchens? And do you have plans for localization of central kitchens and supply chains in these areas? My second question is about the impact of exchange rate fluctuation on your net profit and hedging, because we can see that there is an impact to a certain degree on the net profit. And what are the control measures that you have taken? And perhaps you could share with us on those points.

Thank you, Ms. Lee, for your question. The first question on supply chain and central kitchens. In Singapore and Malaysia, after many years of operation, local procurement and supply chain systems have become mature. For products that can be stably procured locally and meet quality requirements, we will localize as much as possible. For some core seasonings or products whose local supply is not yet stable enough, we will continue to source from central kitchens or established suppliers. Central kitchens do not necessarily expand linearly with the store counts. We will consider store density, delivery radius, and capacity utilization. Existing central kitchens have a surplus capacity. Then we will also try to do some external sales to improve capacity utilization efficiency. With respect to the exchange fluctuation for Q2, that was indeed quite pronounced, and this is mainly due to base effects. Same period last year, we recorded a larger foreign exchange gain. This year it is a loss. Positive and negative combined amplified the year-over-year fluctuation. But it should be emphasized that this is a non-operating, non-cash impact from a currency translation, does not reflect the changes in the underlying business. Excluding foreign exchange gain losses, operating profit and operating profit margin in Q2 both improved significantly year-over-year. Therefore, we ourselves focus on the operating profit measures. In exchange rate management, our approach has 2 layers. The first layer is natural hedging. That is, most of our revenue and costs occur in the same market, local collections, local procurement, local labor, and rent repayment. The higher the degree of the business localization, the smaller cross-border exposure that truly needs to be managed. The second layer is for exposures that do exist, such as centralized funds and cross-border settlements. Company will continue to monitor them, and based on the size of exposure, hedging costs, local compliance requirements, evaluate appropriate funds and exchange rate management methods. However, we will not engage in speculative Forex operation just for the sakes of reported numbers. Overall speaking, we are quite cautious.

Zhongshan Securities, [ Mr. Zhong Ye Cheng ], please.

Hi, everyone. This is [ Zhong Ye Cheng ] from Zhongshan Securities. I have 2 questions. Number one is about stores If we divide them into mature stores, relatively new stores, and new stores, are there significant differences in the table turnover and store model among them if we compare, and which ones would perform better or vice versa? And my second question is about incentives for overseas headquarter management teams. And we are going overseas early, and we have a large scale, relatively sound talent pipeline with more and more Chinese cuisine brands going overseas. So it's likely that there are people who will be approaching your staff and your talent. How do you ensure the team stability?

Thank you for your question. And on the first point, the store age itself is not the key factor determining store performance. And the difference among mature stores come from the trade areas and operational capabilities rather than how many years they have been open. The real impact of a store age is mainly in the first 6 months after opening. New stores need to go through a ramp-up period of team integration, developing surrounding customers or groups, and stabilizing operating processes. This is a normal pattern. Taking 2024 as a dividing line, among 107 stores opened from 2018 to 2023, about 50 achieved a positive cash flow in the first month of opening. Among the 27 stores opened from 2024 to June this year, the proportion rose to about 78%. In other words, the ramp-up speed of the new generation stores is significantly faster than before. The underlying reason is that in recent years, we have tightened requirements and site selection standards, investment calculations, store format design, and store manager reserves. Stores are opened more precisely, and preparation before opening is also more thorough. Your second question, with respect to the evaluation, there are 3 levels. The core of a store manager evaluation is about, on one hand, employees, on the other hand, customers, with a focus on customer satisfaction, employee development, and long-term store operating quality. Business results are included in incentives, but they are not the only metric, because focusing solely on short-term profit can easily sacrifice the employee and customer experience. Regional teams are more results-oriented, looking at operating performance, growth quality, and talent development. Headquarter functional teams are evaluated on whether they can truly help frontline improve efficiency rather than merely completing their own tasks and targets. In terms of talent stability, intensified competition is inevitable, but retaining people is not only about compensation, but also growth space and operating space. Haidilao went overseas early. Its greatest advantage is that it has already cultivated a group of local store managers and regional managers from the frontline. They have a deep understanding of the local market and company culture. As new stores expand, new regions are entered, the new Pomegranate businesses are explored, outstanding managers will always have the next bigger stage. They can also share in the fruits of the business growth through incentive mechanisms. This is our most fundamental way to maintain team stability.

I would also like to thank the management for your very clear answers, and I also wish the company a bright future. Thank you.

Thank you very much, everyone. In the interest of time, this concludes today's conference earnings call. I'd like to thank all the investors and analysts for joining us in today's call. Thank you, and we'll see you next time. [Statements in English on this transcript were spoken by an interpreter present on the live call.]