Guiming Holdings: Robust Same-Store Sales, Coffee and Dine-in Become New Growth Engines

Overview

This report is based on Goldman Sachs Asia team's field research on Guiming Holdings, focusing on post-holiday consumption trends, same-store sales performance, and company strategic priorities. The report believes that despite short-term impacts from weather and holidays, Guiming's recent same-store sales performance has been robust, meeting internal expectations. With increasing penetration of coffee categories and strategic optimization of dine-in business, the company is expected to achieve sustainable same-store growth while maintaining good profitability levels for franchisees. Maintain 'Buy' rating, target price HK$36.

Core views

Recent Operating Trends and Same-Store Performance: Management stated that recent same-store sales (SSSG) performance, including the May Day Labor Day holiday, met expectations. Although Q1 saw a sequential decline in delivery占比 due to Spring Festival factors, it still showed an expanding trend YoY. Management expects that as subsidy efforts increase starting April, full-year delivery占比 will continue to rise YoY. Notably, management believes current subsidies have not triggered vicious competition on the supply side, as prime locations are limited, and last year's increase in delivery占比 had put pressure on store-level gross margins. Coffee Business Becomes Key Incremental Driver: Currently coffee sales占比 is about 20%, the main driver for this year's same-store growth. From a margin perspective, corporate-level coffee gross margin is slightly below average, but considering labor costs, store-level coffee gross margin is even higher than tea drink products. Currently coffee business is still in customer acquisition phase, management believes that in the future as scale expands and user mindset matures, there is pricing power room for coffee products at both corporate and store levels. Star product 'Bitterness Ends with Citrus' peak sales占比 reached 10%, currently remains at high single-digit占比. Strategic Focus Shifts to Dine-in and Store Upgrades: Improving dine-in experience is one of core strategies for management this year. Specific measures include using more rational subsidy levels to control prices, making dine-in channel more price advantageous compared to delivery, simultaneously launching breakfast hours and 'Bring Your Own Cup' activities. Currently over half of stores open before 8:30-9:00 AM, morning period (before 11 am) sales contribution accounts for approx. low double-digit percentage of full day. In addition, company plans to add 6000-7000 6th Gen stores this year, approx half new stores, half existing store upgrades, compared to renovation capacity tight situation in 2025, this year's store upgrade capacity has increased. Franchisee Profitability and Cost Control: 2025 franchisee avg store profit achieved YoY growth, although introducing coffee machines increased Capex, payback period still stable at 12-18 months. Year-to-date franchisee profitability remains substantial, management believes currently no need to provide additional subsidies to franchisees. Regarding gross margin, management is satisfied with current level, expects to remain relatively stable long-term. Among raw materials packaging cost占比 is small, PET/PP per cup cost impact limited, and company has achieved dairy supplier diversification. Regarding HQ labor costs, although introduction of high-quality talent may lead to avg salary increase, total employee count is not expected to increase further.

Analysis framework

The report adopts a typical 'top-down' combined with 'bottom-up' analysis approach. First, assess overall consumer environment potential impact on the company via the macro consumer observation window of 'Post-Holiday Consumption Tour'; Second, dive into micro operational layer, deconstruct drivers of same-store sales (e.g., delivery vs. dine-in, new category contributions) via communication with management; Third, from chain interest allocation angle, focus analysis on franchisee profitability and payback period to verify business model sustainability; Finally, combine store expansion plan (quantity and quality) and cost structure changes to derive future profit growth path. This analysis method emphasizes the balance between single-store model health and scaled expansion in the chained retail industry.

Methodology notes

• Industry/Industrial Analysis FrameworkPrice/Volume Breakdown

  Drivers Breakdown of Same-Store Sales Growth (SSSG)

  Report breaks down same-store sales growth into dimensions such as foot traffic, average ticket size, product mix (e.g., coffee占比), helping investors understand if growth comes from selling more or at higher prices, or from increased占比 of high-margin products.

• Company Fundamentals and Financial Framework

  Unit Economics Analysis

  Focus primarily on franchisee single-store profit, Capital Expenditure (Capex) and payback period, this is core indicator to evaluate chain brand expansion quality and sustainability, rather than only looking at total revenue growth.

• Competition and Strategy FrameworkValue chain analysis

  Channel Profit Allocation and Subsidy Strategy

  Analyze delivery platform subsidy impact on terminal price and store gross margin, and how company optimizes channel structure by adjusting price difference between dine-in and delivery, reflecting consideration of interest allocation across value chain links.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Guiming Holdings (1364.HK)

  Direct beneficiary target, report coverage subject

  Strengths

  Robust same-store sales, strong coffee category growth, healthy franchisee profit model, large store upgrade potential

  Weaknesses

  Coffee business still in customer acquisition phase, pricing power not yet fully released

  Risks

  Difficulty managing large store network, intensified competition, food safety issues

Key data

• Coffee Sales占比~20%April data, continuously supporting same-store growth
• Franchisee Payback Period12-18 monthsStable against background of increasing coffee machine Capex
• 2026 New Store + Upgrade Target6,000-7,000 storesApprox half new stores, half existing upgrades
• Morning Period Sales Contribution~ Low Double-Digit %Refers to sales ratio before 11am占总全天 proportion
• Target PriceHK$36.00Corresponding to approx 42.9% upside space

Impact & implications

The report believes Guiming is building a more robust growth model by optimizing product mix (coffee) and channel structure (dine-in). Stability of franchisee profits provides solid foundation for company's subsequent scaled expansion, while store upgrades help enhance brand image and long-term competitiveness. For investors, focus should shift from simple opening speed to improvement of single-store quality and monetization ability of new categories.

Risks

• Insufficient ability to manage large store network
• Store expansion speed lower than expected
• Poor single-store productivity performance
• Intensified competition, fashion risks and price wars
• Increased store-level costs
• Subsidies to franchisees exceed expectations
• Weakening economies of scale effect brought by geographic expansion
• Food safety issues

What to watch

• Sales占比 and gross margin changes of coffee category
• Actual effectiveness of dine-in business improvement measures
• 6th Gen store upgrade progress and Capex situation
• Franchisee profitability level and stability of payback period