SUPER HI INTERNATIONAL HOLDING LTD.

Hi, ladies and gentlemen, the investors and analysts. Hello. Thank you for attending 2024 Interim Results Call of Superhot International. The company management attending the conference are Ms. Yang Lijuan, Executive Director and CEO of the company, Ms. Qu Cong, Financial Director and Board Secretary. Today's conference call may include a forward-looking statement, which encompasses the company's strategy, business plan, and performance outlook. The content discussed in the earnings conference, along with any comments and responses to your questions, reflects the management's views as of today. Please refer to the latest safe harbor statement in the earnings press release that applies to this conference call. This conference call will be conducted in Mandarin Chinese with an external agency providing simultaneous translation into English. In case of any discrepancies, please refer to the original Chinese content. The presentation materials for the conference call have been uploaded to our IR website. We encourage you to review them at your convenience. Next, we'll invite Ms. Yang Lijuan, Executive Director and CEO of the company, to review our Q3 performance.

Thank you. Hi, everyone.

I am the executive director and CEO of Superhot International. My name is Yami Jent. Allow me to introduce the third quarter business performance of Superhot International. In Q3, our average table turnover rate was 3.8 rounds, an increase of 0.1 rounds year over year. We received a total of 7.4 million customers, an increase of 4.2% year over year. The revenue was 198.6 million US dollars with an increase of 14.6% year-over-year. Our company's operating profit margin was 7.5% year-over-year, 1.8 percentage points. First, we have promoted stores to improve their business from the so-called three spreadsheets, that is the management, table which is about the stores on-site for color coding charge. The operational table really allow the stores to monitor the financial performance. Also, we have the basic spreadsheets that allow our employees and customers to receive better management and also service quality as well. As a result, in the third quarter, more stores have improved their customer experience and also the unit economics as well. In addition to that, we have conducted a more comprehensive and detailed sorting and sterilization of our services and business operation as well. For example, for our members, students on their special occasions such as birthdays, weekends, holidays, we offer customized services which allow us to continue to improve our service quality. Number three, we also implemented the so-called dual management policy with more national managers and excellent store managers managing another store on top of their home store, which allowed them to really replicate good management to more stores. In addition to that, we also began to study how to divide smaller units of management within a store so that more people can be responsible for different parts of the business, and we also allow different parties to have their own spreadsheets for management, which can help us to deeply stimulate the passion of each employee to make sure that the management of the store and also the organization of the management become flatter and easier. Number four, in terms of our headquarter empowerment, we have now integrated the product and marketing departments. We examined the menu structure and also marketing activities of various regions and countries And we have unified the management of the trade business of various countries and regions from the source of procurement to improve our operational efficiency. In August, our product team really optimized a highly acclaimed hot pot dish, Pork Belly Slices in Singapore, and really launched the so-called tender process. pork belly item which has now been ordered with high popularity among our customers with over 10% of increase of selection actually for three consecutive months and number is still rising. And also in August, we also upgraded our flagship hot pot sauce as well, allowing more fresh tomato to upgrade our taste. And during the Olympic Games, we also launched Olympic theme kind of bundle that allow more popularity for different countries as well. Now, number five, we continue to innovate marketing activities. In July, we actually have a crossover event with a really well-known video game, LOL. and we attracted over 600,000 customers to participate in the activity as well. By the end of the event, a total of over 12,000 co-branded dishes were sold, which are deeply loved by our customers. In September, we also launched a series of really fun merchandise for young people, including, for example, hot pot ingredients and other themed toys as well. customers can participate in the role-play activities with the waiters and really enjoy the fun of the immersive experience. Now, when it comes to our operation, first of all, when it comes to the store network, our current base of store number is relatively smaller in terms of store expansion due to construction and also processing preparation. No new stores were opened in the third quarter. In June, we opened a store in Cambodia. And so far, we've opened nine new stores this year in total and another four. Single-digit number of stores will be renovated in December, and the total year estimate for the number of stores newly opened will be double-digit. And after our adjustment, we actually are now able to optimize the utilization of our resources that allow us to improve our operational efficiency. Our country managers are responsible for overseeing store openings as well for the coming year and also beyond. They have already identified several opportunities for expansion, including opening new stores in existing countries and regions and also expanding into countries Lower tier cities and also outside of current countries and footprint as well. The headquarters will assess the suggestions and proposals and oversee the quality of the new stores for stirring a positive cycle of growth from the ground up. In addition to our basic hotpot offerings, we also have initiated the so-called pomegranate project. We have actively explored catering projects in various countries as well. And our headquarter will provide resources such as market research, product development, brand marketing, and design and marketing. other support to empower these initiatives effectively so that we can incubate other types of restaurants such as hot pot, barbecue, fast food, and additional categories as well. Looking beyond, we have established our long-term goal as becoming a leading global integrated restaurant group so that we can continue to improve our operational efficiency. So that's all for my introduction. Coming up, our financial director, Ms. Chu Chung, will continue with the financial performance update. Thank you, Ms. Yang. Hi, everyone. Allow me to give you a brief report of our Q3 financial report. In Q3, we achieved $199 million. million US dollars a year-over-year growth 14.6 percent is because first of all our network continue to expand we continue to also increase our average spending per customer as well and we also contributed a lot when it comes to our increased traffic and also table turnover rate as well among them you know we are operating income Our delivery was 2.6 million US dollars year over year, increased 8.3%. And also, we benefited from our popularity of the hot pot seasoning products and also our sub-brand food among local consumers and retailers as well. When it comes to our costs and expenses, our costs Raw material and also consumable use was optimized by 1.4 percentage points year over year. And as a result, we also are able to improve our gross profit margin as well. Our gross profit margin was optimized because of a number of reasons and factors. Our employee costs were increased by 0.9 percentage points, and it was mainly because of, on the one hand, we increased the number of store employees to ensure customer satisfaction and also the quality of the store's management. On the other hand, some countries also increased the minimum wage per country, so the overall labor cost has increased as well. Rental expenses also increased. decreased and optimized year over year mainly due to the economy of scale generated by the increase in revenue as well. Our water and electricity expenses, our utility bills also were optimized because of The increase of internal revenue base, in addition to that depreciation and amortization also was basically at the same level as last year. For the third quarter, our company level operating profits was approximately $15 million, an increase of 1.8 percentage points. It was mainly because, first of all, the table turnover rate increased and also the average spending per customer increased. In addition to that, we optimized the supply chain and also better control our costs, which allow us to improve the operational efficiency. In the third quarter, our net profit of the tax was also optimized because, you know, basically amounting to 38 million US dollars at the same time. Because of the foreign exchange gains in the third quarter, we also generated extra income where the last year, the same period last year, the foreign exchange lost. was recorded and is mainly due to the exchange rate fluctuation. For the third quarter, we served a total of 4.2% of more customers as well. And the table turnover rate also increased by 0.1 rounds year over year. Our average spending also increased by 2%. 2.1 US dollars per guest. And it was mainly because, first of all, we had made a reasonable adjustment to our menu and marketing activities, providing customers with more choices. In addition, compared to last year, the overall impact of exchange rate fluctuation on customer spending was slightly positive as well, which contributed to the overall increase in customer spending as well. The average daily revenue of per single restaurant also recorded an increase by about 36%. First of all, South Korea continued to lead in the performance and also after our optimization in Japan, including major adjustments in two stores, we were able to actually improve their table turnover rates by 0.5 rounds as well. North America table turnover rates was at the same level as last year. The average spending increased by 2.3 US dollars. per customer as well and it was mainly due to our adjustment in the organic activities and also our provision of better quality and wider range of dish selection that allow us to attract a wider customer base as well. For Southeast Asia, For the third quarter, an increase was also recorded for the same quarter last year. The food traffic has increased significantly, and we have actually benefited from the foreign exchange rate fluctuation. For other regions, the average table turnover rate was 3.8%. slightly slower than the same period last year. The main reason was because of the slowdown of two stores in the UK. We're still ramping up the operational results in the UK. In addition, the operation in Australia and the UAE were normal with an improvement recorded compared to the same period last year. When it comes to same store performance, we have recorded over 106 same store performance as stores that has recorded same store performance within the same region. Same-store performance basically was similar to the overall trend of the same region. We're not going to repeat here. That's all for our very quick review of the third quarter performance. We are now ready for your question. All right. We now have started the Q&A session. The first question comes from Huatai.

Ms. Sun Quan, please go ahead. Hi, please go ahead. Hi, good evening.

I am from , can you hear me okay? Yes, we can. All right, great. Thank you so much for giving me the opportunity to ask the question and congratulations on the excellent performance. I actually have three quick questions for you. The first one is that for this year, we have observed that you actually balance the quality and quantity of new stores open. Would you mind sharing with us your store opening plan for the next year? My second question is that during your presentation you mentioned a new initiative that's about incubating new brands. Is there any updates that you can share with us, new brands of restaurants and also the uni economics? My third question is that we notice that the ASP, the average spending per customer, actually has improved for the third quarter. And how does it really vary from region to region? And what is the competitive landscape as well? Especially in Southeast Asia, we also see that there are some other competitive brands from China that are doing their overseas expansion in Southeast Asia. Does that change our competitive dynamics? Thank you. Thank you for your questions. Now, recording the first questions, I think it's about store opening and plan for the next year. I think Ms. Yang will be in a better position to take that.

Miss Young?

All right, I'll take her place. Now, about store opening, as was mentioned by Ms. Young, we have already opened nine new stores so far this year, and we expect that a single-digit number of stores will complete renovation and open for business before end of the year. We expect to open a total of double-digit number of stores for the year of 2024. And for next year and beyond, we have already signed contracts for more than 10 projects and are promoting new at preparing for their renovation. We also have also identified some new opportunities for increasing our store numbers in some lower tier cities and new markets as well. And we are quickly speeding up the process. Now, there are projects in North America, Southeast Asia, East China, sorry, East Asia, Middle East, and Europe, et cetera.

Hi, Ms. Young, are you back? Great. Thank you for the question.

So for next year, when it comes to store opening, again, we have opened nine new stores this year so far. We expect that single-digit number of stores will complete renovation and open for business before end of the year. We expect to open a total of double-digit number of stores in 2024. For next year and beyond, we have already signed contracts for over 10 projects. We're quickly preparing for their opening. We also have identify a number of opportunities for increasing our store network in lower tier cities and new markets. We're quickly doing site selection and contract signing. Now, when it comes to new regions, we have projects in North America, South East Asia, East Asia, Middle East, Europe. We are not setting a specific number of store opening targets to avoid signing contracts prematurely or inaccurately. In addition, we are encouraging country managers to actually participate in our Penelope initiative. We are encouraging them to explore the possibility of opening different formats. As you mentioned, we are incubating many brands. We now do not have any well-established brands yet. trying different formats, for example, our halal hot pot and also some noodle shops. They are continuing to refine their products and their unit economics and business model as well. Our halal hot pot is close to breaking even, but the products and services still have room for growth. And right now, they're not in a very stable sort of operational status at the moment. And after our adjustment and operational reform, our noodle restaurant in America has turned, you know, to positive profit making. But compare with our other successful sort of Chinese fast food and restaurants. previous restaurants in North America. There's still room for growth for this new brand. We also are preparing noodle restaurants in Singapore and we're trying to combine fast food and also some office targeted combo meals on top of the original business model. But we will keep trying. Thank you so much. That's all for my question. That's all for my answer. I think we also have a third question, which is about the competitive and pricing dynamics in different regions. Now, obviously, competition in the F&B industry has always been very, very fierce. Price competition will always exist. And so price competition. Adjustments, including discounts, off-peak periods, discounts, etc., will continue to exist for a long time. We will pay attention to the reasonableness of our pricing. On the one hand, we will maintain cost-effectiveness. On the other hand, we also have to take into consideration our operating costs as well. In Southeast Asia, we now are seeing a lot of Chinese brands expanding their operation there. But on the one hand, this makes competition more fierce. On the other hand, we also are seeing the maturing of the market because together with other brands, we are helping to grow the local supply chain and also to grow customer mindset there. They're together as well. We firmly believe that improving the experience of our own restaurants and for our own customers will be the way to go for the long run. And so we expect to maintain a reasonably fair level of pricing as before, but because of the fluctuation of foreign exchange prices. and also because of the supply chain changes, we might expect smaller adjustments, but overall the same level. Thank you. Thank you, Ms. Chi, Ms. Yang, for your answers. I don't have any further questions. Thank you. The next question comes from Cindy Gao with Morgan Stanley. Please go ahead. Hi, can you hear me okay? Yes, we can. Thank you so much for taking my question. Now, I also have three quick questions. The first one is that for Q3, you have made a lot of improvement in your profit and margin. And so going forward, do we have any updates when it comes to the guidance of margin and profit going forward for 2025? In addition to that, we also see that we have done a lot of new management sort of measures to optimize the front end and the back end. Is there any updates that you can actually report to us when it comes to the operating performance and results? Another question is that, you know, when it comes to the new stores that has been open so far for 2024, what are the latest performance or trends of performance and what is the expected payback period for these new stores? All right. Thank you, Ms. Gao. This is Chi-Sung. Let me just answer two out of your three questions that are about the financial part. This year, we still maintain our forecast of a mid-single-digit operating profit margin for the company. So the margin is calculated using the company's earnings before interest and taxes while excluding foreign exchange gains and losses. So gains and losses on financial assets and interest income for this quarter, our operating margin stands at 7.5%, showing a significant improvement from 6.6% in the first quarter and 4.6% in the second quarter. We aim to maintain this margin at a reasonable level in the fourth quarter. So for the whole year, the guidance has not changed. For a longer period, for 2025, for example, at least on a store level, 10% to 15%, store level margin is a reasonable level. And for next year, as we mentioned previously, we are preparing for some new store opening and because of our new brand incubation plan, We also believe that there will be upcoming expenses or investment for those new soil network and also for our new brands incubation. But when it comes to the details right now, we are not in a position to disclose too many details. So that's the first part of your question. Another question was regarding our new store performance. Now, we've opened nine new stores, I mean restaurants this year. As of September this year, we had opened eight new stores. Many of the stores have been performing as expected in terms of table turnover rate and recovery or payback cycle. One of them actually, during the first month of operation, already achieved profitability. And actually, one reaching profitability in the second month. The remaining stores are still in their ramp-up phase. In the Philippines, for example, for the first month and second month, they performed really well. But because of some external factors like social safety and security, our current performance is declining versus month one and month two. and we're trying to cope with those local challenges. That's all for my answer. I think Ms. Yang can take the last question regarding the implementation of new management measures and also any updates as to the operating performance. Thank you, Gal, for your question. Now, when it comes to our new management operation or new management measures, first of all, we've clearly established that store management is responsible for operations. We've actively promoted the use of the three spreadsheets management tool or three tables, which helps store management to have a clearer and more accurate understanding of customers, employees, and operational processes. We continue to refine the low base salary and high dividend structure. In Q3, we raised the dividend ratio for national managers and top performing store managers as well, especially those at A-level stores. Additionally, through our dual management policy, we've increased the dividend ratio for outstanding managers. making the incentives more substantial and attractive. There are definitely still room for improvement, but we can already see a lot of improvement on the operational efficiency. As a result, all of our indicators in the third quarter have shown year-over-year improvement, and we have further strengthened the capabilities of the product and brand marketing department within our functional teams, our supply chain management, product research and development, membership operations, marketing efforts have now really paid off with systematic and data-driven approach. Thank you. All right. Thank you for the answers. Very clear. I don't have any further questions. Thank you. All right. The next question comes from Liu-Lin Fei with CICC. Please go ahead. All right. Thank you. Hi, I am with CICC. My name is Lu Ningxi. I have three questions. The first one is that when we look at the overseas environment, macro economy face some headwinds as well. So what is the outlook for Q4 and next year's turnover in customer orders? In addition to that, are we actually happy with the current store management level? Do we expect to actually hear more? about store management. So is there any new KPI sort of systematic adjustment for store? In addition to that, we also hear that we increase the number of store employees to improve our customer satisfaction rate. Is there any room for further optimization of store labor in the future? All right, thank you for your question. Let me just first take the two questions regarding the financials. The first one about the Q4 outlook and next year's outlook of table turnover in ASB. First of all, the table turnover rate for Q4 basically went slightly higher than the same period last year. But quarter over quarter, the improvement is not that significant because basically entering Q3 versus Q1, Q2 rate First of all Q1 Q2 this year already improved quite a lot year over year because we have prioritized the optimization or the improvement of table turnover rate since the beginning of the year and so we really have been growing on a higher base And that is why the improvement has narrowed because of the high base. Now, obviously, we aim to maintain a relatively stable average spending, and we will continue to do our best to improve the table turnover rate. And for Q4, we expect to... record year-over-year improvement. You can expect to hear the specific results by the next quarter. In addition to that, we also believe that there are new opportunities to actually improve our performance in late-night hours because judging from this year, we actually see this exciting improvement. We used to think that late-night snacks is not a dining habit. of the overseas customers but now we actually see new opportunities when it comes to the average spending per customer we expect to maintain you know a stable level in Q3 we recorded improvement because last year we did not you know our previous marketing strategies were not scientifically you know sound and so this year we did a lot of improvement and with those improvements we actually record higher average spending per customers. And in the future, we actually expect sort of similar level of average spending. Now, another question is basically headcount per store. Now, our labor cost is about 33.1%, and that is a reasonable level because we want to maintain high customer satisfaction rate. And in the future, we're going to actually improve our operational efficiency, but we also will actually increase continue to improve our proficiency and operational efficiency as well. Now, we believe that the labor ratio is still fixed relatively, and significant improvement is not really realistic. Now, the last question will be taken by Ms. Young regarding the store management. All right, thank you for the questions. Now for Q3, definitely our management has improved when it comes to the results, but still, there are a lot of issues to be addressed. For example, we need to enhance the business of proficiency and also experience of in-store Managers and employees and problem-solving capabilities also need to be improved as well. We're continuing to transform our organization and really break it down to smaller units so that we can have better management efficiency. For instance, key employees such as every responsible person, back of the house team leaders, warehouse managers are organized into smaller units, accountable units. They are responsible for detailed reports and have their own mechanisms for establishing connections with their interests as well. And looking ahead, we are focusing on implementation of our brand incubation plant. We're now actively exploring different catering projects in various countries or different brand opportunities as well. And our headquarters really have empowered them by providing a lot of market research, product development, brand marketing services resources to empower them to incubate other brands such as, you know, barbecue, fast food, and other hot pot as well. Thank you. Again, just a reminder, if you have any questions, please press star one.

Now the next question will come from Wang Yueru. Ms. Wang Yueru, please go ahead.

Hi, thank you. Thank you for taking my question and congratulations on the excellent performance of the Q3. We have two questions here. The first one is about the overseas supply chain. Do we have any further plans for expansion and also, you know, Any prospect of reducing raw material costs? Another question is, were marketing strategies for each region next year based on the current trend of table turnover rate, which regions are expected to actually increase their marketing efforts? Now, the first question regarding the supply chain and raw material cost control is, Let me just first talk about our supply chain. Right now, in addition to the central kitchens in Singapore and Malaysia, which are on a bigger scale. We actually have a small-scale processing sort of warehouses in different regions and countries. At the same time, there is still a demand for central kitchens for stores. On the one hand, we hope to improve our standardization of products and increase gross profit margins with central kitchens. The other is to reduce the burden of the catching of cutting and matching work in store so that we can better focus on the customers in store. Therefore, in terms of supply chain construction, we now fully utilize the existing supply chain capacity, optimize the processes, and improve management capabilities For example, we optimize and upgrade existing products. We are actively seeking sources and we also are scouting for possibility for maybe improving efficiency or maybe building bigger central kitchens if possible. But before we do that, we are still focusing on those smaller scale processing warehouses to improve the efficiencies on the Overall, our target is really to improve the standardization of kitchen and also improve the efficiency. The majority of our work right now is to, for example, to integrate our current work and our supply chain and our procurement, et cetera. And we have been doing it since last year. And right now, we've already seen a lot of improvement. And when it comes to our protection, we believe that in the future, we can expect to see cost control outcome. Right now, we cannot give a very accurate estimate on the extent of optimization. Now, when it comes to the marketing events, right now, we place the main responsibility for marketing in each country, for each country manager. The headquarters set some red line rules that cannot be crossed. For example, We have to fulfill and be fully compliant with local regulations and laws, and also we have to respect local religions. But when it comes to the specifics of each marketing activity, it's down to each region, and each region is responsible for their own marketing strategy. The headquarter basically conducts the necessary estimate, calculation, supervision, and review in advance. but the actual implementation and planning are done by local markets. So that's our current strategy so that we can empower local regions and local stores. And right now we do not set specific targets when it comes to marketing investment for each region. All right. Thank you so much for your answer. Very clear. Thank you. The next question comes from Li Huaiyi with Mingsheng.

Hi, Ms. Young. Ms. Chu, can you hear me? Yes, we can. Hi, my name is Hua Yi. I'm with Mingxuan.

Thank you for taking my questions. Now, I have a question regarding the table turnover rate and also operating profit margin for mature stores. Now, obviously, we understand that they vary from store to store, from region to region. But what do you think is the appropriate and sustainable approach? level for mature and well-developed and established stores as well. And right now, do you think that they really differ from one country to another? Now, thank you for your question. Right now, when it comes to our store management We focus more on the, for example, payback period and also operating profit margin. Now, when it comes to the table turnover rate, I think one of the key challenges is how many tables you have. When you have fewer number of tables, obviously, your table turnover rates will be higher than the opposite. But then on the other hand, even though your table turnover rate might not be the highest, as long as you have a lot of tables, you still can record very good top line and also bottom line, I mean, operating profit margin for the store as well. I think a reasonable range for margin per store is 10% to 15%. For Southeast Asia, two years of payback time is reasonable. For the Western market, like Europe and America, three to four years are reasonable as well. Now, obviously, it depends. from project to project and also from site to site as well. And so I think as long as they are within the range, then that's fine. So that's a quick answer to your question. Very clear. Thank you. I don't have any further questions. All right. The next question comes from Jesse Chen. Hi, Ms. Yang, Ms. Chu. I have two questions. The first one is that since Ms. Young's arrival to the company, we have observed a lot of adjustment as was mentioned in the previous presentation or answer. We talked about the improvement of dividend ratio. So for different store managers, how do we evaluate their performance and what kind of bonus level are we giving out to them? Another question is that as was mentioned by Ms. Young, we have done a lot of optimization. uh when it comes to the store management and we did see improvement in efficiency and so for southeast asia and east asia when we look at the overall operating margin what is the current level and also miss young mentioned that for q3 east asia really outperformed the others and we also did some adjustment in south korea after the adjustment They improved significantly. And for Japan right now, you know, as you mentioned in your presentation, you also recorded some improvement. What was driving those improvements in Japan? Now, regarding your first question, which is, you know, the bonus level or dividend level, you know, for different stores manager. Obviously, this is confidential. We cannot give you too many details. But for a level store, obviously, the level, the ratio will be higher. And so level A soar is basically double the level of level C, and B is right in the middle. But unfortunately, we cannot disclose specific numbers. But when it comes to the operating margin in Southeast Asia and East Asia, now, we do not disclose the breakdown per region. I can only say that it's between 10% to 15%, which is reasonable. You also would like to understand the growth driver for our Japan stores. Now, when we examine our stores, we had two that encounter issues with their site selection. We did pause their operation, but there's opportunity for their, you know, resuming of business if the macro environment turn better, if opportunities increase. we are open to the idea of reopening those stores. And after the adjustment, we can now place more of our focus on, for example, maintaining our existing stores Now with our so-called three spreadsheet or three table and also the four color coding management method, we can now really improve the management efficiency and accuracy. And so customer experience can be improved, product quality can be improved, and environment can be improved. Also, we changed the pricing level in Japan for a period of time as well. We also lowered the pricing for, for example, affordable products or some really popular products or items so people can have a very first-hand experience of our sincerity of improving our service quality. That allowed us to gradually bring up the performance in Japan. And on the one hand, not only did we improve the table turnover rate, on the other hand, we also improved the revenue. But the whole process started last year. I mean, it's been quite a long period of time. And we are very happy to see that the adjustment and change in the management measure has paid off. Thank you. I would like to follow up with a question. After your series of measures or management adjustment, did you see operating margin or net profit margin to be improved in some mature regions such as Singapore? Now, specifically about Singapore, On the one hand, we did see improvement on the store level and also table turnover rate. We also saw improvement in Singapore as well. And also product structure and pricing, we did see improvement on both aspects to allow us to, for example, offset the inflation. And also we are able to fulfill the government requirements locally for the store. the increase of minimum wage. Thank you. Just a reminder that if you have any questions, please press star 1 1. The next questions come from Wang Yijie with Haitong. Please go ahead.

Hi, Ms. Yang, Ms. Qu. So I have one question.

So my question is about our future growth and also opportunities as well. We can see that we maintain a very stable pace of store opening this year and we saw also improvement of the performance as well. So what do you think is the opportunity for future store expansion and how are we going to penetrate more markets and countries? And also, When it comes to the penetration rate, what do you think the ceiling level is for each region, especially when you are localizing your store across the world, what measures have been proven to be effective? Now, thank you for your question. Future store expansion, I mean, internally, we do not set specific targets for each region. For example, for our hot pot restaurants, If we, I mean, based on our previous experience, we first of all will focus on improving the employee's performance and then increase the customer satisfaction rate by optimizing our performance. For example, product structure and pricing, etc. I mean, after we've done all those, typically we would see an uptake on the bottom line and also the overall revenue as well. And that actually allows us to have more opportunities for opening our branded stores in the region. So we actually do not set store opening targets for different regions beforehand because we believe in our own efforts because we did see that happen before. Through our improvement of services and product quality, we actually create new opportunities for opening new stores. And on the other hand, as we mentioned, we had this... Promo Grenier initiatives that are incubating different formats of restaurants, different brands. We also, with the dual management policy, meaning that we are encouraging and empowering our store managers to not only run their original store, but also run a second store, may or may not be the same hotpot restaurant, then we can actually see that in the future, it's possible that surrounding every Haidila hotpot store, we can see surrounding sister stores of a different format, different brands. Now, obviously, we still face a lot of challenges and headwinds We still believe that there's great hopes for the future and there's still a lot of white space to be filled. And this is definitely there is a blue ocean market out there. So we're not too concerned about store expansion opportunity. That's all. Thank you. Great. Another question is about your localization. Obviously, you've reached different regions. Could you also give us some review of the localization situation across the world? One of the metrics that we can see is the local clients penetration rate. Obviously, in Asia, we have a higher customer base that are from the local communities. And for some stores, we can reach like 80% to 90% of local clients. versus tourists. But then in Europe and America, we actually see a higher percentage of tourists, like Chinese or Asian tourists coming to the store more than local customers. But again, it depends on the site selection. For some restaurants, for those restaurants that are in non-Chinese community neighborhood, we also hire local American managers. We saw room for improvement, and we also saw great opportunities there as well. So, yes, overall, you know, we did see that big divide between local customers and tourists, Asian and non-Asian, but there's a lot of growth opportunities out there, and we can improve that further. Thank you. All right. Due to the time constraint, we will end the earnings call here. Thank you so much. See you next time.