SUPER HI INTERNATIONAL HOLDING LTD.

The investors and analysts, hello. Thank you for joining the 2024 fourth quarter and full year performance call of Super High International today. The company management participating in this call are Executive Director and CEO, Ms. Yang Lijuan, and Finance Director and Board Secretary, Ms. Qu Zhong. Today's conference call may include forward-looking statements about strategy, business plans, and performance outlook. Management's views are current as of today. For details, refer to the latest Safe Harbor Statement in the evening's press release. The call will be conducted in Chinese with simultaneous English translation provided by an external agency. In case of discrepancies, refer to the Chinese content. Presentation materials are available on the company's investor relations page. Next, we're going to invite Ms. Yang Lijuan, Executive Director and CEO of Superhigh International, to present the company's performance for the fourth quarter of 2024. Great, thank you. Hello, investors and analysts. I'm Yang Lijuan, Executive Director and CEO of Superhigh International. I'd like to introduce the company's performance in the fourth quarter and the full year of 2024. We insisted on implementing the three tables management and improving the four color cards capabilities. Combined with the factors of the year-end holidays, we achieved good results in the fourth quarter. Revenue was $209 million, an increase of 10.4% year-over-year. The average table turnover rate of Haidilao hotpot restaurants was 3.9 rounds, and same-store sales growth was 4.2%. The company's operating profit margin was 8.4%, an increase of 2 percentage points year-over-year. In 2024, we opened 10 new stores. The table turnover rate increased to 3.8 rounds, up 0.3 year-on-year. Total revenue grew by 13.4%, with same-store sales of Haidilao Hot Pot restaurants rising by 7.1%. Operating efficiency improved profits, leading to a restaurant-level operating profit margin of 10.1%, up 1.1 percentage points. year over year and a 23.7% increase in company operating profits. Despite overseas challenges, our company still demonstrated strong resilience. Next, I'll share our ongoing efforts in business improvement. First, we engaged both employees and customers. In the fourth quarter, we rigorously implemented the three tables management tool and the four color cards performance review tool. Emphasizing accuracy and excellence, we identify shortcomings in leadership regarding employee growth, welfare, compensation, and care. Therefore, besides the aligned interest incentive scheme, we also improved our systems and tools to enhance cohesion among diverse employees and foster material and spiritual connections. This really helped employees understand the corporate value of changing destiny with your own hands and make effective plans for their career growth. In addition to that, we enhanced customer engagement by creating various dining experiences like birthday celebrations, family get-togethers, and meals with friends. Introducing exclusive account managers strengthened employee-customer connections, allowing teams to efficiently attract customers and provide diverse services. And this method has incentivized a lot of our employees to provide better services with high quality. Thanks to our progress in engaging employees and customers, we can now implement our dual management store and multi-management store policies. Currently, we have nearly 20 outstanding managers who have successfully taken on double or multiple management roles for different stores. These managers not only oversee a greater number of stores with their exceptional management skills, but they also play a key role in developing a talent training pipeline. Number two, by concentrated on enhancing customer experience, we persisted in optimizing our products, services, and cost effectiveness to establish a distinctive identity for Heidi Lau. In 2024, we launched over 1,000 new products globally. Highlights include Lau Pai Beef in Singapore, Fresh Cut Diao Long Beef in the UK, and Fish and Shrimp in the US, all well-received by customers. Using a market insight, we developed a system that assess click rate coverage and gross profit margin optimizing our offerings and improving our supply chain. In 2024 we improved our research development and quality control. the product. We incorporated raw material traceability into production standards, enhance supplier grading and tighten ingredient quality checks.

Each supply chain segment

Each supply chain segment can intercept unqualified products, promoting accountability and ensuring higher quality dishes for our customers. Regarding services, we focused on expanding our services and building emotional connections with customers. For example, in some Malaysian and Canadian stores, we hired DJs for late night hours, improved lighting and atmosphere, and introduced snacks and drinks for late night cravings. We also piloted a nightclub-style decor in selected stores to create a diverse environment. In Q4, two celebrity collaborations events in South Korea were organized, which drew local fans' attention, increasing customer traffic and sales. Alongside enhancing the dining experience, we are also placing greater emphasis on takeaway options. We've introduced a range of quick-serve foods like spicy hot pots, rice bowls, and pasta across various countries' takeaway platforms. In 2024, our takeaway revenue saw a 15.3% year-over-year increase. effectively meeting customer needs and bolstering our revenue generating capabilities. When it comes to cost effectiveness, to maintain a high standard, country heads actually classify stores by local consumption, performance, and demographics. They allocated budgets to reward customers through better shopping environment, product quality, discounts, and surprises, aiming to build

long-term loyalty efficiently.

Through these initiatives, our stores across various countries and cities were able to better align with local conditions concerning products, experiences, environments, and cost effectiveness. we remain devoted to providing an exceptional high-delay experience in every location. Number three, we encourage our company to improve learning for better management skills and techniques to address store challenges. In Q4, we enhanced member experience through digital solutions, analyzing consumer data to boost engagement and visit rates. At the same time, we effectively waken up those dormant members. Heidi Lau's overseas membership exceeded 6 million by the end of 2024. Our new digital dashboard that we launched in October last year provided visit reminders and foster connections with customers on special occasions, such as on birthdays and anniversaries, increasing brand awareness. When it comes to store management, in order to enhance the overall level and quality, we've engaged a reputable management consulting firm. They utilize One Store as a pilot project to teach our grassroots employees how to interpret and utilize management and operational reports. This approach empowers everyone to take on an operator's role, fostering a more streamlined management structure. When it comes to our supply chain management, we enhanced our central kitchens and boosted production capacity to expand export channels and strengthen suppliers' negotiations. Our focus was on Southeast Asia and will be on Southeast Asia using our overseas stores to create supply benefits. Number four, when it comes to store opening, looking back in 2024, we opened 10 Haidilao restaurants across seven countries. Canada, South Korea, Malaysia, the Philippines, Indonesia, Thailand, and Cambodia. Concurrently, we optimized our store network layout and strategically timed our adjustments. We closed three stores in Indonesia and Singapore in 2024 due to expired leases and also our proactive adjustments. As of the end of 2024, we achieved a net increase of 7 Haidilao stores, bringing our total store count to 123. to operational locations. Globally speaking, we consistently implemented a bottom-up strategy with country managers leading the way in opening new stores. To date, we have signed contracts for over 10 new stores and more than 10 stores have progressed to the promotional phase. Number five, in 2024, we launched the Red Pomegranate Initiative, a significant strategy to foster innovation. We've created an incentive system for our internal employees with strong management skills and an innovative mindset. Additionally, we've assembled a dedicated support team to assist with market research, product development, and management operations. We've also explored various business models including barbecue and hot pot with prepared ingredients and a range of fast food options. For example, barbecue is a widely adopted business model around the world. Our focus was on selecting locations near high quality existing stores. This strategy aimed to ensure better customer traffic and allowed us to implement a dual-channel approach for multiple brands, which enhanced efficiency. Currently, we've signed contracts to prepare for the opening of two barbecue restaurants in Southeast Asia. Additionally, most stores are assessing and exploring opportunities to introduce barbecue or other secondary brands in the area. All of the red pomegranate projects required national managers to identify high-quality sites and tracks from the grassroots level. Headquarters will review these based on factors such as project quality and operating conditions. Our future objective is to become a prominent global integrated restaurant group. To reach this goal, we'll concentrate on improving five critical areas – customer experience, restaurant network, operational efficiency, new business ventures, and the capabilities of our headquarters. That was my introduction of the business performance. Now I'll head it over to Chi-chung to discuss the financials. Thank you, Ms. Young. I'll update you on the financials. Our total revenue for 2024 was $778.3 million, a 13.4% increase year-over-year. Our restaurants operating revenue reached up $747.3 million, 96% of total revenue, up 13% from 2023. Takeaway revenue rose 15.3% to $11.3 million, and other business revenue grew by 27.9%. to $197,000 due to the popularity of our hotpot seasoning and branded foods. Our restaurant turnover rate increased to 3.8 rounds per day, up 0.3 rounds per day from 2023, boosting revenue and efficiency. In 2024, raw material costs made up 33.1% of our total revenue. Optimizing and integrating the supply chain increased the gross profit margin by 1.1 percentage points. The ratio of employee costs to revenue was 33.3%, up about 0.4 percentage points compared to the previous year. Following the statutory salary increases during Q1 and Q2, we continue exploring incentive mechanisms enabling us to achieve salary growth for frontline employees while controlling the overall increase in employee cost, thereby successfully enhancing labor efficiency. Rent and utility expenses was 2.6% and 3.6% of revenue. Depreciation and amortization decreased by 1 percentage point due to increased revenue compared to the last year. Other operating expenses were 9.9% of revenue, consistent with last year. The measures mentioned increased our restaurants operating profit margin by 1.1 percentage points to 10.1% from last year. Despite a challenging environment in 2024, unrealized foreign exchange losses of $19.7 million cost our net profit to be $3.86 million less than last year, with a profit margin of 2.8%. Adjusting for non-operating factors like foreign exchange, our operating profit margin in 2024 was 6.8%, beating the target that we set last year. Now that was the overview of the full year performance. I would like to focus now on the Q4. The company achieved a total revenue of $209 million USD. a 10.4% year-on-year increase. The growth was due to more stores, increased customer traffic and table turnover rate, and a higher average customer spending. The Hy-D-Law restaurant's operating income was $199 million, making up 95.7% of the company's total revenue, with a 10% increase year-over-year. Takeaway revenue reached $3.5 million, and up 12.9% year-over-year, while other business revenue was $5.4 million, rising 22.7% year-over-year. This growth was largely due to the increasing popularity. Now let's look at the quarter's income statement. In Q4, raw material costs 67.684 million US dollars with a gross profit margin of 67.6% up by 2.4 percentage points year over year due to improved global supply chain management, better cost control, optimized production, and reduced waste. Employee costs were 67 million US dollars accounting for 32.2% of revenue. which is a slight decrease of 0.2 percentage points year over year. Rental expenses with 5.6 million US dollars accounted for 2.7% of total revenue, primarily due to an increase in revenue. Water and electricity expenses total 7.1 million US dollars or 3.4% of total revenue down 0.1 percentage point. Depreciation and amortization were 21.5 million US dollars 10.3 percent of revenue up a 0.3 percentage point year-over-year mainly due to increase in newly signed stores and corresponding depreciation expenses. Travel and other operating expenses total 222.11 million US dollars accounting for 10.6 percent of revenue consistent year-over-year. The company's operating profit in Q4 was approximately $17.5 million, an increase of $5.3 million, or 44.5% year-over-year. The operating profit margin in Q4 was 8.4%, an increase of 2 percentage points from 6.4% year-over-year. The increase was primarily due to revenue growth driven by increased table turnover rate and average customer spending and improved operational efficiency. Q4, the company's after-tax loss was $11.6 million, largely due to exchange rate fluctuations, resulting in an exchange losses of approximately $26 million, which is a historic high. In Q4, our operating cash flow was $31 million, $600,000 higher than the same period last year and stable compared to the previous quarter. By the end of last year, we had $255 million in cash and cash equivalent, a 66.7% increase from the end of 2023, largely due to improved operations activities. and unused NASDAQ losing funds since our IPOs in the US. In Q4, we served about 8 million customers, up 9.6% from 2023. The average table turnover rate was 3.9 rounds per day unchanged from last year. Average customer spending increased by $0.3 to $25 due to menu adjustment and marketing activities offering more choices. The average daily revenue per restaurant rose by $1,000 to $18,700. Performance in most regions has improved compared to last year, with East Asia experiencing notable gains in table turnover rate. East Asia showed outstanding performance this quarter. The turnover rate was 4.8, up 0.7 rounds from last year, and restaurant revenue increased by 16.4%. The turnover rate rose steadily, showing double-digit growth, and it's mainly... driven by the average spending and high efficiency of operation. North America's Q4 table turnover rate was 4.2 rounds, down 0.1 rounds from last year. The average spending per guest dropped by $2.6 due to ongoing pricing reviews and adjustments. Other regions, the table turnover rate in other regions in Q4 was 4.2 rounds. The average spending per guest decreased by $1.6 year over year, primarily due to an increase in the number of people per table in Australia. Southeast Asia, restaurant revenue increased by 7.7% this quarter with 5.4 million customers dining. However, due to the underperformance of new stores in Cambodia and the Philippines due to the macro environment, the overall turnover rate decreased slightly by 0.1 rounds to 3.7 rounds year-over-year. In Southeast Asia, the average spending per customer rose to $19.5, up by $0.4 from last year, due to improved marketing attracting a more diverse customer base. In Q4, 105 same-store restaurants had an average turnover of four rounds per day, matching last year's performance. And the same-store revenue growth was 4.2%. Regional performance mirrored the overall trend. That's all of our prepared remarks. Now we are ready for your questions. If you have any questions, please press star 11. The first question comes from Hilde Lynn from Morgan Stanley. Hi, management. I am Hilde Lynn from Morgan Stanley. I have three questions. All of these questions are operational and strategy related. The first one is, about your pricing capability and also average spending per guest. Actually, from North America to Europe, is there any pressure of consumption that you saw or witnessed in the last year? Any pricing pressure? What is our forecast of pricing and also average customer spending for 2025? And my second question is also about table turnover rate. What is your projection for 2025 table turnover rate? If there is room for improvement there, how are we planning to achieve that increase? My third question is about localization strategy on two levels. The first one is about our employees. Right now, how localized are our employee make-ups And is it more improved than last year or the year before last? Another question is that when we look at the guest breakdown or makeup, what is the percentage of non-local Chinese guests? Thank you. Thank you, Ms. Lin, for your question. Your first question is about our pricing, whether or not we feel pressure of pricing and also our pricing strategy. I think Ms. Yang will take the question. All right. Thank you for the question. Right now, when we face inflation pressure, given the restaurant competition, it is very important for us to consider reasonable pricing. First of all, we do not plan to increase our pricing easily. Mainly, we want to offer reasonable pricing and cost-effectiveness. That means that we need to make a better menu and also have better supply chain management so that we can guarantee a very good gross profit margin. And also we have differentiated pricing, you know, depending on the hours and also the customer group. So we give flexibility and autonomy of the region or country leaders for them to do pricing depending on the neighborhood of their stores and they have their own budget to do pricing or marketing promotion. They could either do a price promotion or add a portion of the meal or maybe provide better surprises, provide better dining experience and environment and atmosphere. So that was our pricing strategy. Thank you again for your question. you miss young for your answer and regarding the second question of yours concerning table turnover rate and specifically what measures we're going to take to achieve our target so we are confident that we can improve our table turnover rate as we optimize our management we also require every senior management employee or managers to set goals and also put in efforts to achieve that goal. We focus on building loyalty and connection between ourselves and our customers through organizing events on special occasions. We also expect to lengthen the operational hours to add, for example, late-night snacks hours late night hours for our overseas stores as well we also will introduce nightclub decor for late night hours for selected stores as well. We also invite professional DJs to also build atmosphere for late night dining experience. We believe that these will be really well received by our overseas customers. Once we implement these measures, we believe that table turnover rate can be further improved And it will take some time for us to monitor the growth. So that's my answer for the second question of yours. Your third question is about our employees and also the localization situation of our employees and customers. Now, when it comes to localization, first of all, we need to focus on doing it the right way. So we start from the menu and products. We need to localize the menu in order to offer something that caters to local customers' palates. And also, as was mentioned by Ms. Young from last year to this year, one of the most important measures that we did was to focus on our employees' growth and also the unity of our employees from the material side and also spiritual side as well. Once we build a very good corporate culture and have good connections with our employees, we believe that the experience that we can offer to the customer will be better. Right now, from a long term, about 20% to 30% of our employees and also management level our local employees and when it comes to the breakdown of our customers overall it remained very stable as before on a macro level though for example in the US we actually have local managers who are able to successfully attract a lot of local customers When we did our visit in Europe, we realized that actually local customers enjoy our Asian-style dining, which also boosted our confidence. Thank you. The next question comes from Ruanxinyu with Goldman Sachs. Please go ahead. Hi, management. Thank you for taking my question. My name is Ranxin Yu from Goldman Sachs. I have two questions. The first one is about our store opening plan for 2025. We believe that we adopted a bottom-up approach. Do we have any opportunities that we're expecting to see when it comes to new market in 2025? Also, when we cultivate new brands, what are the potential brands that we plan to cultivate? Thank you for both of your questions. I'll take the first one. Now, for 2025 store opening right now, we have already opened three hotpots and also one store. store in a skiing shop or a skiing resource in Japan. So the stores that we signed are in the Philippines and Malaysia and Australia. And right now we actually have signed contracts for new stores, new hotpot stores with 10 stores. And also we have already progressed to talking about signing contracts and the terms of contracts And on top of hot pot restaurants, we also have signed two stores for barbecue restaurants as well. With the support of our red pomegranate project and also dual channel strategy, we have now proactively exploring, you know, explored opportunities to open restaurants. new stores and seek new opportunities for sub brands we do not set hard dark hits but as was mentioned uh you know we have a lot on the pipeline and we expect to by the end of the 2025 we will open more stores than the previous year and the second question i think miss young will take it great uh thank you for the question now recording our red uh pomegranate strategy right now we Have be sure we have identified barbecue as 1 good. This is format for us to build our secondary brands overseas overseas. We will focus on selecting stores nearing our existing high quality store so that we can have high efficiency. Right now in Southeast Asia, we have already signed contracts and prepared for two barbecue restaurants. And most of other restaurants are also seeking opportunities to build barbecue restaurants in surrounding neighborhoods. Apart from our halal hot pot and also noodle shops, we also are exploring opportunities to actually explore sub-brands that are Chinese style and have opportunities in the overseas market. Thank you. The next question comes from Lai Shengwei with CICC. Please go ahead. Hi, management. I am Lai Shengwei from CICC. I have three questions. The first one is that since second half of last year, we have made a lot of adjustments. And, for example, we have a new manager management system. You also adjusted the incentives for managers as well. How is it working out? The second question is about the projection of gross profit margin. and staff expenses. The last question is that for new brands, do we have any sort of budget for investing in new brands such as barbecue? Is there a mature unit economic model that can share with us? Thank you for the question. The first question of yours is about the management adjustment and the effectiveness.

Ms. Young? All right, thank you. Mr. Lai for your question.

Now about management adjustment, we focus on employees. We focus also on customers as well. We mainly focus on having our employees, having a better career growth path. With this new strategy, we now can enable the autonomy and ownership, entrepreneurship of our employees. So far, we have already seen a very exciting and encouraging outcome. For example, with this method, our customers can feel better services and they also have better return rates and loyalty as well. And I think this kind of management adjustment comes from the heart. And we encourage our employees to do things from their heart. I mean, what we offer as a mechanism is just a tool, whether or not it will be taken on, falls, lies down to every single country's key manager, regional media manager. to see whether they believe it's suitable for their own stores. And we can monitor store performance using our own metrics to see whether or not these new tools are working out. All right the second question of yours is about our GP margin and also staff expenses. For GP margin there's room for improvement and our product department right now is prioritizing optimizing the GP margin by readjusting the menu of different countries and regions and also to do kitchen processing management to see if we can do better in the future regarding gross profit margin in different countries. But at the same time, we do not sacrifice the customer experience and quality of our products. I think the way to do it is to control cost and have better organizational capability. Now, when it comes to staff expenses, our priority is to guarantee the quality of our services and products. And so we do have high targets for the quality of people that we use and the headcounts that we use. We also are fully compliant with local regulations and laws. And so staff cost optimization is not our number one priority, but with our dual channel strategy, we believe that we can improve the labor efficiency further. The third question of yours is about the investment on new brands and the budget. Now for new brands development, again, it's a bottom-up approach. We have organized an innovation committee who will monitor with tools the budget for new brands and new verticals that we plan to enter. But the decision is being made by our senior management and also our entrepreneurs. from different countries. And so for a project-level investment, sometimes it can vary from maybe $100,000 to million-level projects. But for every single store, we will do very careful calculation before we set the budget. Now, the last question, as you mentioned, barbecue unit economic models. Right now, we don't have... a lot of barbecue shops in the overseas market. We only sign contracts in Southeast Asia, in Malaysia. And right now, they are still in renovating stage. We haven't really opened them yet. The next question comes from with Huatai Securities. Hi, everyone. Thank you for taking my question. I have two questions. The first one is that we saw your operational quality and performance and also table turnover rate improved in 2024 year over year. and so for 2025 uh your priority you know where is your priority gonna be uh fall on uh is it for improving table turnover rates or expanding new markets um and also table turnover ways improvement can play an effective role in your uh future development so my question is that how do you think it's going to benefit you in the long term my second question is about the supply chain cost management and what's your projection and how to control the cost capex. Thank you. About your first question, we focus on whether or not we focus on same store growth or new market expansion. We're going to do both. Obviously, same store growth is very important. We're not going to sacrifice our same store growth over expansion because it's going to affect our store visit rate and customer number as well. So that will remain very important to us. And for a new market expansion, I think there are different ways to do it. The first one is to enter empty space. Another one is to develop, for example, secondary brands surrounding our existing stores. And so it all comes down to every senior managers of the local market. to see how they plan ahead. I think same store growth is as important as new store opening or new market expansion. So we're going to do both. The second question of yours is the supply chain construction for the overseas market and also capex and GP match and expectation. Now, our overseas supply chain planning requires that the central kitchen in the future needs to do independent operation and also offer advantage when it comes to single product offering. And so they need to be sufficiently self-sufficient. Right now, I think our central kitchen management has improved. Since September last year, we've done a lot of optimization in Southeast Asia. So the central kitchen's capacity has improved dramatically. And also the delivery accuracy rate is better. The quality is better as well. And also, we saw a lot of improvement in the external cells by the central kitchen as well. The next step in Southeast Asia will be to do refined management of the supply chain and see if we can replicate the successful stories. and experience in, for example, North America and other markets. When it comes to CapEx, right now, we're very cautious. We're not going to put in significant investment for Central Kitchen. It depends on every store, right? For some stores, sometimes you just need a small back kitchen. And for some areas and cities, if you have high density of stores, then we will consider maybe investing in Central Kitchen. Thank you. The next question comes from Wang Yuezhu with City Securities. Hi, everyone. Thank you for taking my question. I have two main questions. The first one is that in North America, What is the overall layout of your store? And also, since you got listed last year in America, would you consider maybe opening more stores in North America and speed up the process? The second question is also the short-term planning. So thank you for your question. The first one is about North America market. In North America, we definitely sense that the market has great potential and vitality and diversity. It has the appetite for Chinese hot pot and also other Asians. restaurants, and also Western fast food as well. So we encourage our North America team to really explore and proactively seek opportunities. Right now on the pipeline, we actually have a lot of projects for North America. Hot pot restaurants right now have at least five of them that are in actual promotional stage, progressing stage. We also are looking at into possibility of fast food and other kind of verticals. But typically in North America, you know, payback period is longer than Asia's and the capex requirement threshold is higher. And so we are very cautious about expanding the market in North America. but we are very optimistic. The second question of yours is about incentive scheme, if I got your question correctly. Again, matching the red pomegranate strategy, we are looking into optimizing our incentive schemes, but we don't have the details yet. Maybe we can let you know after the internal decision. Thank you. The next question comes from Zhongye Cheng with Zhejiang Securities.

Hi, everyone. I am Zhongye Cheng. I have three questions.

So among all of the brands come from China, we are one of the few ones that actually have achieved quality and performance. And so exactly why are we more successful? What are our competitive advantage? And my second question is about our payback period for our newly opened stores. And the third question is that we realize that a few stores in Southeast Asia right now is pausing operation. Why is that? Great. Thank you for your question. The first one is about Chinese dining brands you know going global and our competitive advantage I mean from our experience and observation there is actually a lot of success stories you know that from which we can learn so we are proactively learning from you know other brands and our peers we got inspired a lot if we have to Identify what we have done right. I think it's first of all, our attitude. We respect the overseas market. We also stay very modest. We respect local customers and we are very grounded when it comes to our way of doing business, which also means that we are really focused. diligence and we are very cautious in making decision to select local resources so that we can minimize error and risks when we go into the overseas market. The second question is about our payback period. Last year, our newly open source payback period in Asia and Southeast Asia is typically within three years, which is not bad. In North America, it's about four years of payback period, which is also very typical for the restaurant industry. And this payback period has definitely improved. But in two markets, Cambodia and the Philippines, we encounter some problems. you know, challenges from the local market, which is unexpected. So the payback period, you know, sort of underperformed than our expectation, and we are proactively improving our management and strategy to change that situation. Another question is the stores that we pause operation and shut down in Southeast Asia. Now, again, this is consistent with our overall strategy globally, because we will When we examine the performance of store and notice underperformance, we have to stop the loss in a timely manner. Sometimes it's because of the expired leases. Sometimes it's because, for example, we have to admit that when we select the location, we did not make the best decision. And so we have to suffer the consequence and we make the decision of doing the adjustment accordingly. All right, thank you. The next question comes from Yan Ningxin with Xinyue Securities. All right, thank you for the opportunity to ask the question. I have three questions. The first one is that we saw in 2024 in Japan, we had improved performance. What was the drivers? because of company strategy or why was it? The second question is that for 2025, looking at the first quarter performance, how was table turnover rate so far? And what is the trend that we observe? The third question is the barbecue sub-brands as a business model. So what is the overseas store opening model for barbecue stores? Is it going to be the same as the domestic market? Because domestically speaking, barbecue restaurants are smaller in scale than hot pot restaurants. And so when you try to replicate that in the overseas market, what are the commonalities and what are the differences? And also, if we plan to do barbecue in overseas market, what is your expected ceiling of development? All right, thank you, Ms. Yen, for your three questions. The first one is the driver for Japanese market improvement. I think it comes down to the management strategy. We do some very grounded changes based on the four color cards. for example, environments, services, products, and food safety. All of these details are clearly felt by our customers and also the whole experience and customer satisfaction rates were improved. So as a result of these improvements, we clearly improved the overall store performance. Another key driver was the pricing strategy. We removed some ill-designed pricing and because of the local market adaptation we're able to also offer concessions on certain products on the menu and as a result customer felt our sincerity and the return rate of customers were was better and better. And so after one year's adjustment, now it has entered a very stable development kind of trajectory. The second question of yours is the Q1 performance so far. Now, we haven't finished the first quarter yet. I think by about May, we are going to make announcements regarding the first quarter performance. Right now, it's a little bit early for us to disclose any figures. So I... My apologies. The third question of yours is our barbecue restaurants and how is it different or similar to the domestic ones? It's very hard to say right now because our overseas barbecue restaurants are still in a very early stage. We just signed contracts and we are just doing some construction and renovation. and one of them will be open in Malaysia and the other in Indonesia we are still curious to see where the local customers will like them just as much as they like our hot pot restaurants now obviously we have done a lot of market research we have selected very good locations and our managers for these new stores are experienced high quality managers so we have full confidence but right now it's very hard to say um you know how are they similar or different to domestic ones it depends um the last question of yours is about barbecues uh market uh tan market i mean a potential market scale uh again right now is still very early stage um and i think That's with the experience of running and operating high-quality hot pot stores, we believe that in neighborhood areas, we will have great potential of running barbecue stores, so we're not too concerned. Thank you. The next question comes from Wang Yijie with Haitong Security.

Hi.

My name is Wang Yijie with Haidong Securities. Thank you for taking my questions. I have two questions. The first one is that for 2024, we saw that your company improved very good gross profit margin to 10.1%, one percentage point improvement. And then Also, for other aspects of the performance, we also have done a lot of improvements. What are the growth drivers behind that, and what is your projection for 2025? Another question of mine is that in North America, there are some restaurants, as you mentioned, that have... make significant strides, you know, led by local management teams. So for 2024, did you see similar measures that can improve your efficiency and performance of single store with similar strategy?

Now, about the

profitability of restaurants for 2025 again you know right now it's Q1 and it's very hard to project right now because since last year we've done segmentation of different stores and so for those stores that enjoy a very good table turnover rate and profitability they can actually reward their customers with benefits and we believe that those are very necessary and right now we don't have any guidance for 2025 yet and we also are preparing a lot of new restaurants and also we believe that it's going to affect our overall profitability because we are going to open a lot of new stores and sub-brands but right now we don't have a lot of visibility. into the guidance for this year. You also mentioned about our operational improvement last year. First of all, it's very hard to pinpoint one single factor or driver. I think from the frontline of restaurant level, we have to acknowledge the hard work of our frontline managers and employees and the headquarter also play an important role. I think it's a combined efforts, concerted efforts from both sides. Another part of your question is North America. A couple of stores in North America have improved their performance through innovative measures. Now, again, every single store of ours are differentiated and they manage their own customers and own stores based on their own conditions and environment. And so We believe that there are a lot of successful cases, but it's really dependent on local conditions. And for example, in Indonesia, they have their way of doing things. In America, they have their own styles as well. So whatever works for their store is the best measure.

That's all. Thank you.

Now due to the time constraint, we are going to conclude the call here. Thank you so much for your participation. See you next time.